NPP promises GH¢100m seed funds to address rent

On August 22, 2020, 5:38 PM

Vice President Dr Mahamudu Bawumia has indicated that the New Patriotic Party (NPP) will roll out programmes to address rent.

Landlords usually demand two years rent advance payment despite clear regulations against the practice.

The Rent Act of 1963 demands that landlords charge a maximum of six months rent in advance.

Unfortunately, due to demand outstripping supply, landlords charge in excess, sometimes demanding up to three years rent advance.

The NPP government has subsequently introduced a National Rental Assistance Scheme in its 2020 manifesto to address the situation if it wins power for a second term.

Unveiling the manifesto in Cape Coast on Saturday, August 22, Dr Bawumia said “large demands for rent allowance” make it difficult for fresh graduates, for example, to rent accommodation.

“We will establish a National Rental Assistance Scheme (NRAS), seeded with GH¢100 million, to provide low-interest loans to eligible Ghanaians to enable them to pay rent advance,” he promised.

The rent advance loans will be paid directly into the bank account of landlords, who would have to register with the scheme.

The government would then deduct monthly from the benefactors’ monthly income to pay the loan over a period of time.

Housing programmes

Dr Bawumia also added that an extension of the mandate of the current administration would see the government prioritising “low-income housing estates using local building materials.

Additionally, they would “complete the digitisation of land administration”, a process which started several years ago.

Currently, Ghana has a housing deficit of about 2.5 million housing units and needs some 200,000 units per annum. But only 40 percent of this annual need is met, the B&FT has reported.

It would be recalled that the Finance Minister, Ken Ofori-Atta, promised a significant boost in the real estate sector.

The government has already approved the establishment of a National Housing and Mortgage Finance Scheme to provide financial options for the construction of residential housing across the country.

Prior to the announcement, a provision of a GH¢ 1 billion Mortgage and Housing Finance Fund had been announced in the 2018 Budget and Economic Policy.

The government is expected to facilitate affordable local currency mortgage loans to low- and middle-income earners to finance estate constructions.

Under the scheme, the banks engaged are to provide cheap financing arrangements as low as 12 per cent at Stanbic Bank and 11.9 per cent at Republic Bank.

Government is also collaborating with the United Nations Office for Project Services (UNOPS) to deliver some 100, 000 new affordable housing units by 2022.

Additionally, the Ministry of Finance announced in December 2019 that it was entering into a partnership with GCB Securities to establish the first Affordable Real Estate Investment Trust (REIT) to purchase properties and rent them at affordable rates to public sector workers for a period of 15 to 20 years after which they pay a residual value to own it.

REIT has identified properties at TDC Community 22 Affordable Housing Enclave for the pilot phase.

Ghana has several uncompleted affordable housing projects.

Under President John Agyekum Kufuor, a similar project began in 2006 and was to be completed by December 2007 at a cost of $300m.

There were several other project sites, Kumasi in the Ashanti region, Koforidua in the Eastern region, Borteman and Kpone in the Greater Accra region.

Some 1,640 low-cost housing units were to sit on 300 acres of Kpone land. The works on the two other sites were to bring the total housing project to 4,700 units.

Funds for the project from the Social Security and National Insurance Trust (SSNIT) as well as HIPC funds for the project have run out.

The Mahama government did not continue the project. It started a new one, the 5,000 Saglemi affordable housing project which is now a subject of criminal investigations.

The new one has come to a standstill. But the government has secured $51m to now complete the old one under Kufuor administration.