204 ‘rent to own’ housing projects ready
The President, Nana Addo Dankwa Akufo-Addo, yesterday, commissioned 204 housing units, under the National Mortgage and Housing Finance (NHMF) initiative.
Constructed in nine months, the one and two-bedroom facilities are on a rent-to-own scheme, aimed at helping low income earners specially to own places of abode.
The project, located at Tema Community 22, involves the construction of 204 houses, comprising one, and two unit standard and expandable bedrooms for public sector workers. GCB Bank Limited will be underwriting the mortgages to public sector at rates far below market rates, and with longer tenure.
Under the National Mortgage Scheme (NMS), mortgages are being underwritten at rates of ten percent to twelve percent by the participating banks, namely, GCB Bank Limited, Stanbic Bank Ghana Limited, and Republic Bank Ghana Limited. This intervention has, indeed, reduced mortgage rates by over 60%, compared to the average market rate of 28%.
Commissioning the housing units yesterday on day 2 of his tour of Greater Accra, President Akufo-Addo described the completion of the 204 housing units as “one of the successes achieved during the two-year pilot phase of the National Housing and Mortgage Fund (NHMF).”
In his remarks, the President stated: “Despite an annual supply of about 40,000 housing units, we are unable to meet the annual demand of some 70,000 homes each year, and the housing deficit has now exceeded two million housing units,” he said.
The President explained that the demand-side challenges of home ownership include the lack of adequate long-term funding, high cost of capital, and high non-performing mortgage loans. In addition to restrictive banking regulations, high interest rates on mortgages have reduced the appetite for mortgage financing.
In a move to right the wrong, the government, in 2018, approved the NMHF initiative, with the aim of stimulating the local currency mortgage market.
“In operationalising the initiative, the National Housing and Mortgage Fund (NHMF) was set up to pilot two schemes – the National Mortgage Scheme (NMS) and the Affordable Housing REIT’s (rent-to-own) scheme. The Fund is now working with players in the housing market, i.e. home buyers, developers and banks, to address the issues and create an enabling environment for a thriving housing market,” the President said.
The Minister for Works and Housing, Samuel Atta Akyea, said the Akufo-Addo government was keen in improving on the housing challenges of the country.
He took a sharp swipe at the opposition – that this housing project by the New Patriotic Party (NPP) government would not be like one the National Democratic Congress (NDC) commenced at Saglemi, in which some foul play had been fished out.
The Finance Minister, Ken Ofori-Atta, in his address, announced that the next term of President Akufo-Addo would witness, as rolled out in the 2020 Year of Roads, a “Year of Housing.”
The 204 houses are of one and two standard and expandable bedrooms. It is a pilot phase of a nationwide mortgage financing scheme by the government, aimed at reducing the housing deficit.
Government, in 2018, approved the National Mortgage and Housing Finance initiative with the aim of simulating the local currency mortgage market.
The National Housing and Mortgage Fund was set up to pilot two schemes; The National Mortgage Scheme, and the Affordable Housing Rent To Own Scheme to address the housing deficit. Under the National Mortgage Scheme, mortgage is being underwritten at the rate of 10 percent, and this has reduced the mortgage rate by 60 percent.
The affordable rent to own scheme is promoting the rent to own scheme by only monthly payments until the occupants have the options to own it.
The beneficiaries are public sector workers, including teachers and nurses. It will eliminate the burden of paying rent. It also designed to help low income workers to rent and own a home.
The Affordable Housing REITs is promoting the rent-to-own scheme with only monthly rent payments, and, after a period, the occupant has the option to own it. On the other hand, the rent-to-own scheme will eliminate the burdening two-year rent advance system, and designed to give low income workers the opportunity to rent and eventually own homes, with the focus on apartments and inner-city rehabilitation.
The President, as part of the day 2 of his tour, later cut the sod for the construction of the Tema-Akosombo road, and later inspected work on the 9.8 kilometres Okpoi Gonno highway, as well as Accra-Tema 4 lane and 3 tier interchange at the Nungua barrier road.
He then moved to address a durbar of fisher folks of Greater Accra, inspected construction of the Teshie Landing beach, and Teshie link roads.
He ended the day’s tour with the commissioning of La Market, and addressed residents of La.