One may either be a landlord or a tenant due to the necessity of housing as a basic need. It is not only the responsibility of the individual but the government has a major part to play. Various governments have made several attempts to address Ghana’s housing needs with the interventions of numerous national schemes to either make provision for housing or to make housing financially accessible.
The first president of Ghana, Dr. Kwame Nkrumah had several housing policies to make low- and middle-income earners become homeowners. His interventions included the Roof Loans Scheme (RLS) to grant government workers soft loans to those building at their own pace, to roof their houses.
Also, Dr. Busia led government established Bank for Housing and Construction (BHC) to provide loans for housing construction. The BHC was to provide soft loans for people to access low-interest loans for the construction of their houses.
Years on, upon the establishment of Tema Development Corporation (TDC), it was required of them to sell to their first-era tenants at an interest rate of 2% with 25 years repayment period. These homeownership policies include affordable housing scheme projects across the country.
However, some have been questionable with affordability and availability issues. It is even alleged that most of these projects are made available to some top government officials to buy for investment purposes.
In recent times, housing as a basic need has become a big challenge for most people to acquire especially in the major cities with high demand for housing. In addition, players in the rental space, most especially tenants are facing big challenges to afford decent accommodation in major cities.
To address the short to medium-term market challenges in rental failures where landlords demand years of rent advance payments. The Ghana government on 31st January 2023 launched the National Rental Assistance Scheme (NRAS) to provide rent loans to both formal and informal sector workers with verifiable and regular income. The first phase of the scheme is to be implemented with GH¢30 million.
This will provide eligible Ghanaians with a mechanism to pay low monthly rent, effectively removing the need for rent advance payment within five regions – Greater Accra, Ashanti, Western, Eastern, Bono East and Northern. This is a swift process of providing such rent loan at 25% p.a. which is expected to be completed within 5-10 days for its application. The rent would then be paid directly by the Scheme Managers into the bank account of the landlady or landlord.
This scheme is to support lower-income earning households and the youth to access the minimum standards of accommodation. Today (2023), the interest rate on mortgage ranges from 30-45% p.a. with a maximum tenure of 20 years. In the midst of high property prices as a result of high land values due to demand and high cost of finance and building materials. In simple terms, a loan for rentals (NRAS) is 25% whereas the loan on for purchasing (mortgage) 30-45%. Per United Nations standards, it is expected that housing cost should not cover not more than 30% of the household income.
Another element of cost in housing has to do with agency fees. Recently, people do not have the luxury of time to go round searching for properties to rent or buy. It leaves them with no option than to fall on Agents to help them find them their preferred properties to rent.
This helps them saves time and resources searching for oneself. Even in the sales market, it has become complex to afford the necessity of a professional like agent and lawyers in the acquisition process. In my opinion, I see some positive consequences on the need of Agent. Under the scheme, agents play their role by making suitable properties available for their clients to present to the scheme manager for rent to be paid.
Here, the only upfront payment the client may end up paying possibly the contracted agent’s retainer fees and professional fees that comes in the form of commission. It is emphatically stated that, the NRAS is not to abolish agency. Agency is not illegal; agency is backed by law. The Real Estate Agency Act, 2020 (ACT 1047) provides guidance for agency practices and conducts.
The service of a real estate agent cannot be overemphasized. The responsibility lies on individuals to find the right professional agent.
Associations like the Ghana Association of Real Estate Brokers (GAREB) has a search section to find the right professional to assist you. (https://gareb.com.gh/search-member). Members have undergone professional trainings and have been cleared by Ghana police service to be people of no criminal record. Find a professional agent and stay safe in the industry as a consumer in the industry.
By: Ebenezer Oppong Aboagye
Vice President, Ghana Association of Real Estate Brokers (GAREB)