The National Homeownership Fund (NHF), under the aegis of the Ministry of Finance’s Financial Sector Division, is spearheading a National Homeownership Financing Scheme aimed at developing a mortgage market as well as a rent-to-own scheme in partnership with interested financial institutions.

Enter GCB Real Estate Investment Trust PLC (GCB REIT). This entity was incorporated in August of 2019 by GCB Capital Ltd in partnership with the NHF to operationalise the rent-to-own component of the Scheme. A number of local and international banks, on the other hand, partnered the NHF to operationalise the construction finance and mortgage component of the Scheme with highly subsidised mortgages at around 12.0% to 13.0% interest rates.

A Real Estate Investment Trust (REIT) is an incorporated public company under the Companies Act with the dedicated purpose of investing in real estate, and generates recurrent income (rental and interest) from operating, owning or financing income-producing real estate and real estate-related investments.

GCB REIT is an investment vehicle designed to mobilise funds from institutional investors for the acquisition of residential real estate for rental and rent-to-own schemes, as well as for outright sale.

The GCB REIT is focused on facilitating ownership access to affordable, decent rental accommodation, primarily for, but not limited to, public sector workers. Considering that even at subsidised interest rates, access to mortgages remains beyond the reach of many prospective homeowners, GCB REIT’s rent-to-own scheme is designed to provide low-to-middle income earners an alternative route to homeownership.

The REIT’s operations involve acquiring housing units built to quality standards and specifications approved by the National Housing Committee and letting out the units at reasonable monthly rental charges, thus, eliminating the illegal and onerous burden of “rent advance”. Ultimately, tenants can also achieve ownership of the houses under a rent-to-own scheme.

All round Positivity

The GCB REIT is providing home seekers opportunities to rent decent, quality, residential properties at affordable rates, with the possibility of eventual ownership after a number of years. This is a strategic initiative to address long-standing challenges in the housing market including:

• Housing deficit: inadequate supply of affordable houses (deficit famously estimated at 2 million houses)
• Poor quality: unsatisfactory designs and unsound conditions of some residential facilities.
• Excessive rent: unconscionably high rent amounts for the kind of low-quality houses available.
• Advance payments: unreasonable demand by landlords for 2 or 3 years advance rent payment.

The GCB REIT is tackling these problems directly by prioritising acquisition of low-cost houses to translate into lower rent charges paid monthly without requirement for advance payment. The REIT also ensures that houses acquired meet quality standards and specifications approved by the National Housing Committee and are professionally managed and maintained by a property manager supervised by GCB Capital Limited.

The GCB REIT is, therefore, not just another investment vehicle, it is a direct investment into solving a critical socio-economic need and helping to realise the dreams of a large section of the populace.

(Source- Business & Financial Times)

Monday, 1st August 2022 Publication.