Parliament Passes the Real Estate Agency Bill, 2020: What You Need to Know
Great news for the general public and real estate industry players: The Real Estate Agency Bill has been passed by Parliament!
Finance Minister, Ken Ofori-Atta says government will work with the Bank of Ghana to introduced special-priced mortgages as part of efforts to bridge the housing deficit.
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This arrangement, the Minister explained, will enable the government to create cheaper 15 to 40-year mortgages which affords citizens earning lower salaries as well as those in the informal sector to become homeowners.
“We will provide more sustainable financing agreements using diverse instruments to stimulate the [real estate] sector. The next Akufo–Addo led government will from 2021 prioritize housing as the biggest economic activity,” he asserted.
“We have done the year of roads, now we will leave a legacy of houses and hospitals for our people,” he added.
Mr. Ofori-Atta made this known at the commissioning of 204 housing units at Community 22, under the National Mortgage and Housing Finance Initiative.
The housing deficit
Over the years, the country has suffered a wide housing deficit, especially in the urban and peri urban areas. The country is said to have a cumulative housing deficit which exceeds two million housing units, despite an annual supply of about 40,000 housing units.
With this, the country is unable to meet the annual demand of some 70,000 homes each year.
Real estate industry players have pointed out the lack of adequate long-term funding, high cost of capital and high nonperforming mortgage loans being a challenge to home ownership in the country.
Eager to fix the demand–side challenges of home ownership, government in 2018 launched the National Mortgage and Housing Finance Initiative, with the aim of stimulating the local currency mortgage market.
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, that is, home buyers, developers and banks, to address the issues hindering homeownership and create an enabling environment for a thriving housing market.
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.
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According to government, the rent-to-own scheme will eliminate the two-year rent advance system and also give low-income workers the opportunity to rent and eventually own homes, with the focus on apartments and inner-city rehabilitation.
Government also intends to use this framework, the Affordable Housing REITs, to revive the affordable housing concept and complete many of the abandoned government housing projects across the country.