Government to begin implementation of National Rental Assistance Scheme – Minister

The government has hinted at plans to roll out National Rental Assistance Scheme to support lower-income earners to have decent rented accommodation in the country. The governing New Patriotic Party (NPP) promised in its 2020 manifesto to pay rent advances of Ghanaian youth in its second term to in the short term cushion the youth from the problem of high rent and long rent advances. Vice President Dr. Mahamudu Bawumia explained that under the National Rent Allowance Scheme, “we will give you a loan to pay your rent allowance, not directly to you but the landlord and then we will deduct monthly as you will normally pay” NPP also promised to set aside $100 million as a seed into a new National Rental Assistance Scheme (NRAS), which it intends to set up to address accommodation problems if its mandate was renewed in 2020. Almost two years into the second tenure, many Ghanaians have questioned the commitment of Akufo-Addo-led government to this promise. But speaking at an Infrastructural conference organized by the Ghana Chamber of construction Industry (GhCCI) in Koforidua on behalf of the Sector Minister Francis Asenso Boakye, the deputy minister of Works and Housing Abdulai Abanga said, government will soon fulfill this promise with the implementation of the scheme. “Government intends to implement the National rental assistant scheme to among other things address the market imbalances in the rental housing market, provide assistance to lower-income households to access accommodation whilst leveraging such assistance towards the improvement of the quality of the rental accommodation”. He said government will continue to deepen engagement with stakeholders to reduce the current housing deficit of 1.8million in the country. “At the center of all these plans, is the Ghanaian contractor. This nation requires organized group of contractors who are progressive, ready, and fully equipped to embark on the transformational agenda of the government. The Ministry is always engaged with contractors, developers, and other government agencies on how we can collaborate to help reduce the housing deficit which is about 1.8 million housing units” Mr. Gustav Alexander Adu, the Executive Director of Kumasi Wood Cluster Association (KWC) also a commissioner on the Governing Board of the Forestry Commission representing NGOs involved in Forestry and Wildlife Management in his address at the conference said Ghana must switch from clinker-based buildings to bricks which can reduce the cost of building by 40%. “We’ve been dominated by the cement houses disregarding what clay can do. If you travel abroad you see a lot of countries using clay-based bricks but as we speak the cost of brick is more than cement because of the way it is out together. It requires a lot of energy but in Ghana energy cost is prohibited in the sense that you cannot apply to create the bricks that you need. But we have to bite the bullet, we have to find a way to use bricks more than cement . We’ve been colonized by what we call clinker- that is cement-based” He continued “And if you take any building in Ghana it is cement based why when we have clay that’s we can convert it to brick and if we use brick it is climate impactful positively. Clinker is climate impactful negatively but we continue to use it. West Africa is dominated by clinker but if we go back and retool and use our clay-based bricks the cost of housing, cost of construction, the cost of all these housing-related facilities will be reduced by at least 40 %”. Housing Experts downplay the Scheme A team of international housing academics -Nicky Morrison Professor of Planning, Western Sydney University, Emmanuel Kofi Gavu Lecturer, Land Economy, Kwame Nkrumah University of Science and Technology (KNUST), Lewis Abedi Asante Lecturer, Kumasi Technical University and Richmond Juvenile Ehwi Research Associate, University of Cambridge, published last year in the theConversation.com that “we agree with the Ghanaian government that tenants need assistance, but our research concludes that the approach needs to be vastly different to what government has announced. The National Rental Assistance Scheme will only further legitimise and prolong the demand for advance rent, an illegal practice”. They estimate that no more than one in five tenants paying the two-year advance rent will be eligible to receive support from the government’s advance rent assistance scheme. Rather than resolving the issue, the government’s new scheme is in danger of legitimising an illegal practice that won’t fix Ghana’s housing crisis. The Ghana Rent Act of 1963 (as amended) states that a deposit of six months is the maximum that a landlord can request from a tenant. This national rental assistance scheme will embolden landlords to keep charging the two-year advance rent which is illegal in terms of the Rent Act. The Ghanaian government presents the rental assistance scheme as a way of assisting tenants struggling to pay the advance rent. In reality, it’s a scheme that is dangerous of entrenching a divisive social norm. The researchers suggested to the government to reduce labour mobility. “Young people on low incomes are especially vulnerable. They have little choice but to accept these punitive terms. As a consequence, they become saddled with enormous debts. The two year deposit is not a property bond. Unlike a rent deposit or bond in more regulated markets, the tenant does not get back this lump sum. It is two years’ worth of rent paid upfront. This means the lump sum the tenant pays freezes the payment of rent for two years. “We found that first-time renters had to save their monthly incomes for a little over nine months and regular renters for a period of seven months in order to take up the tenancy”. Our research revealed that this system has an impact on young people’s labour mobility in Ghana. This is significant considering that 21.3% and 22.5% of the unemployed population in Ghana respectively live in the Greater Accra and Ashanti Region where most jobs are concentrated. The general housing deficit in the country and the potential lock-in effect of the rent advance system make it difficult for tenants to easily move to where jobs are, even within big cities” Proponents of the rental sector say that it gives tenants flexibility to manage personal budgets, allowing them to have mobility as they search for work. But the burden of finding two years’ rent in advance results in regular tenants, in particular, remaining in their properties for around 10 years. This suggests that tenants are anything but mobile. A two-fold challenge The team of international housing academics stressed that Ghana has a two-fold housing challenge. In the absence of a functioning insurance scheme for landlords, they pass risk on to tenants. There is also inadequate provision of affordable housing in Ghana. So, demand outstrips supply and landlords can ask for, and receive, two years’ rent in advance. “The new scheme is only available to people with regular income in both formal and informal employment. Loans will be offered when employment is with a formally registered company and a salary is involved. This risks exacerbating inequality. Many will not be eligible as they make ends meet in the informal employment sector where their income streams are not typically viewed as regular. This is despite the fact that in some cases regularity can be established for informal sector employees. It could also lead to exploitation of those receiving the loans, as employers could abuse the fact that continued residence in their homes is dependent on continued employment.” A way forward The research team recommended that, Ghana needs an overhaul of its broken rental sector. Rather than a national scheme to help private landlords mitigate risk, there should be a push to work with district assemblies and chiefs who play a critical role in local governance and development. For example, chiefs are the custodians of valuable land that could be released to create low-cost housing schemes. They maintained that government can support this bottom-up approach to the housing problem by empowering District Assemblies to make housing provision a key part of their mandate while exploring innovative models to access land and finance housing development. “We believe it is by increasing the supply of rental housing that the monopoly power of private landlords who charge longer periods of advance rent can be broken”.

The government has hinted at plans to roll out National Rental Assistance Scheme to support lower-income earners to have decent rented accommodation in the country. The governing New Patriotic Party (NPP) promised in its 2020 manifesto to pay rent advances of Ghanaian youth in its second term to in the short term cushion the youth from the problem of high rent and long rent advances. Vice President Dr. Mahamudu Bawumia explained that under the National Rent Allowance Scheme, “we will give you a loan to pay your rent allowance, not directly to you but the landlord and then we will deduct monthly as you will normally pay” NPP also promised to set aside $100 million as a seed into a new National Rental Assistance Scheme (NRAS), which it intends to set up to address accommodation problems if its mandate was renewed in 2020. Almost two years into the second tenure, many Ghanaians have questioned the commitment of Akufo-Addo-led government to this promise. But speaking at an Infrastructural conference organized by the Ghana Chamber of construction Industry (GhCCI) in Koforidua on behalf of the Sector Minister Francis Asenso Boakye, the deputy minister of Works and Housing Abdulai Abanga said, government will soon fulfill this promise with the implementation of the scheme. “Government intends to implement the National rental assistant scheme to among other things address the market imbalances in the rental housing market, provide assistance to lower-income households to access accommodation whilst leveraging such assistance towards the improvement of the quality of the rental accommodation”. He said government will continue to deepen engagement with stakeholders to reduce the current housing deficit of 1.8million in the country. “At the center of all these plans, is the Ghanaian contractor. This nation requires organized group of contractors who are progressive, ready, and fully equipped to embark on the transformational agenda of the government. The Ministry is always engaged with contractors, developers, and other government agencies on how we can collaborate to help reduce the housing deficit which is about 1.8 million housing units” Mr. Gustav Alexander Adu, the Executive Director of Kumasi Wood Cluster Association (KWC) also a commissioner on the Governing Board of the Forestry Commission representing NGOs involved in Forestry and Wildlife Management in his address at the conference said Ghana must switch from clinker-based buildings to bricks which can reduce the cost of building by 40%. “We’ve been dominated by the cement houses disregarding what clay can do. If you travel abroad you see a lot of countries using clay-based bricks but as we speak the cost of brick is more than cement because of the way it is out together. It requires a lot of energy but in Ghana energy cost is prohibited in the sense that you cannot apply to create the bricks that you need. But we have to bite the bullet, we have to find a way to use bricks more than cement . We’ve been colonized by what we call clinker- that is cement-based” He continued “And if you take any building in Ghana it is cement based why when we have clay that’s we can convert it to brick and if we use brick it is climate impactful positively. Clinker is climate impactful negatively but we continue to use it. West Africa is dominated by clinker but if we go back and retool and use our clay-based bricks the cost of housing, cost of construction, the cost of all these housing-related facilities will be reduced by at least 40 %”. Housing Experts downplay the Scheme A team of international housing academics -Nicky Morrison Professor of Planning, Western Sydney University, Emmanuel Kofi Gavu Lecturer, Land Economy, Kwame Nkrumah University of Science and Technology (KNUST), Lewis Abedi Asante Lecturer, Kumasi Technical University and Richmond Juvenile Ehwi Research Associate, University of Cambridge, published last year in the theConversation.com that “we agree with the Ghanaian government that tenants need assistance, but our research concludes that the approach needs to be vastly different to what government has announced. The National Rental Assistance Scheme will only further legitimise and prolong the demand for advance rent, an illegal practice”. They estimate that no more than one in five tenants paying the two-year advance rent will be eligible to receive support from the government’s advance rent assistance scheme. Rather than resolving the issue, the government’s new scheme is in danger of legitimising an illegal practice that won’t fix Ghana’s housing crisis. The Ghana Rent Act of 1963 (as amended) states that a deposit of six months is the maximum that a landlord can request from a tenant. This national rental assistance scheme will embolden landlords to keep charging the two-year advance rent which is illegal in terms of the Rent Act. The Ghanaian government presents the rental assistance scheme as a way of assisting tenants struggling to pay the advance rent. In reality, it’s a scheme that is dangerous of entrenching a divisive social norm. The researchers suggested to the government to reduce labour mobility. “Young people on low incomes are especially vulnerable. They have little choice but to accept these punitive terms. As a consequence, they become saddled with enormous debts. The two year deposit is not a property bond. Unlike a rent deposit or bond in more regulated markets, the tenant does not get back this lump sum. It is two years’ worth of rent paid upfront. This means the lump sum the tenant pays freezes the payment of rent for two years. “We found that first-time renters had to save their monthly incomes for a little over nine months and regular renters for a period of seven months in order to take up the tenancy”. Our research revealed that this system has an impact on young people’s labour mobility in Ghana. This is significant considering that 21.3% and 22.5% of the unemployed population in Ghana respectively live in the Greater Accra and Ashanti Region where most jobs are concentrated. The general housing deficit in the country and the potential lock-in effect of the rent advance system make it difficult for tenants to easily move to where jobs are, even within big cities” Proponents of the rental sector say that it gives tenants flexibility to manage personal budgets, allowing them to have mobility as they search for work. But the burden of finding two years’ rent in advance results in regular tenants, in particular, remaining in their properties for around 10 years. This suggests that tenants are anything but mobile. A two-fold challenge The team of international housing academics stressed that Ghana has a two-fold housing challenge. In the absence of a functioning insurance scheme for landlords, they pass risk on to tenants. There is also inadequate provision of affordable housing in Ghana. So, demand outstrips supply and landlords can ask for, and receive, two years’ rent in advance. “The new scheme is only available to people with regular income in both formal and informal employment. Loans will be offered when employment is with a formally registered company and a salary is involved. This risks exacerbating inequality. Many will not be eligible as they make ends meet in the informal employment sector where their income streams are not typically viewed as regular. This is despite the fact that in some cases regularity can be established for informal sector employees. It could also lead to exploitation of those receiving the loans, as employers could abuse the fact that continued residence in their homes is dependent on continued employment.” A way forward The research team recommended that, Ghana needs an overhaul of its broken rental sector. Rather than a national scheme to help private landlords mitigate risk, there should be a push to work with district assemblies and chiefs who play a critical role in local governance and development. For example, chiefs are the custodians of valuable land that could be released to create low-cost housing schemes. They maintained that government can support this bottom-up approach to the housing problem by empowering District Assemblies to make housing provision a key part of their mandate while exploring innovative models to access land and finance housing development. “We believe it is by increasing the supply of rental housing that the monopoly power of private landlords who charge longer periods of advance rent can be broken”.