Home renting is the next big thing

Home renting has seen its biggest push in Africa in decades, as speakers at the 34th annual general meeting and symposium of Shelter Afrique -- the pan-African finance institution supporting development of affordable housing in Africa -- have called for renting options rather than focusing on home ownership in the short-term.

Speakers, including President John Dramani Mahama -- who did not undermine the value of home ownership, called on public and private real estate players to focus on providing affordable houses for rent in the short-term, rather than home ownership which should be a longer-term focus.

President Mahama called on Africans to seriously consider a mental shift toward formal housing rental systems.

“This is the way forward to managing the inevitable consequences of rapid urbanisation. Rental housing will be affordable, cheaper for many and contribute faster to reducing the housing deficit,” he said.

“The fact is many cannot own homes and this is reality, and the few who do and offer them for rent charge exorbitant prices. Rental units are therefore in short supply. Unavailability of rental units for low- and middle-income earners means that rental conditions are expensive and difficult,” the president added.

He therefore called for public private partnerships that can build more homes -- and coupled with appropriate regulations, prices can easily come down to help citizens live in respectable and comfortable homes. Figures show that 90 percent of Africans cannot afford homes or qualify for a mortgage; therefore, a shift toward renting homes can help speed up reductions in the high housing deficit on the continent.

While Ghana’s housing deficit stands at 1.7million, Nigeria needs to annually build 17million housing units to be able to meet its deficit target. Meanwhile, developed economies such as the USA, Germany and the Asian powerhouses are not pushing for home ownership as aggressively as how Africans are.

In Berlin, Germany, the rental property share is an incredible 90 percent of the total residential market, which obviously drives down prices; even in prosperous Hamburg, the rental market is nearly 80 percent. But in other states like Saarland and Rhineland-Palatinate, homeownership is almost 60 percent -- the highest in Germany.

Managing Director of Shelter Afrique, James Mugerwa, said rental is a viable and legitimate option for providing affordable housing.

He noted that even though it is solidly anchored in Africa’s culture and aspirations to ultimately own a home, the truth is not many can own their own homes. “So rental is here to stay, and we have to take it seriously as a possible alternate solution to alleviating the housing challenge. It is time for us to look at new ways of addressing the housing challenge, and we believe that rental is a solution to this challenge.”

He added that rental has its benefits, including more flexibility and freedom from the responsibility of additional costs such as maintenance.

Despite all these benefits, he however pointed out some challenges that can be solved to make rental cheap and easily accessible.

“Most of the rental structures across Africa are prevalently in the informal sector. We have not been able to create a more enabling environment in terms of legal, fiscal and other arrangements required to create a favourable environment for rental housing.

“We acknowledge all these limits, but we are confident rented houses can work. It does not take away the dream of striving to own a home. But somewhere along the way to owning a house, we have all lived in a rented facility,” he added.

Focusing on renting and its benefits, the five-day symposium will see speakers discuss challenges facing rental and how those challenges can be solved to help reduce the huge deficit on the continent.

Since Ghana joined Shelter Afrique in 2011, the continental institution has supported projects to the tune of US$44million and is currently considering an additional US$27million. Ghana Homes Loans, Fidelity Bank, uniBank, Rehoboth Properties, Emerald Properties and several others are some of the private sector beneficiaries.