CONTEXT FOR REFORM
- Ghana has a serious housing problem caused by: rapid and unplanned urbanisation, poor housing and planning systems, poor buildings, unaffordable houses, limited access to credit, and undersupply of decent and affordable houses. Example, house prices in Accra are far expensive than similar houses in London using purchasing power parity or minimum wage levels.
- This is leading to a system of social apartheid and has major negative impact on productivity, health, social mobility and inclusion, general well being and economic growth
- Sadly, successive government responses have been hasty, patchy, short term focus, skewed towards higher income classes and non-holistic.
- Housing, therefore, has to be seen as critical national infrastructure with economic and social value. It should be seen as more than an individual financial investment.
- To broaden access to homeownership, create diverse pathways to homeownership and home living, ensure decent and acceptable standard of housing, promote social inclusion and integration.
- Tackle both supply (new funding avenues for developers, roping in players into housing development and management, and reforming city planning, development and building regulations) and demand side factors (widening opportunities for people to own their homes and live in decent, acceptable homes)
Create sustainable sources of finance for the housing industry
- Make the National Investment Bank (in the absence of the defunct Bank for Housing and Construction) the lead lender to the housing sector and capitalise it to fulfil its functions. This is similar to the Nordic Investment Bank and Germany’s Kreditanstalt Fur Wiederafbau (created in 1948).
- NIB will provide credit and mortgage insurance to mortgage agencies to keep the market liquid and stable, and expand opportunities for affordable homeownership. This will be similar to functions performed by Fannie Mae and Freddie Mac (USA) and the Canadian Mortgage and Housing Corporation
- Government to provide loan guarantees for developers who are sound, well managed and follow best practices in housing development and management
- Government will sign Service Level Agreements (SLA) with developers whom it guarantees loans or lend regarding acceptable housing standards and types, profit margins, secondary infrastructure access (water, electricity, waste management)
Land release and acquisition
- Government to help developers to negotiate and acquire lands from traditional authorities
- Government to release unused lands to developers. Acquire equity stakes in such developments with the intention to divest those stakes gradually and reinvest in future developments.
- Government will sign SLA with developers it helped or have equity stakes.
City planning and decongestion
- Implement decongestion strategies to create sustainable housing system: re-distribute and re-locate state agencies outside Accra; incentivise firms to re-locate or establish outside Accra and Kumasi
- Create new mixed townships in cities
- Improve transport linkages among cities and within cities to ease commuting and encourage migration to such developments
- Spread access to utilities to new township and development to encourage migration to these areas
- Decongest green areas and create green zones around cities to beautify and sustain the environment
Encourage new players into housing development and management
- Encourage churches, charities, cooperatives and social enterprises into housing development and management.
- Help these new players to access finance through NIB, state loan guarantees for commercial funding and loans etc
- Government deals with these developers to encourage and implement different pathways to housing (rentals, equity stakes, full ownerships)
Expand access to credit
- Create a National Mortgage Agency (NMA) and encourage SSNIT to invest in it. NMA will be operationally independent from government and follow sound and sustainable financial and business practices. The strategic aim of the NMA will be to increase access to credit for homeownership
- Encourage exiting mortgage agencies to increase access to credit by guaranteeing commercial loans for them
- Help professional associations (GNAT, TUC, GMA etc) to go negotiate and agree deals with NMA and other mortgage agencies to give affordable credit to members
Regulating & reforming planning system
- State Housing Company (SHC) to be trust holder of government equity stakes in housing development and housing standards regulator
- SHC to divest itself from housing development into an enabler, broker, regulator and holding trust.
- SHC will be the state housing think tank responsible for housing needs analysis, data, performance, quality assurance, research and information on the housing sector
- SHC to sell existing housing stock to tenants or social enterprise. Negotiated gradual payment schemes will be used. A social enterprise can acquire some of the stock and manage it.
- New laws and standards on acceptable decency home levels (room sizes, space), buildings materials, health and safety etc
Create diverse pathways to home-ownership and living
- Encourage new ways of home-ownerships. Example, tenants acquiring equity stakes in homes with intention of acquiring full ownership later (incremental ownership). Under this scheme the mortgage agency, housing developer or management company will own the remaining share that has not been acquired by the tenant and charge the tenant rent on it until the tenant fully acquires all the shares (full equity)
- Rent regulator function to be performed by SHC.
- Rent regulator to agree fair ceilings for rents, enforce housing standards in the rental market, and promote rights and responsibilities of renters and landlords. Regulator will have power to sanction those who beach its regulations.
Encourage regional and district level involvement in housing
- Help regional and district authorities to negotiate with developers using national standards and regulations to build in their local area
- Regional and district authorities to negotiate with landlords and regulator (SHC) regarding rental ceilings in their area taking into account local needs, cost of living and economic activity