Rental Housing in Africa: Opportunities and Challenges

shelter-afrique-builds
Rental Housing in Africa: Opportunities and ChallengesRental Housing in Africa: Opportunities and Challenges

Shelter Afrique is the only pan-African finance institution that exclusively supports the development of the housing in Africa. Therefore our work has a direct and positive impact on the lives of many of our people.

Being a creation of 44 African Governments, the African Development Bank (AfDB) and the Africa Reinsurance Company, Shelter Afrique builds strategic partnerships and offers a host of products and services to support the efficient delivery of affordable housing and related infrastructure.These include project finance, institutional lending, equity investments and joint ventures, trade finance and social housing. We also offer practical advice and technical assistance to a wide range of industry stakeholders.

Urbanization and slum formation are intertwined in a context of mal-functioning housing sector and increasing demand for decent housing. Rental housing is thus an important component that cannot be ignored in finding a solution to housing in Africa.

Over 2 billion new urban residents are created annually and there is an annual increment of 35.1 million households. This points to a very crucial implication for housing supply and policies. The right to adequate housing centers around the following criteria:  Security of tenure (and protection from forced eviction!), Availability of services, Materials, Facilities and infrastructure, Location, Habitability, Affordability, Accessibility, Cultural adequacy. With over 40% of Africa’s population living in the urban area and over 51% of urban dwellers living in the slum, there is an urgent need for housing policy intervention which can only be realized through good governance systems with the rule of law and clear housing regulations.

In understanding the housing market in general, it is important to note that the supply and demand and the behavior of sellers, buyers, producers, consumers and government policies will determine prices. While supply is affected by availability of land, infrastructure, building materials, organization, building industry, skilled & productive labor, self-reliance BM production and urban planning, demand is affected by demographic conditions, rate of urbanization, rate of new household formation, property rights regime, housing finance, fiscal policies, subsidies, macro-economic conditions. It is therefore imperative for governments to:

  1. Promote the full and progressive realization of the right to adequate housing as defined in the Habitat Agenda and international instruments;
  2. Note that adequate housing for all and cities free of slums can only be achieved if housing reforms are carried out and housing policies are synchronized with urban policies to bring solutions to scale in a planned urbanization, delivering a wide range of affordable housing opportunities in size, standard, typology, price, location and tenure modalities;
  3. Develop policies which must address critical bottlenecks hindering the housing sector to perform its role in economic development & poverty reduction with well-informed and evidence-based housing policies, and
  4. Establish mechanisms and apply instruments to monitor housing sector performance and housing policy outcomes in order to get the best out of housing.

In Africa, the housing sector faces serious bottlenecks in terms of availability of affordable finance, scarcity of serviced land and high price-to-income ratios. Due to scarcity of affordable housing in Africa, people resort to informal settlements, informal rental accommodation propelling practices of subletting and overcrowding.

Other key constraints facing the housing sector in Africa include: inadequate information/market data, lack of evidence-based policies, legal and regulatory frameworks, poor documentation and registration of property rights, subsidies and macro-economic policies, shortage of land for housing, shortcomings in infrastructure provision, high construction costs and poor institutional and human resources capacity to manage the housing sector and allow for policy intervention.

Sustainable homeownership for all is neither financially and fiscally possible, nor desirable for all household groups and life-cycle stages.  Thus for the future, rental housing offers a window for housing affordability and a place in the equation of improving housing conditions for urban Africans. To realize this goal, different types of incentives need to be developed for providers and consumers (for e.g. combining land supply, income-related support, financing models). Institutional management solutions for proper management and maintenance of the rental stock also need great attention.

This calls for cooperation between the government and the private sector in developing concrete guidelines that would promote the rental housing market in the continent.

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here