Developing sustainable formal rental housing market in sub Saharan Africa


Shelter Afrique builds strategic partnerships and offers a host of products and services to support the efficient delivery of affordable housing and related infrastructure in sub Saharan Africa.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.

In Sub Saharan Africa access to home ownership is very much limited but despite the challenges of home ownership, most Africans still prefer to own land and build homes incrementally by themselves. However, evidence suggests that home ownership reduces mobility, produces lower densities and larger urban sprawls. Even if interest rates are low (or subsidized), households with low or irregular income just cannot afford loans from financial institutions or do not even have access to credit. Other obstacles to home ownership also include absence of clear property rights or efficient registration system. Hence rental housing is very much needed for starters and households with low or irregular income (which represent more than 75% of our populations across the continent).

The market readily provides rental housing stock for high and middle income earners. However scaling up rental housing for that market segment using still requires well formalized balanced rights for tenants and landlords, accommodation built to high standard of construction, attractive rental yields and professionalized rental property management services to offer better service to tenants.

For low-income earners, offering longer tenancies (perhaps with an index linked rent) combined with a low rent (with some subsidies from governments) would address the affordability issue, while minimum quality standards shall be required and tenants will need more protection from the landlords.

Governments could and should develop a rental legal framework defining the type of rented homes (main residence/unfurnished, etc.); it would also include the duration and termination of a rental contract (fixed term/renewal/termination); initial rent setting and rent increase regulations; required documentation (contract/inventory/notice to pay, to quit) and clear guidelines of processes for solving conflicts between owners and tenants (mediation, conciliation, arbitration). A well developed, enforceable and stable regulatory framework would make the rental market more attractive to both institutional and private investors.

There is also the need for a fair tax regulatory framework. A good tax model should include main expenses deductible, economic depreciation and losses offsetting taxes on other income and/or carried forward for a few years. There should be insurance products covering the risks of default and damages to the property as well as public guarantees for social housing finance. Giving direct subsidies to tenants has proven to be most effective. However, this entails a concrete fiscal commitment, regular update of information on beneficiaries.

Subsidies to investors may be given in several forms, including tax rebates, grants, soft loans, free or discounted land, and guarantees. This is an efficient way governments can intervene to increase the supply of housing and can act as a counter-cyclical instrument to boost economy.

Finally, it was noted that there is definitely a shortage of expertise and experience in all aspects of the rental housing sector – henceforth the urgency of building capacity as uncertainty and lack of experience will cause potentially viable schemes to stumble and stall.


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