Access to housing has been on the sustainable development agenda at the global level. It has also been pictured among the key factors for promoting inclusive urban development, which embody the right to inhabit well for all urban dwellers.
To promote this right, adherents of the rights to the city have largely reiterated the urgent need for the real estate agencies, government and municipal leaders to advance the habitability of the urban space through the inclusive approach of housing development schemes providing affordable houses for the low-income urban dwellers.
Following this claim, the provision of affordable housing has been the essence of many contemporary urban re-development schemes in various world cities.
The housing science defines an ‘affordable house " as housing units that are affordable by a certain section of society whose income is below the median household income.
In Kigali according to Statistics from The National Institute of Statistics, around 54 per cent of inhabitants are low-income people who earn between $38.0 and $225 per month.
Around 13 per cent of them earn less than $38 per month.
The middle-income group represents 21 per cent of inhabitants whose monthly incomes range between $225 and $678.
Generally, the housing market has largely targeted high-income households, which represent less than 12 per cent of all urban dwellers. They earn more than $678.0 and can afford housing prices which are greater than the purchasing capacities of other categories of urban dwellers. Access to decent houses has therefore been a pressing issue for the poor, low- and middle-income people in the city. As a consequence, most of the Kigali city inhabitants who cannot afford formal housing prices have informally self-developed their dwellings in unplanned areas, which occupy the majority (60%) of residential neighborhoods in the city.
However, this trend of informal settlements’ development is highly discouraged by the current urban development regulations. Recent studies mention that there is a dire need to produce 20,000 housing units every year to subvert to the current needs for decent housing in Kigali city To promote access to decent housing in this city, the government of Rwanda encourages real estate agencies to invest in low-cost housing units which are affordable for low- and middle-income urban dwellers, through different incentives In this perspective, the law n◦ 06/2015 related to the investment promotion and facilitation in Rwanda entitles apreferential corporate income tax rate of zero per cent (0%) to real estate agencies whose investment capital is equal to or greater than $10,000,000.
In addition, the Government of Rwanda established an affordable housing fund within the commercial banks which entitle both affordable housing developers and buyers to apply for the low interest rates and bank loans.
Strategies to promote housing affordability in Kigali city
Access through private low-cost rental housing
Kigali city authorities and the Government of Rwanda should set up housing schemes that facilitate the development of a large number of housing units that Kigali city dwellers can access through long-term rent. This approach is largely applied in many countries that support the rental housing development project and therefore promote long rental tenancies for poor and low-income groups who are unable to own their dwellings due to limited financial resources. For instance, various European countries have housing development regulations which require real estate. developers to reserve at least 20% of the zoned for residential land for low-cost houses that can be rented by the poor and low-income people.
This should be a government choice, by making it mandatory or voluntary for real estate developers, with respect to existing housing policy or affordable housing schemes.
Progressive housing ownership through rent-to-own
The rent-to-own option is among the other practical alternatives for low-income households whose financial resources are very limited and do not allow them to directly purchase their own houses through a down-payment.
It is applied to enhance access to housing for a large number of households, within the limits of their employment contracts or incomes, which are the main conditions for rent payment, it may be introduced in Kigali city through public housing funding schemes.
This housing scheme is also encouraged by the Rwandan national housing policy which highlights the crucial role of the government in supporting the housing market to foster access to housing for all income groups, with specific consideration of the lowest income earners.
However, the introduction of the rent-to-own approach requires the revision of the current affordable housing loan schemes, so that real estate developers may be granted long-term loans at low interest rates, since it will also take a long time for the buyers to cover the total cost of the house.
Decreasing housing costs and change in investment strategies
RSSB, which is the main actor in real estate development, and its partner known as Ultimate Developers Ltd (UDL), should start developing affordable and non-luxury houses instead of planning for housing projects whose prices are out of reach for most Rwandans. Based on data collected from their offices, the prices of some of their houses are set as follows: $71,600 for a two-bedroom apartment, $107,600 for a three-bedroom apartment, $208,600 for a three-bedroom apartment, and $226,460 for a four-bedroom apartment. RSSB decreasing housing price through usage of local construction materials and using low-cost housing strategies will boost the housing affordability in the city of Kigali.
Taxation
Statistics show that agencies in the development of housing affordability meet a tax levy of about 14.80 per cent of the total project in the housing cost.
Similarly, the Word Bank mentions that a value-added tax of 15 per cent is included in the housing cost. However, the tax exemption may raise debate. Still, it could be discussed from the perspective of a win-lose or lose-win approach, asserting that one can attain the desired positive outcomes at the expense of the other interests in order to solve crucial social problems.
In this context decision-makers in Rwanda may choose the lose-win approach, through tax exemption, in order to achieve the national goals of inclusive urban development and promoting access to housing for all categories of Rwandans, as stated in the current urbanisation and housing policies.
In brief, meeting the growing need for affordable housing is one of the biggest challenges in both developed and developing countries. However, better housing policy has the potential to improve the efficiency of local housing markets, create more homes in high opportunity locations, and provide financial relief to low-income families and also It represents a way to gain substantial payoffs for people and a way to tackle big challenges in Rwanda.
The writer is a construction technician with an advanced diploma in civil engineering and specialization in Construction Technology.
shaksshyaka33@gmail.com