The ever-rising price of land in addition to other factors including high-interest rates charged on bank loans lead to an increase in the costs of houses, real estate developers told lawmakers on Tuesday, May 23. This was during a session with the Committee on Land, Agriculture, Livestock, and Environment. The session was looking at impediments to the affordable housing programme. ALSO READ: Are affordable housing projects viable in Rwanda? The head of Riverside City Estate Gahanga – a real estate development firm based in Kicukiro District – Andre Mutaganda, said that, overall, real estate developers are confronted with two major challenges – expensive land and high-interest rates on bank loans, which he indicated average 16 and 18 per cent per year. “In fact, the person who sells land gets more profit than the person who has built a house [and sells it],” he told members of Parliament, adding that this can discourage real estate developers as the return on investment is low. For instance, he said, a plot of land with 360 square metres (20 meters to 18 meters) cost Rwf15 million in Gahanga, noting that “land is the most expensive component in construction.” He said that the house buyer, under the Government’s affordable housing scheme, gets it on credit charged at an 11 per cent interest rate, while the developer is charged 16 and 18 per cent on a loan used to construct the house. “As of now, the interest rate for us developers is still high,” he said, appealing to lawmakers to do advocacy for developers so that they can get low-interest loans and affordable land. MP Jean Pierre Hindura said that developers should adopt a vertical housing model – storeyed buildings in the form of apartments that can accommodate many families – in line with the strategy of efficient land use and minimizing costs. ALSO READ: Kimironko has most expensive land-report Regarding the concern about high-interest rates, Hindura said that advocacy is needed to lower them too to at least 11 per cent as is the case for affordable house buyers. ALSO READ: Senators call for cheaper loans, better financial services Government subsidy matters Mutaganda told lawmakers that he ventured into constructing affordable houses sold in the range of Rwf35 million to Rwf40 million, per unit, which are eligible for the subsidy under the Government’s affordable housing scheme managed by the Development Bank of Rwanda (BRD). The subsidy includes covering the cost of infrastructure such as access roads, electricity and water for the investors, with a view to lower the cost of the houses. In phase one of his project, he said, about six months ago, he finished building 87 (stand-alone) houses, each priced at Rwf35 million, in Gahanga, Kicukiro District. Each of the houses, he explained, consists of three bedrooms, including a principal room (of 3.5 metres to four metres) – with facilities including [an in-built] bath and toilet – a sitting room, a dining room, and a kitchen. However, he said, such a house would cost Rwf47 million if the Government had not provided subsidies on infrastructure including access roads, water, and electricity, under its affordable housing scheme. The legal advisor of Millennium Savings and Investment Cooperative, Englebert Karemera, in Kabuga, Kicukiro District, through its company Abadahigwa ku Ntego, said that Government subsidy was critical to making such initiatives a reality. According to the business plan of 2021, he said, the Rwanda Housing Authority was requested to invest more than Rwf800 million in supporting infrastructure – including water, electricity, and roads – adding that the entity was still waiting for such funding to implement the project. “If we embarked on the project alone, it would not be affordable houses. Instead, we would sell at our own prices,” he said, underscoring the need for financial support from the Government.