Govt mulls direct investment in low-cost housing projects

The government is exploring the possibility of directly investing in a social rental housing programme to provide affordable accommodation for individuals earning up to Rwf200,000 per month, according to Infrastructure Minister Ernest Nsabimana. During a session with the Lower House's Committee on Land, Agriculture, Livestock, and Environment on Wednesday, May 24, Minister Nsabimana revealed that a feasibility study on the implementation of the programme and the government's involvement in it is expected to be completed by August this year. ALSO READ: How will Rwanda meet up to 5.5m housing units demand? Social rental housing refers to the provision of affordable or subsidized rental housing, offered below market rents—generally not exceeding 30% of a tenant's gross income—by entities such as the government. This initiative aims to assist individuals who are unable to find suitable accommodation in the private rental market. Minister Nsabimana highlighted that Rwanda is drawing inspiration from countries like South Korea and Singapore, which have successfully implemented social housing schemes, providing housing to a significant number of people with government support. In addition, the government plans to prioritize the construction of affordable houses for individuals earning between Rwf200,000 and Rwf1.2 million, aiming to improve access to housing. This decision comes in response to the limited availability of affordable housing options that low-income earners can afford. For instance, Noel Nsanzineza, Acting Director General of Rwanda Housing Authority, revealed that the original target of constructing 15,000 affordable housing units between 2017 and 2024 may not be met. Instead, it is projected that only around 5,700 units, or 38%, will be realized due to ongoing projects. Minister Nsabimana emphasized that through the social rental housing scheme, individuals earning as little as Rwf60,000 or Rwf100,000 per month can access low-cost accommodation, thanks to government investments. Furthermore, the government is exploring options such as constructing residential houses near areas with a high concentration of job opportunities to reduce transportation costs. An example cited was the Kigali Special Economic Zone in Masoro, which employs many individuals. The Case for Social and Affordable Housing According to Minister Nsabimana, Rwanda's urbanization plans project that by 2050, 70% of Rwandans will be living in urban areas, necessitating over 2.1 million houses. The majority of these houses, approximately 70%, will be needed by small and middle-income earners, requiring special measures to provide them with suitable accommodation and prevent the proliferation of slums or unplanned settlements. He stated that 50.8% of Rwandans are low-income earners, with monthly incomes ranging from Rwf0 (unemployed or no income) to Rwf200,000. Additionally, 46.5% fall into the middle-income bracket, earning between Rwf200,000 and Rwf1.2 million per month, while the remaining 2.7% earn Rwf1.2 million and above, indicating relatively higher income levels. ALSO READ: How Government can stimulate Kigali’s affordable housing market Nsabimana emphasized that social rental housing should cater to individuals earning up to Rwf200,000 per month. Those earning between Rwf200,000 and Rwf1.2 million can be accommodated through the affordable housing category. Meanwhile, individuals earning Rwf1.2 million or more have the means to acquire houses at market value through bank loans or personal funds. Based on the UN Habitat and World Bank's definition of affordable housing, Nsabimana explained that an affordable house should require spending up to 30% of one's monthly income on rent or mortgage payments. Rwanda's affordable housing policy states that an affordable house should not exceed Rwf40 million or Rwf50 million with payment spread over a 15 to 20-year period. However, individuals earning up to Rwf200,000 per month cannot afford such houses, which is why the government is considering the social housing initiative. We need to devise special strategies, particularly for the first category, which represents 50.8% of the population with income ranges from Rwf0 to Rwf200,000, and the second category, which represents the majority, Nsabimana emphasized. ALSO READ: Developers: Cost of borrowing, land responsible for high housing prices MP Clarisse Imaniriho raised concerns from real estate investors regarding the high cost of loans (approximately 17%) and land, which contribute to escalating house prices. She sought information on the government's actions to address this issue. Nsabimana acknowledged that as urbanization progresses, the cost of land increases too. In response, the government is acquiring plots for its land bank reserve to mitigate this impact. Additionally, the government plans to collaborate with investors to secure low-interest loans, such as 1%, from international financiers and countries, fostering investment in affordable housing schemes.

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Govt mulls direct investment in low-cost housing projects