There should be cause for rejoicing among real estate dealers and Rwandans dreaming of owning houses following the Prime Minister’s Office move to amend the new mortgage law.
Patrick Nzirabatinyi, the Legal Advisor of Cogebanque said that the Economic and Social Council in the Prime Minister’s Office made amendments to the new mortgage law following a bankers’ petition.
“We held a few meeting with them (Prime Minister’s Office) and they took our concern. They have made a few changes which we think will be pivotal in the sector’s growth,” he said.
Real estate dealers had earlier expressed fears that the new law that had been passed and officially gazetted without consultation to stakeholders would harm the entire sector.
The law stipulated that a mortgagee shall raise 70 percent of the mortgage value while the bank shall finance up to 30 percent.
According to Nathan Lyod, CEO of DN International, this was scaring away Rwandans who dream of owning houses through mortgages, which is the primary source of financing in the construction sector.
“A few Rwandans can afford the 70 percent value of the mortgage,” he said.
Charles Haba, the Managing Director of Amani Holdings, a brokerage firm also said that the new procurement procedure limits financing for further development.
However, Nzirabatinyi, who also chairs the Bankers’ Association of Rwanda (BAR), said that the amendments guarantee banks or mortgage financiers to determine the appropriate percentage the mortgagee shall raise on the mortgage.
“There are also changes in the clause that called for revision of the contract entered before the new law,” he said referring to Article 26 of the new law, which says that all mortgages entered into prior to this law shall remain valid for only two years, after which the new law shall be applicable.
Nzirabatinyi added that these were some of the amendments that were forwarded to cabinet and parliament respectively for approval before gazetting it again.
“We expect the approval process to be fast in order to have it gazetted as soon as possible.”
The development comes a time when there are only four banks in the country financing mortgages, whose demand exceeds the supply.