Tanzanian leading real estate developer introduced a new pay for houses scheme
The National Housing Corporation of Tanzania a leading real estate development and management firm mandated under the Ministry of Lands, Housing and Settlements Development has launched a new scheme which allows its clients to pay for the houses purchased while living in their own homes.
Dar es Salaam, Tanzania December 2016, The National Housing Corporation of Tanzania a leading real estate development and management firm mandated under the Ministry of Lands, Housing and Settlements Development has launched a new scheme which allows its clients to pay for the houses purchased while living in their own homes.
Known as “Tenant Purchase Scheme”. The scheme allows Tenants to purchase NHC houses directly through a long-term payment plan. Whereby the tenant pays a monthly instalment for a period of 120 months. With the house handed over to purchaser after completion of all requirements, with the client being given their housing unit title deed after completion of the final payment.
The prime objective of the Tenant Purchase Scheme is to provide an easy and long-term access to home ownership for institutions and households that are not otherwise able to either raise enough funds for outright purchase of housing or who might not qualify for traditional mortgage finance.
The projects under this scheme include: Geita (Bombambili, Chato), Katavi (Ilembo, Inyonga), Dodoma (Kongwa), Ruvuma (Mkuzo), Kigoma (Mlole), Babati (Mrara), Singida (Unyankumi), Kagera (Muleba), Tabora (Uyui, Igunga) Arusha (Longido), Morogoro (Mvomero), Shinyanga (Bukondamoyo), Njombe (Makete), Mara (Buhare), Mtwara (Masasi), Mbeya (Mbarali) na Mkinga Tanga.
This tenant purchase scheme has been operational since November 1st 2016.
Within the tenant purchase scheme applicants will have the chance to select a house of their choice, according to the type and number of bedrooms, region or location. With the main financial criteria features of the scheme being: The applicant should have an average monthly income of at least Tshs 500,000 (230 USD), Deposit a minimum of 25% of the house purchase price, Interest rate of 15% charged on the outstanding balance, Maximum repayment of 10 years (120 months), Life assurance cover of 1% of the house purchase price; paid annually in advance based on the loan balance and a provision of insurance cover of 0.077% charged on the house purchase price. With the following domestic financial institutions partnering in the tenant purchase scheme: Azania Bank, NMB Plc, NBC Bank, Exim Bank, Bank of Africa (BOA), Commercial Bank of Africa (CBA), KCB Bank, Bank ABC, CRDB Bank Plc and DCB Commercial Bank Plc.
Following completion of this strategic plan the NHC Management has developed another ten years Strategic Plan for the period from 2015/6 to 2024/25. Under this new plan, the National Housing Corporation is planning to develop a minimum of 30,000 units for sale and lease by 2025. Out of these 12,000 units are affordable housing, 13,500 are middle-income units and 2,700 are high-end units, and 1,800 commercial units. The affordable housing prices for this scheme ranges from Tshs 29,000,000 (13,387 USD) to Tshs 49,000,000 (22,634 USD) VAT Exclusive. With house prices differing depending on the house size and location.
NHC has managed to build affordable houses almost in all regions, to enable low-income earners to own their own houses that cannot raise enough funds to build or purchase their own homes. In addition to which it is expected that the construction of the affordable houses will have significant multiplier effects benefiting economic development for the areas where projects are established. Which will create employment (direct & indirect) and hence help raise welfare and quality of life standards for these communities as a whole.
Following the existing and increasing demand in housing, given the current housing deficit of 3,000,000 units with an annual growth in demand of 200,000 units. Coupled with the annual growth in demand and the urban population growth; offer a major growth opportunity for the national economy.
Concomitant with these trends NHC intends to increase the housing sector contribution to GDP by some 4% within five years time. With the Tanzanian Government redirecting the NHC to broaden its operations and expecting NHC, to focus on balancing their the real estate portfolios so as to move from predominant real estate management business and to put more emphasis on real estate development. Whilst also placing a greater emphasis on providing and facilitating the provision of quality housing and other buildings for use by the general public all while operating within sound commercial principles.
Principally this approach will consist of: promoting home ownership by taking advantage of the Mortgage Financing (Special Provisions) Act and the Unit Titles Act of 2008 which have been recently enacted. Building affordable houses for the low-income group countrywide. Taking advantage of its wealth (properties that are strategically located) so as to operate commercially and alleviate housing problems. As well as striving to partner with private investors (under PPP arrangement) in undertaking large-scale investment projects while ensuring that public interests are safeguarded. It is thus expected that the growth of the Tanzanian housing sector will increase by an average rate of 30% to 50% per annum over the next 20 years provided that sufficient structured housing finance is in place.