Background and Idea Behind the Scheme
Traditionally, housing supply in Ghana has been primarily private-sector driven, through individual household self-build or self-managed approaches, or corporate developers producing for sale on the open market. This approach has predominantly targeted home ownership with a marginal fraction targeting rental housing. On the other hand, there have been instances where some public sector housing delivered through public housing agencies such as State Housing Company Limited and TDC Development Company Limited have been retained for rental accommodation.
Overtime, limited land supply, cost of capital, rising cost of building materials, dependence on high-priced imported building materials, displacement of residential functions for commercial land uses, and poor investment in infrastructure supply among others, have all contributed to substantially drive up the cost of housing developments, limiting the supply of housing while outpricing a significant section of the populace.
These challenging housing conditions have resulted in significant housing deficits that are affordable and decent to ordinary Ghanaians. A by-product of the housing deficit is what is commonly known as ‘Rent Advance’, high multi-year rent advance payments demanded by landlords as a condition of offering tenancy. Often prospective tenants, burdened by this financial requisite to rent do procure loans at exorbitant interest rates or use more than 30 percent of their household income to enable them to access the desired rental accommodation, making them not affordable.
The Fulfilment of a Pledge – NRAS
In view of this, the governing New Patriotic Party in its 2020 manifesto, page 157 promised, that; “To address the short-to-medium term market failures in the renter-segment of the housing market, the next NPP Government will establish a National Rental Assistance Scheme (NRAS). In partnership with the private sector, the Scheme will provide low-interest loans to eligible Ghanaians to enable them pay rent advance.” In fulfilment of this pledge, the Government of Ghana, through the Vice President, H. E. Dr. Mahamadu Bawumia, launched the National Rental Assistance Scheme (NRAS) on 31st January, 2023, to address the age-long rent advance problem, instituting an innovative solution to enable eligible Ghanaians pay rent on a monthly basis.
How the Scheme Works
The Scheme positions itself as the bridge entity between landlords and tenants to satisfy the interest of both parties and effectively minimise the risk exposure and financial exposure for both parties. Applicants are expected to self-identify a property of their preference and notify the Scheme through a formal application process. After the application has been reviewed and approved, the Scheme Manager assesses the property and concludes all negotiations with the landlord, rents, makes the full rent payment to landlord and sublets the rented property back to the applicant.
Expected Impact of the Scheme
With the introduction of the NRAS, the undue burden of rent advance payments has been lifted off the shoulders of all citizens who patronise the Scheme. This ultimately increases their affordability as 30% of their monthly income is all that is needed to continue the rental agreement into perpetuity. Ultimately, the gains achieved through the implementation of this policy will complement government efforts at achieving Target 1 of the Sustainable Development Goal 11 which seeks to ensure access to adequate, safe and affordable housing and basic services by 2030.
The Government is committed to ensuring that every eligible Ghanaian can access The Scheme when needed. Accordingly, apart from the initial seed capital, government has assured of its commitment to making annual budgetary allocations to support the expansion of the programme to all sixteen (16) regions of the country.
The Scheme has been designed for individuals with a reliable and verifiable source of income from the public and private sectors as well as self-employed individuals.
To be eligible for the Scheme, the applicant must show proof of the following minimum criteria:
1. Be a Ghanaian
2. Possess a valid Ghana Card
3. Must be an adult of eighteen (18) years and above
4. Verifiable employment and earned income
5. Must have a verifiable bank statement or mobile money statement
6. Rent payable must not exceed 30 percent of the household income
A Year After Implementation
The Scheme enrols an average of one hundred and twenty (120) beneficiaries across the six regions monthly. In its latest monthly reporting, The Scheme announced enrolling a total of One Thousand, Four Hundred and Ninety Two (1,492) total beneficiaries as of January 31st 2024. With an average monthly rent of five hundred cedis a month per beneficiary; renting for two (2) years, government has disbursed approximately Nineteen million Ghana Cedis (19,000,000) to landlords of scheme beneficiaries. It is worth noting that to date, beneficiaries of the scheme have all abided by the terms of their agreement with the Scheme and have all made and continue to make the expected monthly repayments to the scheme; recording a 100% repayment thus far.
As of January 31, 2024, the beneficiary distribution across the 6 operational regions’ indicate a notable prevalence of rent advance payment issues in urban areas, particularly in Accra and Kumasi. The figures are as follows: Accra – 903, Kumasi – 257, Takoradi – 160, Techiman – 147, Koforidua – 16, and Tamale – 9.
The National Rental Assistance Scheme seeks to specifically address the age-long challenge of rent advance payments in the rental housing space. Its essence is therefore not to address all challenges of the housing market in Ghana, nor is it a solution to eliminate the housing deficit of the country. As governments past and present continue to institute policies to address other challenges in this housing sector, the current administration, through an already existing rental process of ‘renting and subletting’ has instituted the National Rental Assistance Scheme that by all measures is tackling and eliminating the need for rent advance.
A bridge solution as the National Rental Assistance Scheme is, it satisfies the requirements of landlords, property managers and tenants alike, and does not burden Government excessively while also eliminating a national burden as rent advance payment is to its citizens. Truly, The National Rental Assistance Scheme must be commended and expanded to benefit all those who qualify as rent advance affects Ghanaians of all ethnicity, educational background, sex, political affiliation and religion.
As a novel initiative, it has emerged as a viable solution to Ghana’s rental housing challenge. As we mark the first anniversary since its inception, let’s seize this occasion to enhance the successes attained thus far and strive to broaden its reach, ensuring that a greater number of deserving Ghanaians can benefit.
About the Writer
The writer, Francis Asenso-Boakye is a public servant currently serving as the Minister for Works and Housing and Member of Parliament for the Bantama constituency. With over twenty-five (25) years of experience in development planning, project management, and policy formulation, he leads the initiation, formulation, and implementation of policies, projects, and programmes in the works and housing sector to promote national development.