The Zambia Institute of Estate Agents (ZIEA) has called on sector players to come up with innovations like ‘rent-to-own’ that will help citizens own property given the failure of the traditional mortgage system to benefit ordinary Zambians.
ZIEA president Bryan Mushota has also noted that the country’s housing deficit, currently standing between 1.5 and two million, will only be narrowed after at least three decades.
In an interview, Mushota observed that the failure of the traditional mortgage system could be attributed to the high interest rates on loan facilities obtaining in the country.
“So, it’s not for us to really come up with actual products to offer people the loans, but what we can do is to attract investors into the real estate market who can come up with schemes like ‘rent-to-own’ whereby the rent you are paying is going towards the ownership of the house. So, when you are paying rent over a number of years, it will become your property. So, those are the schemes that might work because the traditional mortgage system has failed because of the interest rates in Zambia. Because even today, the Monetary Policy Rate has gone up, meaning that even the lending rates are going to go up! So, traditional mortgages are expensive; there has to be deliberate innovation from players to see how best the final consumer can be cushioned from the high interest rates, which the traditional lending institutions are offering,” Mushota said.
“People might argue, but there are a lot of houses, which are empty with no tenants coming. Those houses, which are empty, and not taken up, have saturated a certain segment of the market which is a high-cost market and cannot take anymore. But the market which is sustainable and can offer developers profit is the affordable housing market. The majority of Zambians, I would say about 80 per cent, if you take, for example, house rentals, up to say about K5,000 is what maybe 80 per cent of Zambians can afford, anything more than that, you are looking at a small 20 per cent of the Zambian population.”
He, however, expressed optimism at the provision in the new Employment Act that calls on employees to provide accommodation for employees as “this would help more employees in the country own property”.
“And the good thing that has happened is that the government, under the new Employment Act, they are prescribing that employers provide accommodation for their employees. One of the ways that employers can empower employees is by giving them access to houses, which will eventually become theirs. So instead of paying the rent to accommodate these employees, this money can go towards a mortgage, whether commercially or through other ‘rent-to-own’ schemes. The housing deficit at the moment, according to the Ministry of Infrastructure and Housing Development, at around 1.5 and 2 million, but we should get more accurate data; we hope it hasn’t risen. So, even if you build 500 houses or 1,000 houses, for you to fill up two million housing units will take decades, two, three, four decades! And by 2050, it is expected that our population will triple,” said Mushota.