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Time to focus on homeownership, housing policy

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HOUSING FEATURED PROMINENTLY IN HIS GOVERNMENT’S
DEVPOLS—Dr H. Kamuzu Banda

By Geoffrey M. Wawanya:

Background:

Once upon a time, Malawi used to have very good housing strategies that were the envy of many third world countries, especially those in Africa.

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Today, many of the countries that learned from us are far advanced, in terms of developments in the housing sector. They simply put ideas generated in Malawi to good use.

Those strategies were comprehensive, such that they covered both urban and rural housing areas. In fact, the government then had both an urban and rural housing section.

At that time, the government had development strategies— fondly called devpols— in which housing featured prominently. These devpols used to be reviewed periodically, such that, every five years, there was always a new set.

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Life was, indeed, good and people used to work very hard.

Under the housing strategies, there used to be housing schemes for everyone. One could be allocated a house or plot on which to build in accordance to existing building regulations. This was inclusive of even those with little income, as they were able to be allocated a traditional housing plot where building regulations were minimal.

Private sector employers developed their own housing schemes. The civil service had a robust homeownership scheme which exists even today, be it only in name. This was ably managed by the then New Building Society.

There was also a deliberate policy to subsidise the cost for first-time home buyers by reducing interest and having a 20 percent mortgage guarantee on every borrowing. The New Building Society was the established financial instrument for housing delivery. It had branches in all the three regions of the country.

Housing was, indeed, a big thing and, through these strategies, the government was able to reach out to every district of the country.

In fact the Ngwazi, Dr Hastings Kamuzu Banda, used to say that in order for development to be shown to have taken place, his people had to have three things, namely: A house that does not leak; enough food; and decent housing.

Where are these wonderful strategies? Are they gone for good or they are being reviewed? I am asking because these wonderful strategies were engineered to benefit everyone.

Housing was, indeed, a priority and major development goal.

The current situation

  1. Lack of a comprehensive housing policy

No known housing policy exists, unlike in the past when there were development policies (devpols) and strategies every five years.

Unfortunately, housing delivery systems developed in the past have become dysfunctional and there appears to be disorder in the housing sector and total lack of coordination.

Like in the land sector, the sector is riddled with chaos and corruption. For instance, one sees the ministry, local councils and the Malawi Housing Corporation building houses.

So, who would oversee the process of house building to check whether building standards are being followed?

Is the army and Malawi Police Service not capable of building for themselves?

How come they are able to execute works when awarded road construction contracts?

Then, there are individuals who construct houses on their own without any assistance from the government.

Finance mechanism

There exists no housing finance mechanism at all. Those wishing to build finance the process through the normal banking system.

The government itself abandoned the Building Society and never developed any other housing mechanism.

Prohibitive taxation system

The taxation system that exists poses major challenges to housing development. Property taxation is so exorbitant that pensioners cannot afford to live in their houses situated within a rateable area.

What went wrong?

Only one thing went a miss. This is that housing is no longer a priority for our government and this is despite several warnings from local and international experts.

The ministry’s section on housing only manages property owned or occupied by government and its employees and nothing else. This is despite that the government is for the entire country.

What needs to be done?

  • Government has to develop a comprehensive housing policy and prioritise it

The first thing is to realise that housing is the starting point of any attempt to develop the country and, as such, the government needs to have a comprehensive plan.

In simple terms, prioritise housing.

  • Revitalise dead housing schemes

Revitalise housing schemes that were already created. These include the civil service housing scheme.

The Building Society that existed then was a government institution and this enabled it to provide a 20 percent guarantee on any mortgage.

With the then Building Society disappearing, the government needed to create another entity and continue with the schemes.

It is not too late to do so. Even now, the government needs to create one.

  • Reduce tax burden

Reduce tax burden on housing, especially for the elderly.

Introduce an age bracket where an elderly person who is, say, over the age of 55, does not have to pay taxes for their residence.

  • Create a housing finance mechanism

Create an attractive sustainable financing mechanism, which would attract local participants in housing delivery.

Develop a special fund for infrastructural development, mobilising only local resources in order to meet affordability targets

*The author is a land economist and housing specialist

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