17th November, 2015- The Real estate developers and government have in the past few years come up with various interventions to ensure Rwandans access decent and affordable homes. These initiatives were strengthened further this year with new policies and incentives as government moves to fast-track delivery of decent homes on the market for low and middle-income earners.

Industry players say these steps will help turn around the sector, attract more investments and players and hence make it possible for Rwandans to realize their dream of acquiring homes at affordable rates. In fact, both government and private sector have increased investments into the real estate sector this year to drive this ambitious objective.

The Cabinet adopted the national housing policy in March 2015 to guide the sector and ensure that affordable houses are brought to the market targeting low and middle-income earners. Efforts toward easing access to affordable decent homes by Rwandans have been boosted by promotion of use of locally produced building materials improving the participation in planning and openness towards using local materials in construction, and equal acknowledgement of tenure rights.

The government plans are underway to further improve and strengthen the urban planning policy to encourage consistency in planning and development management. To support the sector, government issued new criteria for real estate developers to qualify for support from public funding to construct affordable homes for the lower end of the pyramid.

Under the new guidelines, government will offer basic infrastructure and land to developers, amounting to 30 per cent of the costs for the affordable housing programme.

The Minister for Infrastructure Honorable James Musoni assures that the developers can now easily access funding from banks, noting that mortgage conditions have also improved.

The introduction of long-term credit facility targeting the real estate industry meant that there would be a reduction in interest rates on mortgage loans. Real estate developers can also secure more funding with better options for down payment and applying for and acquiring building permits has also been significantly eased,” Minister Musoni points out.

The  efforts to strengthen the current housing policy are ongoing, saying it is important to support the private sector so that they are able construct more homes to satisfy the growing demand for housing.

The Minister clearly puts it out by encouraging homebuyers to save for housing and pooling resources will be part of the policy framework they are drafting. He argued that this will help Rwandans to acquire decent homes without acquiring bank loans.

The policy will also be designed in a way that it will help increase financing models accessible to Rwandans.

“We are also emphasizing the principles of quality in planning and construction of homes. We envisage a situation where land use, urban planning and housing policy directions complement each other to ensure optimal resource utilization when developing housing,” Musoni noted.

The country requires 344,068 housing units by 2020 to beable to meet the growing demand in The minister said instructions determining the conditions and procedures for obtaining government support for affordable housing projects recently adopted by the Office of the Prime Minister will play a significant role in helping cement collaboration between government and the private sector in efforts geared at bringing more houses on the market.

“It is a commitment to the financing of inner-neighborhood infrastructure from the side of the Government under set conditions. The conditions relate particularly to the profiles of beneficiaries of the housing units, to the affordability of access schemes to housing which may either look at the sales prices or affordability of financing schemes, and to resource-efficiency and local skills enhancement through collaboration with small-and-medium enterprises,” Hon.Musoni, said.

Developers say the cost of homes is high in Rwanda because most building materials, including iron sheets and cement, are imported. This challenge has also made it hard or very costly for individuals to build their houses.
In addition, different investors have unveiled alternative building solutions, a development that will help reduce the cost of construction materials and make houses more affordable. Already, two firms specializing in manufacturing of construction materials were launched a few weeks ago.

Meanwhile, the Ministry of Infrastructure designed a fund targeting urban developers and it is expected to facilitate the financial commitment to public infrastructure and project approvals once in place.

Minister Musoni says the move will allow government flexibility in approving and implementing infrastructure projects in a timely manner. This is particularly for investments that are not funded by the government.

“We are looking at ways of giving incentives to the housing sector to support developers involved in construction of houses for low-income households. Under the initiative, these people will be able to access finance through guarantees, top-up funds, and other subsidy programmes.”

A few months ago, government launched a new investment code that provides additional incentives for investors. It offers tax incentives to affordable housing developers, including preferential corporate income tax rate, and accelerated depreciation for investments in construction projects worth $1.8 million (about Rwf1.4 billion).

According to Musoni, the government is also promoting a progressing Public-Private-Partnership (PPP) scheme to implement a sustainable, “mixed-use housing neighborhood development based on a PPP model”.

Under this model, over 22,000 housing units will be developed by the private sector with the twofold strategy is designed to, firstly, trigger large-scale investment targeting affordable housing, and create competition by using identified available land. Secondly, it will help facilitate small and medium affordable housing developers through collaborative development schemes.

 Rwanda is one of the smallest countries in the world, which however has one of the highest population densities in sub-Saharan Africa. Land, especially for development, is a scarce resource. Therefore, the housing policy intends to trigger and facilitate optimal utilization of land by encouraging developers to embrace sustainable land use.

Under the second Economic Development and Poverty Reduction Strategy (EDPRS II), the government promotes sustainable green urban development to cater for increasing urban population, rising rural and urban consumption, and environmental protection.