Dar Es Salaam — The local real estate industry is up for huge reshuffles as government contemplates ending the country's housing nightmare, particularly in urban areas where shelter has become one of the most expensive items in life.

The National Housing Corporation (NHC), the public real estate giant, has to change the way it operates to enable it produce many affordable homes for Tanzanians, says the Minister for Lands, Housing and Human Settlements Development, Mr John Chiligati.

Mr Chiligati revealed last week that in just few months to come, all commercial banks in the country would start giving long term low interest loans of between 10 and 20 years for purchase of houses.

The Tanzania Mortgage Refinancing Company that the government will form in partnership with the World Bank will facilitate the envisaged issuance of soft loans, said the minister, noting that the World Bank has already released 52bn/- for the purpose.

Mr Chiligati was speaking during the launching ceremony of the NHC Board of Directors when he said that some banks have shown interest to buy shares of the company that will be availing commercial banks with money to lend to their customers.

Commercial Bank of Africa (CBA) started giving housing loans in 2007, emulated by other banks but the current demand overshadows the supply, making house rents and buying prices untouchable by the majority citizens.

CBA last week announced the extension of the repayment period for housing mortgage loans from 15 to 20 years to ease the burden of repayment on borrowers.

It also introduced Equity Release, a new product that enables Tanzanians with houses or owning shares in various companies to use them as security against cash loans from the bank.

CBA's Head of Retail Banking David Shambwe says the new product will enable more Tanzanians afford the housing service, one of the basic needs of a human being. "For those with shares, their share certificates will stand as security we shall hold them and give them cash," Mr Shambwe said adding that the minimum acceptable share value is 20m/-.

Under the arrangement, people could borrow between 20m/- and 350m/- for purchase of the houses from developers with whom the banks have entered into contracts.

The Home Loan facility product will benefit salaried, self-employed, businessmen and professional Tanzanians, residents and non-residents, aged between 18 and 60 years.

The bank has since 2007, disbured 10bn/- in loans, the service that has put it in the limelight owing to acute shortage of housing and high rate of urbanisation.

The shortage of housing in Tanzania is approximated at three million units. "We still stand at a position where over 99 per cent of houses are built on cash ... the reliable availability of housing finance and serious players in the industry will enable Tanzanians to acquire descent houses without necessarily tying up all their resources," Mr Shambwe argued.

Prior to CBA introduction of the mortgage in 2007, Tanzanians used to spend between five and 30 years constructing the houses, which made home development among the most expensive undertaking.

The number of developers and housing units has increased in recent years but high demand was keeping property prices extremely high. He said CBA has entered into partnership with various developers who have 500 houses in Dar es Salaam and Mwanza.

With private sector coming in to support NHC efforts, there is light of hope in the end of the tunnel. But, for NHC to become more efficient, it has to change from being a landlord to becoming a serious real estate developer.

"The NHC should cease being a landlord. Its houses which are rented at 75 per cent of the market price, should be sold," the minister said, noting that the corporation should embark on real estate development to mitigate the acute shortage of houses in the country.

He ordered the flushing out of middlemen through official contracts with tenants occupying the NHC houses, saying despite the low rents charged by the NHC, some tenants turned into middlemen by renting the same houses to other people at exorbitant rates.

"I know of people who are paying up to 2.5m/- to mere tenants who in turn pay hardly 200,000/- monthly to NHC. This is unfair to the company and the taxpayers who are toiling to benefit dubious dealers," said the minister.

But, the minister cautioned against NHC management selling any of its houses in the prime areas. Such houses, he said, should be retained for use as collaterals for bank loans. He said that reliance on renting as the sole activity of the company was inappropriate due to the low rent. charged, sometimes even insufficient to foot the repair costs.

NHC has executed 36 partnership projects worth 51bn/- and is currently earning the company 1.5bn/-, annually. Some 38 similar projects are still under construction.

The new appointed NHC Director General, Mr Nehemiah Mchechu, called for team work in solving the challenges facing the company, saying NHC was a giant public utility in East and Central Africa, with assets worth over 1.5tr/-, with potential for further fast growth.

"The challenges are real and need serious measures to address. I am, however, optimistic that we have come this far and we can still make wonders if we bring our forces together and work hard to achieve the goals," he said.

The Chairman of NHC Board of Directors, Mr Masudi Msita, noted that his board honours the trust that the government has bestowed on them and that they would work hard to move the company to prosperous future.