30 June 2014

Tanzania: Company Set to Build 50,000 Houses for Public Servants

PLANS are underway by the state-run Watumishi Housing Company to build low-cost houses for public servants in the country. (File photo)

OWNING a house is one of the biggest and most exciting thing for any person. However, for some it might take years and a lot of money to build a house.

It's even harder for those with other responsibilities other than for immediate families, including paying for various school or college fees for siblings, rendering them to stay in rentals until their old age.

The situation is even more difficult for public servants -- those who get transferred to new areas and struggle to get accommodation. Some teachers who get posted to rural areas across regions have often refused to work in those areas, claiming lack of accommodation as the reason.

Recently, while responding to question in the National Assembly, the Minister for Community Development, Gender and Children Ms Sophia Simba said the government was aware that district council staff and other government employees have been struggling to get accommodation.

Ms Simba was responding to a question from Legislator Hezekiah Chibulunje who wanted to know why staff houses at Chamwino State House weren't being used, while workers at the district council had no accommodation. Housing problems in the country have been increasing mainly due to population increase in urban areas.

In Tanzania the problem is ignited by the rural-urban migration, especially in the national capital, Dar es Salaam. Last year's Mortgage Report of the Bank of Tanzania (BoT) indicated that demand for housing and house loans remains extremely high in the country, but it is constrained by inadequate availability of affordable housing and inordinately high interest rates.

These challenges that exist in the housing sector will soon be history as Watumishi Housing Company (WHC) will soon embark on building 50, 000 housing units that government workers can buy through low interest mortgage system. WHC is a public entity also tasked to managing Real Estate Investment Trusts (REITs).

The organisation's Chief Executive Officer Dr Fred Msemwa says that WHC -- established in 2013 -- is the main implementer of the Tanzania Public Servants Housing Scheme, which among its responsibilities include building 50,000 housing units in five phases.

These houses are to be built in different regions in the country such as Dar es Salaam, Coast, Tanga, Arusha, Mwanza, Shinyanga, Mtwara, Lindi, Tabora, Dodoma, Morogoro, Ruvuma, Mbeya and Kilimanjaro. In the first phase about 1, 500 housing units will be built, starting from September this year, Dr Msemwa says.

The construction period of the 1,500 units will range from 8 to 18 months in Dar es Salaam, Coast, Tanga, Arusha, Mwanza, Shinyanga, Mtwara, Lindi, Tabora, Dodoma, Morogoro, Ruvuma and Mbeya regions. The units will be sold to public servants under mortgage arrangements with very low interests rates ranging from 11 to 13 per cent.

Dr Msemwa says that WHC will discuss with financial institutions such that the institution will pay the whole amount and continue deducting from the buyers monthly salary. "WHC will link up public servants interested in buying the housing units with appropriate banks.

The banks will pay for the housing units for the prospective buyer and make monthly deductions from the buyer's salary," he explained. He reveals that prospective buyers will not be required to make down payments before the houses are constructed, as it was done by other institutions building and selling low-cost houses in the country.

Other special features that make the houses more affordable to public servants include longer periods of repay of up to 25 years, ability to defer payments and pay some amount at the end using pension fund.

"There will be no requirements for deposits from the house buyer and there will be options for those who want to pay earlier than that," Dr Msemwa explains.

Statistics show that about 650,000 public servants out of which only 10,000 or less than two per cent have been provided with residential accommodation through leasing or house purchase scheme.

The existing housing backlog which is now estimated at 3 million housing units is growing at 200,000 units yearly, meaning new delivery methodologies are needed to bridge the gap. Because of this challenge seven public institutions decided to join hands to speed up the provision of massive quality low-cost homes to public servants in the country.

These public institutions include PPF Pension Funds, National Social Security Fund (NSSF), Public Service Pension Fund (PSPF), Local Authority Pension Fund (LAPF), Government Employee Provident Fund (GEPF), National Health Insurance Fund (NHIF) and National Housing Corporation (NHC).

"Shortage of housing units in the market has pushed both residential as well as commercial property on the higher side. But his trend is likely to be reversed in the near future as Watumishi Housing Company enters the real estate market to increase the supply," Dr Msemwa says.

He said the housing units will come in a variety of designs and sizes that will conform to each buyer's desire as well as Tanzanian cultures and lifestyles.

Dr Msemwa urges public servants to start preparing to grab this opportunity by ensuring that they do not take unnecessary loans so that their salaries qualify for mortgage deductions when they apply for housing loans.

He says WHC will work with stakeholders from within and outside the country in developing the Investment and real estate market to have a lot more Tanzanians benefit from the company. Prospective buyers can access more information on how to buy a house from WHC and application forms from NHC or through the company's website www. whctz.org.

The type of houses to be built and sold include one, two or three- bedroom houses, semi-detached or detached and storey buildings which comply with Tanzania lifestyle and needs of young graduates.

In the second phase of the financial year 2015/16 - 2018/19 WHC will build houses in Iringa, Lindi, Katavi, Geita, Musoma, Kagera, Kilimanjaro, Tabora, Dar es Salaam, Coast, Dodoma, Morogoro, Mtwara, Mbeya, Kigoma, Mwanza, Shinyanga, Arusha, Tanga, Rukwa and Simiyu. Banks that are working with WHC to provide prospective buyers with mortgage loans include CRDB, Azania Bank, NMB, NBC and DCB.


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