The Development Bank of Rwanda (BRD) has announced reforms in the affordable housing programme, allowing more Rwandans, including those earning below Rwf200,000 a month, to access low-interest loans and achieve homeownership anywhere in the country.
Under the new provisions, Rwandans can secure a loan and acquire a house within their financial means, with price limits such as Rwf5 million or Rwf10 million. They have the option to purchase an existing house or have one built for them, without having to wait for investor-built properties.
The BRD officials made this announcement on June 8 during a session with the Lower House's Committee on Land, Agriculture, Livestock, and Environment, which aimed to address challenges in the affordable housing programme.
Emmanuel Ahabwe, the Coordinator of Rwanda Housing Finance Project at BRD, explained that the changes were made due to the limited availability of affordable houses in grouped settlements, which posed a challenge to the initial programme design.
For example, Ahabwe mentioned that around 7,000 public servants had applied for mortgage loans to purchase houses, but faced obstacles as some investors claimed they would not profit from constructing them. Additionally, the house prices varied, with some reaching Rwf12 million and others Rwf17 million.
"To address these issues, we have made the programme open so that people can obtain houses anywhere in the country through the Gira Iwawe programme. This way, they can have their own accommodation without relying solely on the grouped settlement initiative, which is not yet fully effective," Ahabwe said.
Initially, the project set the minimum income threshold between Rwf200,000 and Rwf700,000 for households from 2019 to 2021. However, it was discovered that many individuals, including primary school teachers and some medical personnel, earned less than the Rwf200,000 minimum income.
"There are many people in this income bracket who can find affordable accommodation in different parts of the country because they work across Rwanda. So, we decided to remove the Rwf200,000 minimum requirement and include households with lower incomes in the project," Ahabwe explained. As a result, the project is now seeing increased participation from teachers, security personnel, and other individuals with incomes below the previous threshold.
Regarding the maximum income limit of Rwf700,000, it has been raised to Rwf1.2 million per month. This adjustment was based on the prices of completed houses by investors in Kigali, where houses were priced at approximately Rwf35 million.
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Ahabwe emphasized that since household income is taken into account, cases arose where the combined earnings of a husband and wife exceeded the initial Rwf700,000 limit. However, considering the additional expenses they have to manage, such as children's school fees, providing lower interest rates on loans can contribute to improving their overall welfare.
Eligibility for the affordable housing programme requires applicants to be Rwandan citizens or permanent residents of Rwanda, with a net household monthly income not exceeding Rwf1.2 million. Successful applicants can benefit from mortgage interest rates of up to 11 percent.
A funding amount of $150 million secured by Rwanda from the World Bank to support the affordable housing programme has been deemed insufficient, given the significant number of Rwandans in need of housing. Approximately 73 percent of the funds have been utilized thus far. The programme aimed to assist 6,000 individuals in becoming homeowners, with 4,000 already benefiting under Gira Iwawe.
Ahabwe suggested that the programme would require additional funding beyond the current pilot phase to sustain its impact.
According to the United Nations Human Settlements Programme (UN-Habitat), a house is considered affordable when a person spends no more than 30 percent of their monthly income on rent or mortgage payments.
Rwanda's affordable housing policy stipulates that an affordable house should not exceed Rwf40 million, and the loan repayment period can extend up to 20 years.
