Rwanda: Indian, Austrian Investors Mull 'Rent-to-Own' Housing Model in Rwanda

27 November 2023

The government is in the final stages of implementing a 'Rent-To-Own' scheme aimed at providing affordable housing for low-income earners. Investors from India and Austria have expressed keen interest in this innovative model, The New Times has learnt.

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The Rent-To-Own initiative is designed to empower low-income workers by offering them the opportunity to rent homes with the ultimate goal of ownership.

Under this model, tenants pay monthly rental fees along with an additional amount, accumulating over several years, which will eventually enable them to purchase and own the property.

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This initiative was prompted by a study conducted in June 2023 by the Rwanda Housing Authority (RHA), the Ministry of Infrastructure, and the Development Bank of Rwanda (BRD). The study revealed that approximately 30% of urban households in Rwanda earn a net monthly income of Rwf100,000 or less, while an additional 27% fall within the monthly income range of Rwf100,001 to Rwf200,000.

Despite completed and ongoing affordable housing projects, Minister of State Patricie Uwase says that less than 10% of the population can afford the so-called affordable houses in the country.

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Addressing the need for a Rent-To-Own model, Eng. Edward Kyazze, Division Manager of Urbanization, Human Settlement, and Housing Development at the Ministry of Infrastructure, disclosed that investors from India and Vienna have expressed interest. Kyazze emphasized the importance of a pilot project to attract investors, with the government providing enhanced incentives.

Kyazze revealed that Indian investors are awaiting approval to construct 2,000 Rent-To-Own dwelling units, starting with approximately 300 units as a test phase. Public-private partnerships and subsidies for such rent are crucial components, and approval of the model by the cabinet is anticipated.

To ensure the scheme's success, Kyazze proposed land banking as a practice to aggregate land parcels for future development. The Rwanda Housing Authority has designated 6,100 hectares for private sector construction of affordable housing, addressing Kigali's 30-year plan to alleviate the shortage.

The government is also considering revising its housing strategy to integrate new models for affordable housing, such as incremental housing where residents buy incomplete houses and complete them gradually.

Furthermore, the government is exploring the possibility of direct investment in a social rental housing program for individuals earning up to Rwf200,000 per month.

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Jean-Claude Benimana, a housing model consultant, emphasized the need for a commercial feasibility study, an investment package, and government infrastructure contributions. He lauded the Rent-To-Own scheme as a real solution, suggesting that it would be a financial facility suitable for informal economies like Africa's.

Benimana urged a trial project to attract investors, a collective investment scheme, and a diverse pool of advantages for home acquirers to contribute to the program's success.

For a lawful and structured economy like Rwanda's, Benimana underlined, the Rent-To-Own model presents a 'juicy opportunity' for risk-taking investors, with manageable risks in the affordable housing sector.

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