Govt proposes groundbreaking incentives to deliver massive affordable houses

In a bold move to tackle the nation’s severe housing shortage, the government has proposed a groundbreaking incentives package aimed at empowering the private sector to close the 1.8 million housing unit deficit.
This far reaching initiative encompasses a range of land, tax, infrastructure, regulatory, streamlined approval processes for housing developments and financial incentives designed to stimulate the housing industry and facilitate the delivery of affordable homes.

Land-related incentives
The government’s proposal includes providing land as grants and encouraging allodial title owners to offer land as equity.
Additionally, efforts to digitize and efficiently manage land records and property values aim to reduce delays and errors at the Lands Commission.

Tax-related incentives
The package offers several tax-related benefits, including exemptions on imported equipment and materials, waivers on green building materials, rebates and concessions on infrastructure permits, dividend holidays, waivers of the five percent tax on immovable properties, and exemptions from capital gains tax.

Infrastructure-related incentives
In terms of infrastructure, the government commits to providing essential services such as roads, water, primary drains, communication, and energy upon proof of financial close and a master developer agreement.

Self-financing horizontal infrastructure
Developers who self-finance horizontal infrastructure will also be allocated additional land.

Off-take agreements
The proposed off-takers for housing projects include the National Housing Fund (NHF), workers’ unions, housing associations, and joint venture employee associations, all of which will enter into off-take agreements to ensure the purchase and occupancy of new housing units.

Easing regulatory processes
To streamline regulatory processes, a One-Stop-Shop for Master Developers will be established, covering permits from the Environmental Protection Agency (EPA), fire certification, and other related services.
Additionally, prorated and discounted rates for building, fire, and EPA permits will be implemented.
The government also plans to set up a technical expertise advisory service unit, introduce flexible zoning regulations, and update building codes to accommodate innovative and sustainable real estate development practices.

Construction finance
The plan includes using the NHF to provide cheaper financing for developers, establishing Real Estate Investment Trusts (REITs), and sourcing crowdfunding from international organizations such as Shelter Afrique and the International Finance Corporation (IFC).

Affordable building technology
The proposal emphasizes the use of affordable building technology for off-take projects to ensure cost-effective construction.

Mortgages
To make mortgages more attractive, the Bank of Ghana (BoG) will grant regulatory relief by applying a 50% risk weight on mortgage facilities instead of the current 100%.

Strict foreclosure rules
The judiciary will introduce strict foreclosure rules to help banks recover distressed assets.

More tax waivers
Additional incentives include tax waivers on interest earned on new mortgages in the first five years and providing long-term, affordable Cedi funding for housing through pension funds.

Rent-to-Own projects
Corporate tax for developers involved in rent-to-own projects will be reduced by half to encourage the establishment of rent-to-own portfolios.

Rental Assistance
The Rental Assistance Scheme will be expanded to off-take houses and cover rent-to-own clients, providing further support for housing accessibility.

Marketing and centralized portal
A centralized portal will be created to capture effective housing demand through the Real Estate Agency Council (REAC), facilitating better market transparency and access.

Project categories
The development of housing projects will be categorized into four segments: Category One (500-1,000 homes), Category Two (1,000-2,000 homes), Category Three (2,000-5,000 homes), and Category Four (above 5,000 homes).

Affordable and sustainable housing
This comprehensive incentives package marks a significant step forward in addressing Ghana’s housing crisis, promoting private sector involvement, and ensuring the delivery of affordable and sustainable housing for all citizens.

Real estate developers engaged
The Ministries of Finance, as well as Works and Housing, which designed the package, have engaged real estate developers and other stakeholders for their buy-in before rolling it out.

BENCHH 2024
Works and Housing Minister Kojo Oppong Nkrumah unveiled the incentives on the second day of the 3-day Built Environment National Conference on Housing and Hydrology (BENCHH) 2024 in Accra.

Streamlining PPP processes
He emphasized that this collaboration would streamline Public-Private Partnership (PPP) processes by introducing a Master Framework.
This framework, he explained, would eliminate the need for approval from the Ministry of Finance at every stage of the agreement, thereby reducing bureaucratic delays.

Attracting master developers
The Incentives Package is being developed to attract master developers into the affordable housing market in Ghana.
The Package will help streamline the approval processes for housing PPP projects by eliminating individual concessionary applications and replacing them with a pre-approved framework.
He highlighted the importance of these measures in attracting master developers into the sector to undertake economically viable housing projects, thereby making housing accessible to prospective homeowners.
“By incentivizing private sector participation, we aim to significantly increase the supply of affordable housing while ensuring that these projects meet quality standards and are delivered in a timely manner,” he explained.

Massive affordable housing projects
Mr. Oppong Nkrumah said the joint efforts between the two Ministries would incentivize developers to undertake massive affordable housing projects across the country.
“Our goal is to deepen public-private partnerships and create an enabling environment for private developers to undertake large-scale affordable housing projects,” he stated.

Growing demand for decent housing
The Minister emphasized that these incentives would be pivotal in overcoming the current housing deficit of 1.8 million units and meeting the growing demand for decent housing among Ghanaians.

Works Inspectorate Unit in the offing
In addition to housing incentives, the Minister addressed ongoing efforts to establish a Works Inspectorate Unit within the Ministry of Works and Housing.
This unit is tasked with enforcing building codes and safety standards across construction sites nationwide, thereby enhancing the quality and durability of housing infrastructure.

Rigorous regulatory oversight
Mr. Oppong Nkrumah stressed the need for rigorous regulatory oversight to safeguard public safety and uphold industry standards.
During the three-day BENCHH 2024 conference, discussions will include regulatory reforms and the establishment of a Works Inspectorate Unit to ensure adherence to building and safety standards.
The Ministry aims to present comprehensive reports on government initiatives, achievements, and challenges, seeking input from stakeholders on innovative approaches.
Mr. Oppong Nkrumah expressed confidence in the outcomes of BENCHH 2024, highlighting the potential of collaborative efforts to drive tangible progress in Ghana’s built environment sector.
He urged participants to actively engage in discussions and contribute their expertise towards crafting actionable strategies that address the nation’s housing and hydrology challenges comprehensively.