Botswana Housing Corporation (BHC)’s decision to ground its rentals lower than the domestic mortgage market’s monthly premiums has led to reluctance to purchase the rented units of the corporation by some of the potential home buyers who are also tenants, the President of the Real Estate Institute Botswana, Modiredi Maruping has said.
Speaking at the launch of the BHC’s sitting tenant’s sales campaign on Thursday, Maruping said the corporation should consider hiking the rentals as the move will encourage the tenants to buy the houses they are currently occupying.
It is said that rental of some of the BHC low cost houses has been pegged at P600 per month for the past several years. However some financial institutions do offer mortgages which allow monthly repayments of roughly P4000 which reflect a huge difference between the two prices that tenants would pay should they decide to get a mortgage and buy the houses they are occupying.
On Thursday, BHC launched its ‘sitting tenant’s sales campaign’ aimed at selling houses to their current tenants. The corporation says it will run a year-long campaign to empower and encourage sitting tenants to invest in their leased house.
Currently the corporation has leased out about 1528 houses across the country. Of the 1528 units, 1354 are classified as low income houses while 141 and 33 units are termed as medium and high cost respectively. “Tenants with valid leases will be offered the opportunity to purchase their leased BHC house,” said the BHC’s marketing and research manager, Mookodi Seisa.
The corporation’s Chief Executive had earlier on, when giving welcome remarks indicated that to drive market understanding during this campaign, BHC will have neighbourhood activation throughout the country.
“During these activations our customers will have the opportunity to engage with the corporate partners to realize how they can capitalize on the opportunity to buy the houses they are currently leasing from BHC. The corporate partners will equally have the opportunity to develop and show case product offerings that empower Batswana through home ownership,“ Motswaiso said.
However when making his presentation, Maruping was later to advise the BHC to consider revising its rentals so as to encourage home ownership.
“Interest rates are also at a lower level thus favourable, this is a great opportunity for BHC’s sitting tenants,” Maruping said.
Motswaiso has in the past argued that rental stagnation and freeze further pushes the corporation’s margins lower, worsening spiralling costs. This he said was because rental increases have to be approved by government. Rental price controls have long proven not to solve any housing affordability issues.
Botswana Housing Corporation’s (BHC) revenue grew by 10 percent in the 2011/12 financial year despite rental tariffs being stable in more than seven years.┬á
The corporation’s financials shows that had an income of P342 million with rental income growing by 8 percent despite the stagnant rentals charged by the corporation in relation to costs of input.