Thursday March 6 2014

Want to own a house in Uganda? Don’t wait for National Housing or govt help!

By Daniel K. Kalinaki

Let’s talk about housing, for a change. National Housing and Construction Company has some four-bedroom houses for sale in Regina Estates in Lubowa, just outside Kampala. Sitting on 30 decimals, the houses are at only Shs793 million. Yes, that is Shs793, not Shs79.3 million.
But hurry! Its other project, Kyambogo, has been sold out. The houses there went for just Shs818 million!
To be fair, National Housing has some cheaper flats, in the range of Shs300 million or so, but if you are an average salaried Ugandan looking to get your leg onto the property ladder, you probably need to look elsewhere.

Which is a pity. Set up in 1964 as a government-owned company to build affordable housing, National Housing had by the early 1970s built almost 2,400 housing units across the country. These included flats around Kampala, houses across the country, office blocks like Crested Towers, schools like St. Henry’s College Kitovu, and Entebbe International Airport.

About 10 years ago, a large chunk of National Housing was sold to the Libyans to settle a debt, or so we were told. Not only was the transaction hare-brained, it was done under the table, without transparency. Since then, the company has changed its focus from low-margin, mass housing projects, to high-margin, high-end projects. Who are those Ugandans buying Shs800 million houses? What do they sell?
According to the Uganda Bureau of Statistics, the median wage in Uganda in 2009/10 was Shs210,000. That means if you lined up all Ugandan workers, from the lowest-paid to the highest-paid, that’s what the guy in the middle of the line earns.

Government policy towards housing is giving young Ugandans trying to get onto the property ladder a raw deal. The current crop of policy makers took over government pool houses built by National Housing in earlier regimes, bought them on the cheap, and at very favourable terms.
In privatising National Housing and allowing it to put profit ahead of affordable housing, they have kicked away the ladder to stop others from climbing into the property-ownership bracket easily. The majority has been left to scale the walls with no ropes and no help.

In its 2006 elections manifesto, the NRM made some interesting noises about housing, promising to “prioritise housing development and home ownership” among working Ugandans.
The government put Shs30 billion it had raised from the sale of pool houses (to the lucky policy makers) into recapitalising Housing Finance Bank. Another Shs30 billion was supposed to come from the bank’s shareholders to create a Shs60 billion cash pile to reduce the cost of mortgages. The other half of the money does not appear to have materialised!

Ten years later, Housing Finance offers a market rate of 18.5 per cent on its prime mortgages. To take out a mortgage of Shs250 million over 15 years, one would have to pay about Shs4 million per month, fees not included. Not many can afford that – certainly not journalists!
Most Ugandans have thus resorted to the inefficiency of saving up to buy land and build their own homes, often doing so over the course of their working lives, and moving into their semi-complete houses long after their children have left home.

There is pride in building one’s home and it helps if there is support. Here is what the NRM promised in 2006: To “pay for the development of public goods in planned estates (water, sewerage, electricity and roads)”, “review taxes on home ownership with a view to making home ownership affordable” and ensure “proper planning including roads, and plot numbers on each house”.
It didn’t happen. Affordable public housing remains a dream, our neighbourhoods unplanned mazes. It’s a shame.
Twitter: @Kalinaki