Why you cannot afford a house

Property ownership in Botswana is restricted only to a small portion of Botswana’s rich population, while the poor will pay rent to their graves, experts have revealed.The issue came to light last week Thursday at the second Botswana Guardian (BG) Breakfast Seminar, hosted to discuss the complications of land ownership and property development.

It emerged at the meeting that the biggest hindrance to property ownership is the lack of buying power or the average to low salaries that Batswana are paid, which disqualify them from acquiring mortgage financing.An expert in property and University of Botswana (UB) lecturer of Architecture, Killion Mokwete said that Batswana’s average earnings are way too low to afford them funding to acquire property.

His views struck a chord with a FinMark Trust report compiled in 2011, titled “Accessing housing finance in Africa”, which shows that only 17 percent of Botswana’s employed population can actually qualify for mortgage loans. FinMark Trust is an independent trust tasked with core funding by the South African office of the UK Department for International Development (DFID).

Its mission is ‘to make financial markets work for the poor’ in the Southern African Customs Union (SACU) countries, by conducting researches to reveal the disparities in the financial markets. Out of the 2 million people in Botswana, Statistics Botswana (SB) data shows a 17.8 percent unemployment rate.

The FinMark Trust report stresses that only 17 percent of the 1.6 million workers qualify for housing finance. This means that only 278 800 people in Botswana can qualify for house loans.In the report, FinMark states that average monthly earnings of persons employed in the formal sector (male and female, citizens and non-citizens) are P2788 ($453). “As will be seen, most existing commercially available housing finance products require borrowers to have a minimum salary of P4000 ($650), or P4800 ($780).

It is clear that many of those employed in the formal sector do not qualify for conventional housing finance. Those outside the formal employment sector are even less likely to qualify for any form of housing finance,” read the FinMark Trust report. Mokwete was further backed by Joseph Serema, chairperson of a pressure group of youth, called ‘Petition to the Minister of Lands and Housing’, whose aim is to help government find solutions to property ownership.

Serema said, it was hard especially for youth to own property, because of shortage of serviced land and thereby are compelled to buy land or houses at high prices. Masego Moepi, Public Relations Officer at the Banc ABC Home Loans Department said only the rich in Botswana have access to finance, land and property ownership. “You would find that one rich person might be owning over ten houses in Gaborone, just because they have the purchasing power,” she said.

Thelma O’reily, Botswana Building Society Head of Finance and Property concurred that the rich want to own as much houses as possible so they can then rent them out for profit, while those who earn peanuts would rent for life, since they cannot afford to own a house. “The cheapest BHC house ranges between P500 000 and P700 000, so they are expensive,” she said.

Moepi of BancABC blamed government for failing to regulate BHC. She said, currently BHC controls house prices, saying the higher the prices on Botswana Housing Corporation (BHC) houses, the more expensive they become when sold by private property companies in the open market.

BHC spokesperson Mooketsi Seisa admitted that BHC houses are expensive and unaffordable to Batswana because of the high expenses incurred on infrastructure development. “We spend a lot to build houses, by the time we start erecting walls, 30 percent of the costs would have already been incurred, so it is hard for us to charge reasonably,” Seisa said in a separate interview. He also said that people, who buy their houses for profits complicate things.

“We encounter people who sell houses at escalated prices one month after we sell them the houses, so this makes it more expensive for other people to buy houses,” he said.

Last modified on Wednesday, 31 July 2013 16:12

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