Article: National Rental Assistance Scheme: a novel initiative to make renting accessible for all

Traditionally, housing supply in Ghana has been primarily private sector driven, through individual household self-build or self-managed approaches, or corporate developers producing for sale on the open market. This approach has predominantly targeted home ownership with a marginal fraction targeting rental housing.

On the other hand, there have been instances where some public sector housing, delivered through public housing agencies such as State Housing Company Ltd and Tema Development Company (TDC) Ltd, has been retained for rental accommodation.

Over time, limited land supply, cost of capital, rising costs of building materials, dependence on high-priced imported building materials, displacement of residential functions for commercial land use, and poor investment in infrastructure supply, among other factors, have all contributed to driving up the cost of housing developments substantially, limiting the supply of housing while outpricing a significant section of the populace.

These challenging housing conditions have resulted in significant deficits to ordinary Ghanaians of housing that is affordable and decent. A by-product of the housing deficit is what is commonly known as “rent advance” – high multi-year rent advance payments demanded by landlords as a condition of offering tenancy.

Often prospective tenants, burdened by this financial requisite to rent, procure loans at exorbitant interest rates or use more than 30% of their household income to enable them to access the desired rental accommodation, making them not affordable.

Fulfilment of a pledge – the NRAS

In view of this, the governing New Patriotic Party, in its 2020 manifesto (page 157), promised that: “To address the short-to-medium-term market failures in the renter segment of the housing market, the next NPP government will establish a National Rental Assistance Scheme (NRAS).

“In partnership with the private sector, the scheme will provide low-interest loans to eligible Ghanaians to enable them to pay rent advance.”

In fulfilment of this pledge, the Government of Ghana, through the vice-president, His Excellency Dr Mahamadu Bawumia, launched the National Rental Assistance Scheme on 31 January 2023 to address the age-old rent advance problem, instituting an innovative solution to enable eligible Ghanaians to pay rent on a monthly basis.

How the scheme works

The scheme positions itself as the bridge entity between landlords and tenants to satisfy the interests of both parties and effectively minimise the risk and financial exposure for both parties.

Applicants are expected to self-identify a property of their preference and notify the scheme through a formal application process.

After the application has been reviewed and approved, the scheme manager assesses the property and concludes all negotiations with the landlord, rents, makes the full rent payment to the landlord and sublets the rented property back to the applicant.

Expected impact of the scheme

With the introduction of the NRAS, the undue burden of rent advance payments has been lifted off the shoulders of all citizens who patronise the scheme.

This ultimately increases their affordability as 30% of their monthly income is all that is needed to continue the rental agreement into perpetuity.

Ultimately, the gains achieved through the implementation of this policy will complement government efforts at achieving Target 1 of Sustainable Development Goal 11, which seeks to ensure access to adequate, safe and affordable housing and basic services by 2030.

Accessibility

The government is committed to ensuring that every eligible Ghanaian can access the NRAS when needed.

Accordingly, apart from the initial seed capital, the government has assured of its commitment to making annual budgetary allocations to support the expansion of the programme to all 16 regions of Ghana.

Eligible beneficiaries

The scheme has been designed for individuals with a reliable and verifiable source of income from the public and private sectors as well as self-employed individuals.

To be eligible for the scheme, the applicant must show proof of the following minimum criteria:

1. Be a Ghanaian
2. Possess a valid Ghana Card
3. Must be an adult of 18 years or above
4. Verifiable employment and earned income
5. Must have a verifiable bank statement or mobile money statement
6. Rent payable must not exceed 30% of the household income

A year after implementation

The scheme enrols an average of 120 beneficiaries across the six regions monthly. In its latest monthly report, the scheme announced it had enrolled a total of 1,492 total beneficiaries as of 31 January 2024.

With an average monthly rent of GHC500 a month per beneficiary, renting for two years, the government has disbursed approximately GHC19 million to landlords of scheme beneficiaries.

It is worth noting that, to date, beneficiaries of the scheme have all abided by the terms of their agreement with the National Rental Assistance Scheme and have all made and continue to make the expected monthly repayments to the scheme – recording a 100% repayment rate thus far.

As of 31 January 2024, the beneficiary distribution across the six operational regions indicates a notable prevalence of rent advance payment issues in urban areas, particularly Accra and Kumasi.

The figures are as follows: Accra – 903, Kumasi – 257, Takoradi – 160, Techiman – 147, Koforidua – 16 and Tamale – nine.

Conclusion

The National Rental Assistance Scheme seeks to address specifically the age-long challenge of rent advance payments in the rental housing space. Its essence is therefore not to address all challenges of the housing market in Ghana, nor is it a solution to eliminate the national housing deficit.

As governments past and present continue to institute policies to address other challenges in the housing sector, the current administration, through an already existing rental process of “renting and subletting”, has instituted the National Rental Assistance Scheme, which, by all measures, is tackling and eliminating the need for rent advances.

A bridge solution as the National Rental Assistance Scheme is, it satisfies the requirements of landlords, property managers and tenants alike and does not burden the government excessively, while also eliminating the national burden of rent advance payments for citizens.

The National Rental Assistance Scheme must be commended and expanded to benefit all those who qualify, as rent advance affects Ghanaians of all ethnicities, educational backgrounds, sexes, political affiliations and religions.

As a novel initiative, it has emerged as a viable solution to Ghana’s rental housing challenge. As we mark the first anniversary of its inception, let’s seize this occasion to enhance the successes attained thus far and strive to broaden its reach, ensuring that a greater number of deserving Ghanaians can benefit.

About the writer

The writer, Francis Asenso-Boakye, is a public servant currently serving as the Minister of Works and Housing and Member of Parliament for Bantama.

With over 25 years of experience in development planning, project management, and policy formulation, he leads the initiation, formulation, and implementation of policies, projects and programmes in the works and housing sector to promote national development.

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