The Tanzania housing sector is expected to improve after the recent passing of two new pieces of legislation by the National Assembly, the Condominium Act and the Mortgage Financing (Special Provision) Act, both of which were introduced to Parliamen earlier this year and are intended to govern bank lending for construction.
According to the minister of Lands, Housing and Human Settlement Development, John Chiligati, who spoke with members of the Tanzania Bankers Association (TBA) last week in Dar es Salaam, “if you provide long-term loans of 10 to 20 years at a lower interest rate than what you charge your commercial clients, then certainly our dream of the housing sector boom will come to reality.”
Mr. Chiligati went on to say that the Mortgage Financing (Special Provisions) Act would help make it possible for more Tanzanians to become home owners because it would make it easier for real estate developers to construct multi-unit, high-rise apartment complexes and to subsequently sell the individual units to as many buyers as possible.
Immediately upon completion of the sale, each buyer would receive a title deed for their purchase.
“We expect many Tanzanians will become home owners through this Act,” said Mr. Chiligati, “Its implementation will not only increase the number of home owners but will also trigger the house construction industry and stimulate our national economy.”
The Mortgage Financing (Special Provisions) Act was designed, alone with the new Condominium Act, to help an estimated 70 percent of Tanzanians, who are currently without decent housing, acquire bank loans and construct new houses.
The Government of Tanzania opted for two pieces of legislation in order to appease concerns from the banking sector that previous housing laws were unbalanced in favor of the borrowers.
At last week’s meeting with TBA, Mr. Chiligati assured the members that the new legislation would protect both the banks and the borrowers and that the risk involved would be shared by both parties.
“We initiated the laws in response to complaints that the previous laws were mainly in favor of borrowers such that they created high risks to banks,” said Mr. Chiligati, “The new Condominium Act and Mortgage Financing special provision Act have strong balances between the rights and obligations of both banks and borrowers.”