Inefficient tax waiver system stalls affordable housing policy – Planners

Ghana's inability to effectively implement tax waiver policies in the real estate industry has contributed to the challenge of bridging the widening housing gap by providing affordable housing units.

As a result, efforts should be geared towards providing tax incentives if that target is to be achieved. That is the position of an Urban Developer, Dr. Kwadwo Ohene Sarfo.

“In times past, there was a government policy that real estate developers will benefit from a five year tax waiver system. Unfortunately the policy was not properly managed as such there was no compulsion for developers to build for the poor,” Dr. Sarfo told Citi Business News.

According to him, providing tax incentives to low income earners in the form of cash grants will enable them meet the relatively high cost of housing units usually provided by the private sector.

“I think perhaps the best place will be to provide cash grant but with some additional requirements butt there must be ceilings on the price for the properties that will benefit from this otherwise people will use it for all manner of houses so there must be price or cost ceilings for people that benefit from tax waiver.”

Dr. Sarfo who was speaking to Citi Business News on the sidelines of a round table discussion on Ghana's Housing sector on Tuesday further pushed for regulations to check possible abuses of the system.

“The targeting must be very clear with a way of testing to identify that those who are benefiting are really the poor people. There must also be additional regulations to ensure that these cash grants are not traded in and not utilized for the housing project that they requested for,” he stressed.

Ghana's housing deficit currently stands at 1.7 billion.

It is however expected to increase to 1.9 billion by 2019 if efforts are not put in place as soon as possible.

Some analysts also believe the low penetration of affordable housing for lower and middle income population is a promising market segment.

Architects demand co-ordination of activities for affordable housing

Meanwhile some players in the real estate industry are pushing for the co-ordination of activities between the Works and Housing and Local Government Ministries in ensuring standards in the housing sector.

They contend the disintegration of functions could partly be blamed for instances where quality is compromised.

Under the current regulation, contractors are licensed by the Water Resources Works and Housing ministry while their operations are monitored by the Local government ministry.

But Former Honorary Secretary to the Council of the Ghana Institute of Architects, Tony Asare tells Citi Business News the development poses worrying threat to the housing sector if regulatory roles are not properly coordinated.

“If for instance you are a contractor, you take your license from the Water Resources Ministry while the Ministry of Local Government supervises you when you are practicing. Somebody gives a license and there should be some coordination or the ceding of the licensing should be given to the person who supervises,” he stated.

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By: Pius Amihere Eduku/citibusinessnews.com/Ghana