Abstract
The government of Rwanda recently passed housing development regulations and funding schemes which aim at promoting access to affordable houses for the low- and middle-income Kigali city inhabitants. The existing studies on housing affordability in this city did not yet discuss whether this government-supported programme is likely to promote access to housing for these target beneficiaries. This study applies the price-to-income ratio (PIR) approach and the 30-percent of household income standard through the bank loan to assess whether housing units developed in the framework of affordable housing schemes are, for the target recipients, affordable at all. It relies mainly on housing prices schemes held by real estate developers, data on households’ incomes collected through the household survey and a review of the existing studies and socio-economic censuses reports. Findings reveal that the developed housing units are seriously and severely unaffordable for most of the target beneficiaries, especially the lowest-income urban dwellers, due to the high costs of housing development, combined with the high profits expected by real estate developers. The study suggests policy and practical options for promoting inclusive urban (re)development and housing affordability for various categories of Kigali city inhabitants. These options include upgrading the existing informal settlements, combined with their conversion into shared apartments through the collaboration between property owners and real estate developers, the development of affordable rental housing for the low-income tenants, tax exemption on construction materials, progressive housing ownership through a rent-to-own approach, and incremental self-help housing development using the low-cost local materials.
Highlights
Access to housing has been on the sustainable development agenda at the global level
As for housing affordability, our results reveal that the housing units which are being developed alongside the affordable housing schemes are not affordable for the overwhelming number of target beneficiaries
In the Kigali city context, our key informants suggested that the government should apply the housing subsidies approach and collaborate with different agencies such as Rwanda Housing Authority (RHA), Rwanda Social Security Board (RSSB) and Banque Rwandaise de Développement (BRD), which are among the key actors in housing sector, to develop affordable houses which can be accessed by low-income households
Summary
Access to housing has been on the sustainable development agenda at the global level. To promote access to decent housing in this city, the government of Rwanda encourages real estate agencies to invest in low-cost housing units which are affordable for low- and middle-income urban dwellers, through different incentives [17]. The beneficiaries include low- and middle-income households whose monthly income range is between 220.63 US dollars (equivalent to 200,000 Rwandan Francs) and 1,323.78 US dollars (equivalent to 1,200,000 Rwandan Francs), and who do not own any dwelling place [27] They are eligible to apply for low and long-term loans at 11 percent interest rates (compared to 18 percent for normal bank loans, for 20 years) through the affordable housing fund, established by the Government of Rwanda in collaboration with the World Bank [28]. This study was motivated by the knowledge gap about the contribution of the affordable housing developments schemes in curbing the problem of access to housing in Kigali city, regarding the affordability of the developed housing units and monthly incomes of various categories of the target beneficiaries. Before the presentation of the analytical approach applied in this assessment of housing affordability and data sources, we discuss the relevance of affordable housing schemes, within the broad contours of the current Kigali city (re)development processes with respect to socio-economic situations of its inhabitants
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