Why developers’ focus on low-cost units is not a panacea

28Oct 2018
Guardian On Sunday
Why developers’ focus on low-cost units is not a panacea

WITH the housing and mortgage sectors taking the brunt of economic drawbacks when it comes to consumables and real estate that has been rising since mid-2017, appeals are being made for either self-attuning or an element of regulation as to focusing on low cost housing units.

The reason for this emphasis is the decreased flow of credit to the housing sector generally and worries about megaprojects in the sector, for instance the recent suspension of a high profile National Housing Corporation (NHC) joint venture project at Kawe on the northern reaches of the city up-market residential and business districts. Many worry the poor will be totally left out.

One question that surfaces is how far the poor are really the focus of NHC operations, and when it for instance talks about low cost housing units that cost anywhere between Sh27m and Sh30m, is this really the current definition of the poor in Tanzania, or it is merely a corporate category?

And even if NHC focused on units it would then sell at that price, how far would the actual poor benefit, specifically those in urban areas, living not just in rented houses but actually renting one or two rooms at most?

Is there anything in what NHC is doing at the moment that actually makes an effort to address needs of the poor or the language resurfaces for attention of the government?

There have been various instances in the past that policy was intentionally directed at low cost housing, or improvement of unplanned shanty areas without changing the habitation constituents, by offering services and erasing some habitats for roads, pipes, etc.

The result was that these areas started taking a higher profile in the wider land market and those looking for plots close to main roads, and in the mid-1970s the Sinza areas was a developing zone of small plots and wide or airy spaces between them. This was the proper intention of city authorities and ministerial policy coordinators but it failed as developers soon streamed in, purchasing out poor plot holders.

Those who advocate policies that exclusively target the poor often think of the kind of house to be built, a three bedroom self-contained unit, and this is ceremoniously qualified as the house of a poor person.

Even if those in higher income brackets would usually build a better house, the location of a house is important, in which case the value of a house in market terms combines the quality of the house and the plot location.

Looking at it more directly, the plot is really the basis of house valuation and then the rest is a development on the plot, a structure situated there, etc.

In that sense each and every construct put on the land will have its market price, in which case focusing on the poor is a non-starter, as the poor will always live on the lowest available units in the city or elsewhere.

If they are favored by deliberate policy and placed on an upgraded location by fiat on NHC, they will soon sell those units (the way civil servants rented out NHC flats in the city centre that used to be rented by Asians and nationalised under the Buildings Acquisition Act in 1971.

Only a few of those initially allocated the flats upon nationalization remained there for more than a decade, as it was profitable to rent out to an Asian for cash than to build own house.