Wednesday, April 23, 2014

How To Register Your Land In Ghana

Land is a valuable asset, which appreciates or increases in term of price, as time goes on. It is therefore very important that, when you are able to acquire a land, it is registered appropriately and accordingly with the land agencies involved to avoid future land disputes and forfeiture.

In Ghana, recently, acquisition of land has become tiresome and very expensive, especially in elite areas of Accra. This gives more reason why it is vital that the land is registered as this would also give the owner full rights over the land and in its development as well as save the owner from litigation.

7 Steps to Register Your Land in Ghana

  1. Background Checks - Carrying out thorough checks about the land is important, as this will enable the future land owner gets to know if the land is available to be acquired. In this process, the prospective land owner can also consider the services of a land lawyer to research the land and prove its availability; such as if it has already been sold out. Checks must also be done with other government land overseers, for example; the Tema Development Corporation (TDC), to ascertain if the land had been earmarked for any developmental projects. One would also be told if the land is not suitable, say if it is a water-logged area, and therefore, not advisable to be purchased.
  2. Acquisition and Negotiation - After the availability and suitability of the land has been established, the interested buyer or lessee negotiates with the actual owner of the land for sales. It is important to be reminded that the interested buyer must deal with the rightful owner of the land because the use of middlemen is not advisable. An agreement is reached and documents made to its effect.
  3. Document Endorsement - Three copies of the agreement documents would be needed for endorsement by a land lawyer, who will have to sign the back of each of the copies with his practising stamp duly fixed. Each copy of the documents must have a site plan attached, together with two extra copies of site plans, all making 5 documents. The back of the site plan would also be needed to be endorsed by the owner and the buyer of the land; after which they (the site plans) are to be certified by the stamps of a licensed surveyor and the regional surveyor with accurate date.
  4. Witnesses - These are people who would testify to the proceedings so that in future whenever there is anycase of challenge about ownership of the land, they would be called upon for assistance. It is therefore required that at least, 2 qualified persons from both parties – the seller and buyer sides must sign as witnesses. The two witnesses signing on behalf of the buyer or lessee must do so with their full names, addresses and original signatures.
  5. Land Commission - After the endorsement of the documents, it is then sent to the land commission, together with processing feesfor of processing and registration of the land to begin. After the processing is completed, the documents are released to the Land Valuation Board for stamping and certifying.
  6. Internal Revenue Authority (IRS) - The IRS sees to the taxes associated with the registration process. From the land valuation board, the processed documents are then released to the IRS for tax clearing of the land to be made. When this is complete, the applicant, or buyer is given a tax clearance certificate. The documents are from here, taken back to the land commission for final registration at the deeds registry.
  7. Original Copy - From the deeds registry, the buyer is given an original copy of the land title document.
It is advisable that persons who seek to register their lands go through the above processes to have their lands registered accurately and the documents original and recognized. Failure to do this, and employing unauthorized means to go about the registration process or use of “short cut” as it is popularly termed in Ghana, could lead to serious land issues in the future. The land title document must also be kept in a secured place to prevent loss or damage.

Monday, April 21, 2014

7 Ghana Real Estate Laws You Should Know

 Tordia House Plan

In Ghana, as in other developing and advanced countries, there are laws governing the building of houses, and construction in general. These laws, when conformed to, brings sanity into the construction industry, ensuring that all laws are obeyed and buildings built in a way to secure good living for human development.

One needs not be told the effects or consequences of living in a poor quality building – there is the high possibility of collapse, fire, and flood. For this reason, the government, governmental and non-governmental organization (NGOs) in the building sector, international organizations, and individual players in the building sector, have devised ways to put the Ghana real estate laws in check and to ensure that real estate developers and builders in the country comply with these laws.

The Ghana Building Code (GBC) was last reviewed in 2012, during an “African Adaptation Programme on Climate Change” conference, in which it was held that the GBC be reviewed to attain “Risk Reduction In Physical Development”; in a bid to reduce -if not fully eradicate –disasters related to building such as collapse and fire.

Some of the most important Ghana Real Estate Laws that builders need to apply in their projects are as follows:
  1. Land Title - One must first have a land, and with a clear title. This should be the foremost step in starting a building. Failure to obtain a land title from the agencies involved, such as the Lands Commissions and the Town and Country Planning will lead to the loss of the building without any monetary compensation.
  2. Building Permit - It is rightful and very important that a builder obtains a building permit before he embarks on the process; this is compulsory even if the building has a legal support. The building permit must be obtained from the city authorities, district, metropolitan or municipal assembly under which area the building will be situated. Examples are the Accra Metropolitan Assembly and Tema Metropolitan Assembly. Failure to get a building permit before starting a building would lead to a huge monetary fine or total demolishing by the government or city authorities.
  3. Building Materials - The Ghana Building Code (GBC) expects that builders employ good quality building materials in their construction works. The Code does not allow the use of poor quality, harmful or toxic building materials; because they are a threat to human health which could cause severe ailments and even death. Conformity to this law brings to memory the tragic incidence of the collapse of the Achimota- branch of Melcom, a super-market with branches across Ghana, in which about 8 people were reported dead and several others injured. Therefore, the use of good quality building materials including electric cables for wiring, blocks and bricks is advised.
  4. Emergency Precautions - When putting up a design for the building, it is required by law that the building must have emergency features such as exit and assembly points in case of fire, flood or any other disaster. The builder is also required to include structural means in the plans to prevent disasters.
  5. Excavation Requirement - Environmental factors must be considered when building. These include the depth of water tables, and sub-soil drainage must have a legal backing before excavation begin. This would help check pollution of water bodies and fertility of soil, especially in building in crop-growing communities.
  6. Financial Requirements - According to this law, a builder must spell out how they intend to fund the building process. Is it by personal or group funding; or loans from a mortgage company? One must also be in good standing to be able to have access to loans if that would be the means of financing the building.
  7. Completion Time - It is expected by law, that builders meet certain timelines in their building process. Typical of such timelines is the completion of the foundation and walls within a period of 2 years. Also, the builder must be able to meet the entire completion time that they have already indicated in the building document.
Buildings are essential structures of every human’s life, and therefore must be constructed with utmost care and good quality materials. It is therefore vital that foreign investors, real estate developers, and individual builders take these laws into consideration when embarking on building projects, for a fulfilling and better standard of living in Ghana.

Tuesday, April 15, 2014

The Price of Building Blocks & Bricks in Ghana

Blocks and Bricks are both building materials, which can be used for the same purposes. However, the two have varied differences and similarities in terms of price, durability, choices, convenience, and their advantages over each other. In Ghana, the most common building material used is cement, which is employed right from the start to the finish of a construction work; i.e., in producing blocks.

Conversely, brick, which is obtained from burnt clay, is not all that much patronized by builders despite the effort of the government of Ghana encouraging the use of this indigenous local material to solve the housing problem of the country.

The scarcity of the usage of bricks in building projects, according to research, has led to the gradual killing of the brick industry in Ghana even though; the country is endowed with clay deposit in almost all 10 regions. The $300 million needed annually to import clinker and gypsum – the main raw materials in producing cement –could be saved and use for other projects to serve national interest and security. Ghana currently is lacking behind in the building sector with a current housing deficit of over 1,500,000 units. The country needs to meet the annual requirement of 50,000 housing, but currently, the annual supply stands at 25,000; exactly half of what is needed. This deficit could be catered for if effort is made to use local building materials.

Some experts in the construction industry have argued that the gradual diminishing of bricks in Ghana is due to the fact that many people believe that, “It is more costly and less convenient to build with bricks than cement blocks.”

The price of a single block in Ghana now costs between Gh¢2.00 and Gh¢2.50p (73 – 91UScents), while the price of a brick is between 50 pesewas and 80 pesewas (18 – 29 UScents). Even so, in majority, if not all bidding documents, blocks remain the specified building material.

Blocks are Primary Building Material...Why That?

  1. Amount of Blocks or Bricks Needed - The block sizes used are mainly the 6-inches for construction at the foundation level and the 5-inches for the building itself, while the brick; on the other hand; being smaller in size, a number of 6 pieces would be needed to make 1 single block. This sums up to the fact that more bricks would be required than blocks in building.

    Taking for instance, a case of building a standard 14 by 14 feet single room in Ghana; approximately, a number of 150 bags of cement, which is equivalent to 4,500 good quality blocks are needed as against a total of 27,000 bricks for the same kind of building. Moreover, one must also not forget that an amount of sand would be needed to be mixed with the cement in producing the blocks.
  2. Cost of Fuel/Cement - Most people believe that it may be expensive putting up a brick building because of the initial cost to be incurred as compared with the block building.

    In the case of brick, more fuel is needed for the entire production, which involves mixing, drying, firing and fabrication, including hand moulding. Consequently, more fuel would be needed for this kind of work, and this calls for more money, having its own repercussions on the pocket of the builder with respect to the rampant increase of fuel prices in Ghana lately. On April 01, 2014, fuel price saw an increase by 7%, leading to the automatic hikes in all petroleum products and other commodities. This is the third time of increase since the beginning of the year, when we are only in the first quarter.

    The block on the other hand, does not require much more input to be produced as in the case of the bricks. It involves moulding and drying. The challenge with producing blocks has got to do with the unstable prices of cement, which shot up from ¢18.00-20.00 ($6.5-$7) by the close of last year to Gh¢21.00- Gh¢25.00 ($7.67- $9), as of now.
  3. Labour Intensity - It is obvious that the labour force in brick building is greater than the labour force needed in block building. More workers would be needed in the brick case to undertake the various production processes of mixing, drying, firing and moulding; whereas only a few of the workers would be needed in the block building. For instance, if 8 workers are needed in the brick production, with 2 of them taking up one of the production processes, equally, only 2 workers will be needed in the block production – one worker for the mixing and moulding, and the other for the drying. More workers simply mean more cash to pay them.
  4. Building Process - Obviously, the building process involved in both block and brick would be different, with the other requiring more people on board and using more time than the other. Bricks for instance, require more skills right from the production to the building, not to mention that they are smaller in size and also heavier, making it more difficult to be installed by few workers. This can cause a prolonged time of completion, meanwhile prices of goods and services would be going up. For the block, only a few people can handle the entire building process.
  5. Expensive Machines - The machines used in bricks production is undoubtedly more expensive than the machine used in producing blocks. Therefore, it is easy to raise money in acquiring a block-producing machine than that of the brick-producing.
The high cost involved here has accounted for the non-usage of the bricks and scarcity of brick buildings in Ghana; however, the maintenance costs are as low. The bricks building do not need plastering and painting as would be needed in the block building. Also, when building in a water-logged area or on a wet land, bricks are the best choice the reason being that they are stronger and can absorb the water without collapsing, unlike the block building.

Despite these conveniences and advantages, cement block remains builders’ first choice. This has brought about monopoly in building materials, making cement expensive with a bag of cement being now sold at Gh¢21.00 and in some areas of Accra at Gh¢25.00 ($7.67- $9).
Inasmuch as a heavy budget is needed in putting up a brick or block building, their benefits are immense. Both building materials are strong, fire-resistant and insect-proof; raising them above other building materials such as the wood.

All the same, in order to solve Ghana’s recurrent housing deficit, it is imperative that the government puts in more effort to build the capacity of the brick industry and review the construction policies, emphasizing on the use of more local materials such as the clay. Stakeholders must also endeavour to use local building materials in their construction works for everlasting building resistance.

Wednesday, April 2, 2014

The Cost of Luxury Real Estates in Ghana

Image source: Queensridge

Property in the form of land or buildings is referred to as real estate. It has become a profitable investment worldwide since real estate mostly appreciates in value over time.

Luxury real estate is high-end properties usually developed for high profile, high income and high net worth individuals worldwide. Due to their massive resources and high-level income stream, most of them desire to live an elegant lifestyle, requiring high class buildings with high grade furnishings in a prime location.

They mostly buy or own several homes and real estates in different countries across the world. The features and parameters that define luxury real estate may differ slightly amongst countries, though there are always common traits. Familiar characteristics of luxury real estate include the property location and its surrounding views, such as by a water body, on a hill or next to luxurious amenities like golf courses, international first class schools, hospitals, security stations and spas.

In Ghana, luxury real estate is usually classified by the location first, then the high sale price and sophisticated facilities. Communal facilities consist of 24hour concierge desk services, coffee bar and waiting lounge, roof top pool, Jacuzzi, gym and sky garden with spectacular views. These luxurious homes are usually within one-mile radius of the Kotoka International Airport such as the Airport Residential Area, Airport City, East Legon, Airport Hills, Roman Ridge, Labone, Cantonments and Trasacco Valley - the only luxury gated community.

Properties selling above US $100,000 are usually classified as luxurious in Ghana. The average cost of luxury homes (usually 3-4bedrooms) in Airport Residential Area is around US $ 400,000; in East Legon US $ 370,000; in Spintex US $300,000; but in Trassaco Valley and Airport Hills is US $1million. Generally, luxurious homes in Accra costs around US $ 500,000.

However, luxury homes in Asia costs at least US $1.3m. In USA luxury houses start selling around US $1.4 million and for Europe is at least US $1million. South Africa and Nigeria have their minimum hovering around US $200,000. In comparison with other global prices of luxury homes, Ghana seems to have lower costs of luxury homes thus there is high demand especially by foreign investors which increases the prices. These prices keep escalating tremendously due to the forces of demand and supply, influx of expatriates, returning Ghanaians from abroad with much foreign income, the new oil industry and cost of building materials.

Foreign developers are now cashing in on Ghana’s real estate industry and making huge profits. They buy an acre of land for about US $2.5million and construct a number of high rise apartments selling each for about US $300,000 to US $800,000.

With the high demand, good returns are made within reasonable time. Examples of these developments are Villagio Vista, Primrose Place, Meridian Apartments and Casa Bella, all within the Airport Residential Area.

Though it may seem all profitable, the real estate industry in Ghana still faces some challenges predominantly related to acquisition and registration of lands. These are mostly issues of litigations and complicated land transfer processes especially associated with real estate in the prime areas.
This trend of continuous increase in prices in the real estate market is expected to remain so for a long while.

Though most native Ghanaians are not able to enjoy these luxury homes because they cannot afford it, the luxurious housing developments and its subsequent management create several jobs for Ghanaians and a good competition in the local building industry.

Monday, February 17, 2014

How to Buy, Build or Complete Your Uncompleted House with Mortgage in Ghana

image source:

Owning a property is absolutely one of the greatest investments that one could ever think of making in life. It is indeed a great feat, which not everyone can attain, therefore, individuals who have made efforts to buy or build their own houses are always proud of such achievements; and Ghanaians are no exception.

The people of Ghana pride in property ownership, and would go to any length to acquire at least one. Building a house requires a great deal of money. One needs a whooping sum of not less than $100,000 (GHC 250,971 at the time of writing) to embark on such a process. Such an amount is not easy to come by, and it is proven even harder for the average Ghanaians who do not earn much income. Working on an uncompleted house requires extra funds to put finishing touches to it. These situations make mortgages a much sought after in Ghana.

There are many financial institutions which render mortgage services to people interested in buying, building or completing a house.

Prior to applying for a mortgage, it is important to be well informed about the interest rates these financial institutions charge respectively. Furthermore, it is equally essential to apply for the appropriate loan, as there are different types of mortgages for different uses, and all these come with various interest rates ranging from up to 35%-40% in some cases. (:

Different types of mortgages

  • Should you be interested in building your own dream house, the ‘self-Build Mortgage’ (sBM) is the loan to apply for. For most of the self-build mortgages, the money for each stage is usually only paid out once it has been completed and a valuator has visited the site.

    But, some self-build mortgages release the amount of money required for each stage of the building at the beginning rather than the end of the stage. This is especially useful if you do not have the cash up front to pay your builders or to buy materials.

    Self-Build Mortgages tend to have higher rates than on standard mortgages, and the payment spread within 10-20years.
  • The ‘Home Purchase Mortgage’ (HPM) has been designed purposely for people who intend buying a house. The borrower is made to pay a minimum of 15% deposit, and the loan payment spread between 15-20 years.
  • In case you are looking at completing your uncompleted building, you need the ‘Home Completion Mortgage (HCM). This type of loan has been designed for people who already started the building process but stopped along the way due to financial problems. The uncompleted house could have initially been funded by the owner’s own money, his employer, bank or another mortgage company.

    Loans for this purpose normally do not exceed up to 50% of the total construction cost of the property, and the interest rates vary from bank to bank. The property must have reached the lintel level at least. Borrowers of this type of mortgage have a maximum of 15 years to finish payment. Not everyone can apply for a loan. To qualify for a mortgage, you must first ensure that you are not below18 years (some financial institutions have 21 years as minimum) and secondly, not more than 55 years old. There are other issues that need to be considered as well, should you decide to build, buy or complete an uncompleted house with a mortgage.

  • And to build, buy or complete an uncompleted house with a mortgage, one must:
    1. Mortgage brokers - There is the need for the person to contact a mortgage broker to help them get a better financial institution or bank with the best interest rate. The borrower can also decide to do his own background checks to pick a suitable mortgage company without necessarily consulting the broker. Therefore, conferring with two or three mortgage companies would be ideal for the borrower to ascertain which company is better and has the best rates.
    2. Intended purpose - The mortgage loan which has been acquired for the purpose of building, buying, or completing an uncompleted building must be used for the exact purpose. Some people often use the loans for something else other than the intended purpose, and in the end, they lose. Not using an acquired mortgage for the main purpose can bring problems to the borrower. It could lead to a breach of contract between him and his bankers if they found out that he was using the mortgage for something else than what both parties knew of. In this case, the borrower could even be accused of deception.
    3. Loyalty - There is the need for the borrower to be loyal in his dealings with the mortgage company. Being loyal in this sense includes the importance of the borrower to pay his debt as agreed by both parties (himself and the bankers). The borrower must have a sturdy income, to be assured of his ability to pay his deductions without any unnecessary interruptions. He should be able to provide adequate security for the loan. Paying your debts duly will also help you avoid foreclosure, where the banker will have your property owner reverted to themselves because you are unable to pay back your debts within the given time frame.
    4. Other source of income - To be on the safer side, the borrower must look for other sources of income. This will help him be in good terms with his bankers even if he loses his job someday. One would still be able to pay back the loan when he has alternate sources of income without being harassed by his bankers when the unfortunate happen.
    Despite the relief that acquiring a mortgage for owning a house could bring, the high interest rates charged by the mortgage companies in Ghana is still a bother to Ghanaians, and especially to the average Ghanaians.

    More often than not, borrowers end up paying as much as 400% of the original amount they borrowed and this takes a toll on them as they are faced with over-burdened financial situations. For this reason, not everyone in Ghana can afford to own a house. In the meanwhile, those who cannot afford to build or buy their own houses are compelled to live in rented apartments and other makeshift buildings which have their own consequences.

    The government of Ghana, and the bank of Ghana must as a matter of urgency, intervene on behalf of the people, by putting measures in place to regulate the interest rates to ensure that no one is exploited, in his quest to own a house.

    Monday, February 10, 2014

    6 Steps to Verify Land Ownership in Ghana before Purchase

    Land litigation remains one of the major problems in Ghana. Lately, issues regarding land have been on the increase, and have made most of the headlines. There have been a lot of demolishing exercises carried out; land guards selling and reselling lands to people; flooding, and tidal waves invading lands in areas such as Glefe, a community near Dansoman, and all suburbs in Accra in the Greater Accra Region.

    More often than not, buyers do less investigation to ascertain ownership of the land before purchasing. After thorough investigation, it comes into view that most lands sold out end up being a state acquired lands or for some original owners, but have been sold and re-sold to the poor victims by cunning chiefs and notorious land guards.

    In a country like Ghana, land is a valuable asset – the reason being that they do not diminish or loose its value whichever the situation of the economy.

    In planning to buy a land in Ghana, important steps must be taken to ascertain the ownership before even envisaging doing so.

    Here are 6 practical steps to follow to avoid loosing your hard earned money:
    1. The Ghana Land situation - Please visit the site. It is essential that when you want to purchase a land, you first visit the plot and look out for the land and where it is situated. Find out whether it is near a refuse dump site or it is one itself. You must also check the surroundings to see if it's a desirable area you would want live, and also get to know if it is a water logged area. Usually, most lands in such areas are left likely to belong to government, purposefully left out for future projects.
    2. Ghana Land Social Amenities - A land would be better to acquire or buy if it has the major necessary social amenities, such as – the land being connected to a good road network, electricity from the national grid, pipe-borne or portable water, and sometimes a market. All these are necessities of human life that we cannot live without. Therefore, it is prudent that you have all these facilities around or in the area of the land you want to purchase. Often, the lands in these areas, where there are no facilities, are not demarcated and therefore may not be for sale.
    3. Ghana Land Chiefs and traditional leaders - In Ghana, most land disputes have been said to be caused by some chiefs and traditional leaders, as well as individuals who have self-imposed the name ‘land guards’ on themselves. Some of these chiefs and traditional rulers are in the habit of selling and re-selling lands to people, with mostly the aim of making ‘bad’ money. Many people have been victimised by their behaviours. They have cunning ways of doing this: for instance, if someone buys the land at $13,000, or GHC 31,200 at the time of writing and pays part of the money, or even pays all, but has not put the land to any use, these traditional authorities can resell the same land to a different buyer who can afford to pay much more money to the tune of $20,000 (GHC48,000), something like a ‘money show power’ system. One therefore, must check and be very sure that the land he wants to buy has not already been sold out. Don’t get scammed.
    4. Ghana Lands Commission - The buyer would also have to check with the lands commission to ascertain whether the land in question has already been registered in another buyer’s name or has already been sold out. Sometimes, the delay in the registration process on the behalf of the land commission causes the multiple sales of a land, and it also gives some greedy chiefs and land guards the opportunity to sell that same parcel of land to other unsuspecting people. In the event the land title has already been registered, refrain from buying it.
    5. Follow-Ups - After you, the prospective buyer have done your due diligence and checks to ensure that the land does not already belong to someone else, you must consult the town and country planning agency in the area, to be informed about the land. For example, people who want to buy lands in Tema – and its nearby towns must consult the Tema Development Corporation (TDC). It helps the buyer to know if the land has been earmarked for a market place or it has been designated for a road construction.

      The buyer would also know if the land is a government acquired property. This would save the buyer from future demolition after he had had to spend thousands of dollars to put up a house only for it to be demolished by an original owner or the government. Such demolitions do not come with any compensation, and this could be the greatest lost.
    6. Ghana Court Endorsement of Land - Some lands could have injunction placed on them by a court, in the situation whereby its ownership is being claimed by two or more people. Such lands are not supposed to be bought by a new buyer if its proprietorship is being challenged in court. Therefore, it is advisable that you avoid such lands even if one of the alleged owners, a land guard or even a chief wants to sell it at a cheaper price to you. Beware that until the final decision by the court, that land remains untouched.
    Purchasing a land and putting it to a full use, for it to be taken back from you could be very traumatic. Consequently, every individual must ensure that, the above steps are taken in their search to buy a land in Ghana and knowing its ownership. This is very important and will save you from unnecessary headache and financial lost.

    We can help! Let us purchase land for you and process all documentations. We have 100% success rate with no litigation issues. Our knowledgeable and qualified lawyers and personnel based in Ghana will handle your land needs for an affordable fee. Please contact us and let us know how we can help.

    Monday, February 3, 2014

    Interest Rates on Mortgage Loan in Ghana and Its Impact on The Average Ghanaian

     Interest Rates on Mortgage Loan in Ghana

    If acquiring mortgage loan is a challenging and an exasperating option for many average Ghanaians, the interest rates that come with it is proven to be a catastrophic burden to all. In Ghana, many people have decried the rates at which interests are being charged by financial institutions and mortgage brokers, describing them as outrageous!

    There are many local financial institutions, which deal in mortgage loans. These financial institutions include; Ghana Home Loans; Home Finance Company (HFC); Barclays Bank; Eco Bank, and United Bank of Africa (UBA).With a total global capital of around 70 million dollars, and contrary to other international banks, Ghanaian mortgage brokers do not have the sufficient financial capacity to cater for customers’ loan needs. In general, they will offer loan ranging from GH ¢24,315,700.00 ($10,000) to GH ¢243,157,000.00 ($100,000), only; and that comes with untenable high lending rates.

    The interest rates as charged by these financial institutions are between 25%-40% on a mortgage loan, making Ghana the country with the highest interest rates in Africa, and the second highest in the whole wide world. This simple scenario reflects very well the ‘absurd nature’ of Ghana’s mortgage interest rate charges. For instance, should one borrow an amount of GH ¢100,000.00 ($40,588.6) for a 10-year period, by the close of the first year only, the borrower is indebted to the bank to the tune of GH ¢140,000.00 ($56,823.95). Meaning, by the end of the 10-year period, the borrower would have paid the bank more than 400% of the original amount on loan; meanwhile, the property they bought or built would not have its value increased that much. In fact, financial institutions are the ones who are making unacceptable exorbitant profits at the expense of the average Ghanaian.

     House plan

    Against all the fiercest criticisms, banks and other mortgage brokers continue with their recurrent activities, justifying the interest rates that they have been infringing on their customers. Banks argue that they have to deal with the cost they incur in terms of the hazardous nature of the loans they give out to customers. Meanwhile, researches have shown that these mortgage brokers refuse to do due diligence and rather blame their customers –predominantly in the informal sector – to be too secretive about their businesses, inefficient, unrealistic in their plans, and volatile.
    Whichever the excuses, it is evident that these high interest rates pose a threat to the economy of the country. It stifles the free flow of both the government, corporate, and individual’s dealings – rendering the whole economy helpless and making Ghana an expensive country to live in.
    1. Mortgage in Ghana is Too expensive - There is no shred of doubt that these gargantuan interest rates are too expensive in the eyes of Ghanaians and most people cannot afford it, except a handful of those who “have made it” in life. The average Ghanaian earn a little over GH ¢3,500 ($1,420) annually, and so it is very obvious that he cannot think of acquiring a mortgage loan. Already, there would be a tall list of necessities he needs to be provide for the family including paying of school fees, payment of utility bills and the rest. Therefore, how much can he afford to deduct from this money to pay for a loan with such huge interest?
    2. Inaccessible Mortgage in Ghana - The fact that one’s source of income and the income itself is a determining factor in acquiring a mortgage loan automatically disqualifies the average Ghanaian who earns just a little over GH ¢300.00 ($121) as salary from obtaining a mortgage loan. This means, he can never live in his dream house because he would not be able to build or buy a house of his own house since he cannot borrow for that purpose.
    3. Ghana Mortgage Interest Rates Hardships - High interest rates brings hardship, making living very difficult in Ghana. The pressure of owing a financial institution such a huge sum alone is frustrating. And what happens if the borrower loses his job later? This will amount to foreclosure – where the property would be retrieved from the borrower when he is not able to pay his loan at the given time. This means, he has actually suffered to loose – in terms of having sacrificed so much money to acquire a property, which was never recovered.
    Ghana’s high mortgage interest rates remain a contentious issue, stirring hitting debate between Government and the Bank of Ghana.

    While others have blamed the government for not doing enough to control mortgage interest rates, substantially; some members of parliament have cautioned Government and the Bank of Ghana about disastrous consequences, should these two entities fail to engage in a workable resolution to this long-term controversial exorbitant mortgage interest rate. Just as the Minister in Charge of Financial and Allied Institutions rightfully put it during a debate on the country’s Treasury bill:

    “The issue of high lending rates to customers must be a major concern to many people, and until it addresses economy, it will not make any headway but keep going round in circles.”

    Tuesday, January 28, 2014

    How Many Bags of Cement Can Build a Standard Single Room?

    In Ghana, a standard single room must be approximately 14 by 14 feet and comprise a toilet, a bathroom, a kitchen, and in some rare cases, a porch.

    To embark on building such a structure, one must first take into consideration the building materials and their costs. For instance, the number of bags of cement required for the work, plywood, the volume of sand, and the labour force or workmanship.

    Cement is the main building material needed to mould the blocks, and therefore the need to calculate how many bags would be needed for the entire work – the types of blocks to be used at the different levels of the building process –6-inches size blocks specifically for the foundation, and the normal 5-inches for the building itself including, the wall blocks, the concrete work at the lintel level, plastering and flooring.

    According to a professional building constructor, Mr. Edward Akabutu of ASLOM Construction Company, a total number of 150 bags of cement would be needed for the construction of a standard single room, prefiguring the total amount for the purchase of the cement alone to GH¢3,000.00 ($1,500.00). This is no small money for an average working Ghanaian, who earns just over GH¢3,000.00 ($1,500.00) annually.

    The price of a bag of cement has not been stable over the few years in Ghana, and based on current prognostications, it may take a while before we see depreciation of prices.
    Nonetheless, most people in Ghana are still eager to become proprietors. Nowadays, house is as precious as ‘gold.’ There are three principal reasons, which explain people readiness and willingness to rather build or own a standard single room than renting a 2-bedroom house.
    1. To beat rental charges - Taking the opportunity of price instability as an excuse, landlords/landladies are in the habit of not only increasing their rental charges every so often, but also charging exorbitant rents for low-quality houses. Some of them go as far as taking a 5-year advance payment from their unsuspecting tenants. Today, a standard single room in Accra is between GH¢150.00 ($ 68.20) and GH¢200.00 ($91.10) per a month. Owning a single room apartment is therefore, one smart way that could save one from financial hardships.
    2. Peace of mind - Some landlords/landladies have taken the frequent price increment as an excuse to harass – and even suppress –their tenants in many unnecessary ways. House owners’ enmity does nothing but to trigger frustration and depression that would never be experienced when one lives in their own house.
    3. Extra Passive Income & Making Ends Meet - Being a proprietor of a single room apartment in Ghana may be the ultimate option for the average Ghanaian and would be considered a greater feat. If building a house is a huge investment, it is also seen as a great financial relief for owners of such proprieties and a sign of independence and maturity. Regardless of the economic hardship in the country, these house owners are sure to get something in their pocket at the end of the month.

    Despite the sort of comfort it brings, the single room is surely not recommendable to everyone, and certainly not to a large family. If, for lack of space, a single room-house is an encroachment of individual privacy, there could be health implications such as the easy passage of communicable diseases from one person to another.

    The building of single rooms may be a choice of lifestyle for some average Ghanaians or a short term shelter for others, such structures cannot be the definite solution to the country’s perennial acute housing deficit. Ghana’s population is increasing rapidly and more and more people from the rural areas are moving to the cities. Encouraging such buildings could further worsen Ghana’s already existing serious housing problem, leading to shanty towns. It is obvious that shanty towns tend to further develop into slums, causing dreadful implication on the people’s welfare and the country’s economy in general.

    No serious entrepreneur or foreign governments would want to make any investment in a country with poor settlement plans. Hopefully, lawmakers take note of and act upon this.

    Wednesday, January 22, 2014

    The Cost of a Bag of Cement in Ghana within the Last 3 Years

    Cement is the most commonly used building material in Ghana. Many commodities, goods and services including petroleum products, have seen price hikes over the years with cement not being an exception. The price of cement within the last three years has been increased by almost 120%, causing controversies.

    In 2011, a bag of cement was sold at GH¢15.00 ($6.35) and saw a dramatic increase to GH¢17.00 ($7.20) in the following year. The price then shot up to GH¢18.00 or $7.63 in 2013. Today, a bag of cement is sold at GH¢19.00 ($8.10) or even at higher price, depending on the shop from where it is being bought. Unfortunately, with the recent increase in petroleum products, the price of cement is equally likely to climb to GH¢25.00 ($10.63) by the end of January.

    If fuel price instability is the main cause of the price increase in cement in Ghana, certainly there are other factors that can be cited, explaining the volatility in the cost of cement.
    1. High In Demand - Being the most commonly used building material; cement is much patronized in the construction industry in Ghana. Unfortunately, GHACEM, which is Ghana’s leader in cement production does not have proper infrastructure to meet customers’ needs. In 2007-08, the company was forced to shut down production for several days due to some technical problems. This triggered the increase in price. It is expected that as the demand of a product goes high, its price increases because the company is unable to provide for customers’ needs.
    2. Monopoly System - The cement industry in Ghana has been plagued by monopoly. Research shows that GHACEM, the government major share-holding company, had a market share of 97%, before the construction of the new cement factory in Buipe, a small town located in Northern Ghana. Since 2007, GHACEM dominance is diminishing slowing. Recently, other cement producing firms have emerged. They include Diamond Cement, Dangote and Sol cement. Nonetheless, GHACEM is yet to experience a major competition; customers are very much attached to the local brand and are yet to patronize the imported ones.
    3. Price Wars - In a bid to prove its superiority over its competitors, GHACEM escalated the price of its cement not only to distinguish itself from other cement producing companies, but also to put a value on its product. To prevent any inferiority tag placed on them, the other cement producing companies also increased their prices, leading to frequent increases. Over the years, the war of dimension of product quality between GHACEM and local cement producing companies has resulted in price competition.
    The commercial competition characterized by the increase of prices rather is affecting the consumer. Cement price instability has made building of house very difficult and challenging for the ordinary Ghanaian. More often than not, people have to leave their buildings uncompleted for so many years due to their inability to come to terms with the drastic increase in the price of cement or simply have to opt for makeshift buildings and wooden structures, while some constructors are forced to build poor quality houses to beat down construction cost.

    Undoubtedly, it is high time cement producing companies in Ghana adopted strategic measures to stabilize the price of a bag of cement – making it accessible and affordable for ultimate low cost housing. But judging by the current situation, the country will not experience any price depreciation anytime soon, at least not until 2016. Ghana remains one of the most expensive countries to live in.

    If house building has become a less appealing activity for the average Ghanaian, the majority of estate developers, constructors, and proprietors will defy cement price increment by adopting new ways of building houses and doubling their annual earnings at the expense of the ordinary Ghanaian and expatriates who often complain about the low-quality but high-cost rental of houses.

    For the time being, in anticipating of a ‘miracle,’ Ghanaian consumers would have to adjust themselves and suffocate a little bit more under high-cost of living, wondering how long they would have to muddle through unjustified frequent price increase.

    Have you seen other Cement prices in Ghana lately? What are Cement prices in your country? Leave your comment or experience with Cement below or on our Facebook Page here.

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