Why subletting is rife in city’s prime locations

Monday September 28 2020

 

By Josephine Christopher

Dar es Salaam. In 2010, Ramadhan Hamis got a chance of a lifetime when a four bedroom house owned by the National Housing Corporation (NHC) went on the market for possible renters. Located at Upanga next to Palm Beach, this is a prime location idyllic for someone looking to settle with a family. Its appeal was heightened by the fact that it was just a stone-throw away from the central business district.

However, getting the house was harder than Hamis had anticipated. It turns out, there was another party interested in the same property. It was now a battle of who will seal the deal and secure the coveted house.

At least 10 years down the line and I’m seated in Hamis’s living room in the same house he fought for tooth and nail while he recounts how he courageously managed to remain the last man standing. “I was offered Sh80 million to let this place go,” he says. But he chose not to give in to the request and today he lives in the house with his wife and three children.

One might wonder why Hamis forwent an exorbitant sum just to live in a rented house. One answer comes to mind; location!

Location plays an important role in determining the worth of a real estate property.

Most desirable places in the city such as Posta, Kariakoo, Upanga and suburban areas such as Masaki, Mbezi and Mikocheni have been taken up by developers who build storey buildings, which are accommodated with significant facilities.

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“The presence of these facilities such as elevators, car parking and security make the apartments in prime locations even more expensive,” said Ally Gogo, a real estate agent with an operation base in the city centre.

Prospective tenants and house owners have a higher preference for locations that will make life more convenient for them.

Desirable properties are mostly close to amenities such as shops, cafés and transport into city centres.

Abdul Ranza, a realtor in the city told The Citizen, “tenants search for convenience on how much time he/she is going to spend on the road to the city centre.”

The convenience is also in terms of costs, if you were to build your own house in a city prime location, it would cost you an arm and a leg. Paying for the amenities like elevators, security, power backup, etc are added on top of the total cost of the building.

“But for apartments, the cost of the amenities is shared by the different families living in the building. This, in turn, reduces the cost per head. So, it is often more viable to buy an apartment in a city than to buy a plot and build a house in it,” said Ranza.

However, these have resulted in the emergence of backyard renting and selling by tenants, who use these units as a stream of income without the knowledge of the landlord.

How big is the problem?

“Currently, cases of backyard renting or reselling have minimized,” Yahya Charahani, the acting head of corporate affairs at NHC, which is under the Ministry of Lands, Housing and Human Settlement Development, told The Citizen.

The state-owned developer is among real estate developers in the country, who have encountered this challenge with its tenants.

The company’s projects in the city include Mchikichini residential apartments located at Ilala, off Kawawa Road, just less than two kilometers from the city center among other properties that are touted to be one of the most sought after properties. Charahani said prior to 2010 cases of the dubious selling of NHC properties were many but the company has since implemented measures that have controlled the problem to a minimum.

One of the measures that the developer has taken is to conduct a frequent verification process of all its tenants.

“It is like a monthly process, because in most cases we send our agents to tenants’ houses each month to hand over bills or rent invoices,” he said.

According to Charahani, NHC has a huge verification process that is currently ongoing to all of its customers across the country.

He said, “We understand that there are still some cases that are yet to be resolved because we have done our best to make sure we restrain tenants from reselling or subletting our properties”.

Earlier this year, it was reported that the developer was under investigation for renting out houses to unsuspecting tenants, mostly foreigners working in Tanzania, at exorbitant rent fee of up to Sh20 million ($9,000) annually.

An article by our sister newspaper The East African indicated that the minister for Lands, William Lukuvi, submitted a list of NHC houses suspected of having been sold off illegally to the Director of Criminal Investigations.

Charahani said, “NHC strives to encourage stakeholders and whistle blowers to provide us with any information if they detect that there is violation of law in any of the corporate properties.”

He said NHC has more than 21,000 units across the country and they have made an effort to frequently verify their tenants’ information.

A realtor based in the city Mr Jumaa Senkondo, told The Citizen that currently it is very difficult to find an agent that is renting out a state-owned property.

“Long time ago it was possible, because middlemen were making money out of renting or selling these properties illegally but now, if you want a state-owned property you definitely have to contact them directly,” he said.

Charahani concluded that, due to high demand, any tenant who vacates from the corporate property has to hand over the house to the NHC and then the house would be given to another customer on the waiting list.