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National Housing to cut house prices by producing own inputs

Monday May 24 2021
NHC PIC
By Josephine Christopher

Dar es Salaam. The National Housing Corporation (NHC) will start producing its own building materials in the coming financial year. This in a deliberate move to expedite the construction of low-cost houses, NHC’s Public Affairs and Information manager Muungano Saguya said at the weekend.

By producing its own construction materials, NHC will also be cutting costs associated with purchasing cement, roofing sheets, aggregate and concrete blocks - and also its operation costs.

Mr Saguya said in a statement availed to The Citizen yesterday that production of the construction materials will start in Dodoma in the 2021/22 financial year.

“For low-income earners, a house should cost between Sh10 million and Sh20 million. But the high cost of building materials and value-added tax (VAT) hiked the prices of our low-cost houses to Sh40-55 million in some cases. This isn’t affordable to many,” he said.

Houses built under a pilot project that covered 34 districts were costly partly because of the costs associated with land acquisition and construction of infrastructure such as electricity lines, feeder roads and drainage systems to service the plots.

“Such projects should have been undertaken by Tanesco, Tanzania Rural and Urban Roads (Tarura) and other agencies… This is why we have built 1,300 houses under the project, but the selling price went up and some districts and municipal councils were unable to pay,” he said.

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With a shaken purchasing power around the country, NHC has reversed its policy whereby instead selling 70 percent of the houses it builds and renting the remainder, it now offers for sale only 20 percent and reserve 80 percent for rental.

The drive to build affordable houses for all remains NHC’s focus but it will run hand in hand with profitable projects targeting middle and high income earners whose profits would go to subsidize low cost housing.

NHC is currently investing in the development of satellite cities in Arusha, Mbeya, Dar es Salaam and Dodoma, where it is building 1,000 houses to provide shelter for public servants transferred to the new capital city, with some Sh70 billion being invested in the three-phase Dodoma project.

In Dar es Salaam, it was carrying out the Golden Premier Residences, Morocco Square and Kawe projects.

Apart from own projects, NHC was undertaking several other projects on contract basis, including construction of the Vingunguti abattoir in Dar es Salaam, zonal referral government hospitals in Musoma and Mtwara as well as 44 residential houses for Tanzania Forest Service staff.

Believing that affordable mortgage financing scheme would enable more people to buy houses, the NHC has mobilised 19 banks to join a scheme that has provided Sh20 billion loans so far.

The World Bank has also been supporting a low interest rate loan scheme for housing developers through the Bank of Tanzania and Tanzania Mortgage Refinancing Company.

Tanzania’s housing demand remains high at three million units annually, which grows by 200,000 units. Industry watchers say the government and stakeholders should develop a comprehensive housing policy to guide the sector, whose contribution to the economy is key.

There is also a plea for the waiver of VAT on building materials to help lower the prices. Further, a reasonable tariff could be levied on sales of those materials to set up a fund to subsidize building of affordable houses.

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