Every working person dreams of owning a decent home some day. However, raising the money to buy or construct your dream house is not always an easy task, especially for the majority of Kigali’s over one million residents. 

The biggest challenge for city dwellers has always been that most of the houses on market today are out of their reach as real estate developers target the upper segment of the market. These are people that earn at least Rwf3m net pay a month. 

With the city population projected to hit two million in eight years, the situation could only get worse, which calls for urgent interventions to ensure people acquire homes.

According to the survey done in 2012 by the city authority, the current formal housing market only supplies about 1,000 units annually, yet the city needs around 31,000 units yearly. It is estimated that between 2012 and 2018, about 17,280 units or an average of 1,234 units annually will be constructed. The study projected that the total housing requirements for Kigali will be 460,000 units by 2022.

For the majority of city residents, especially corporates, owning a house in a good neighbourhood has for long been a dream. This could however change with new initiatives and mortgage products that target the low and medium income earners.

New mortgage products to ease access to funding

The growing demand for affordable decent homes in the Greater City of Kigali has attracted the attention of financial institutions and real estate developers.

Local banks have come up with creative ways and products that will ease access to mortgage finance. 

Over a week ago, for instance, Kenya Commercial Bank (KCB) Rwanda gave the ‘home-owning’ quest a new dimension when it took potential home buyers on a guided tour of various properties across the city and its suburbs.

Over 50 home-searching city residents participated in first ever "Property bus tour”, and visited three estates; Rubirizi Homes in Kabeza, Kanombe sector, and Kinyinya Estate and Century Park Residences in Nyarutarama.

During the tour, the bank also launched a home loan product, where the bank will provide 100 per cent financing for clients who own land and require money to construct homes. 

The mortgage amounts will range from Rwf25m to Rwf80m, according to Maurice Toroitich, the KCB Rwanda managing director. 

For properties that require over Rwf80m to construct, KCB will finance up to 90 per cent of the total cost, Toroitich told potential home buyers during the tour.

However, under a home loan guarantee programme through SORAS, an insurance firm, the bank will foot the entire cost for those seeking to buy new houses. The interested people must be earning gross income of Rwf2.5m per month. The guaranteed amount will however be subjected to a 3 per cent levy.

Jackie Kabagema, a resident of Remera sector, Gasabo and one of the people who participated in the KCB property bus tour, said her dream of owning a home in the city could soon come to pass. 

"I tried to secure a loan in one of the banks, but their terms were unfavourable. Besides the high mortgage rates, I didn’t agree with their harsh conditions,” she said.

"Now that banks like KCB have come up with such great opportunities for land owners, I will be able to build my own house,” she said.

Steven Mutabazi, a RwandAir employee, said it was previously hard for most city dwellers to find affordable homes around Kigali. 

"There are many estates around the city, but it is hard to get a house that fits your financial ability. Opportunities like the property tour have enabled many potential house buyers to see properties on the market and identify those they can afford. 

"In fact, I have identified a house among the ones we toured. I already have half of the required money and KCB people have agreed to finance the balance,” he said. 

Mutabazi said he had in the past failed to secure a bank loan to buy house because of rigid mortgage conditions banks give borrowers. 

He applauded KCB’s 100 per cent loan scheme offer, which he said will help many Rwandans own decent homes. 

"Renting a house in Kigali is the most challenging responsibility you can ever take on; houses are quite expensive. I would do anything to buy my own house as soon as possible,” said Amos Ndungutse, a resident of Kimironko (Gasabo District), a city suburb. 

Monthly rent for an average three-bedroom self-contained, all-purpose house ranges from Rwf150,000 to Rwf250,000, depending on location, convenience and accessibility.

Toroitich told Business Times that since 2011, the bank has provided 480 home loans worth Rwf15b.

All the mortgage schemes attract an interest fee of 17 per cent. Toroitich blamed the high interest rate on "the prevailing market situation”. 

Charles Haba of Century Real Estate said property developers were trying their best to satisfy the growing demand for homes across the various market segments.

He, however, said the market does not offer what many potential home owners want, a reason why some Rwandans prefer to build their own homes. 

Haba said his firm would develop the Rubirizi Homes Estate according to each client’s preference. 

"Owning a home is not only a social need, but is also a good long-term investment,” he argued. 

Toroitich said there was need for professionalism in the sector to reduce the risks and attract more investors and buyers.

Other bank products, initiatives

The Rwanda Housing Authority (RHA) and the City of Kigali are devising ways of providing city dwellers affordable, but decent homes. 

Eng. Leopold Uwimana, the head of construction at the Rwanda Housing Authority, told Business Times last week that they will start building affordable houses on plots owned by the Rwanda Social Security Board (RSSB) in August. He said the plots that include the 10-hectare site in Batsinda and another 130 hectares in Kinyinya, Gasabo-Kigali have been lying idle since 2007 when they were acquired. The project targets to set up 8,400 units when construction works are completed, he added. However, this scheme is targeting low-income earners, and public servants earning between Rwf100,000 and Rwf450,000. It will benefit other residents later, according to the authority. 

The housing authority is already working on another affordable housing scheme to construct 4,800 units on four 20-hectare pieces in Ndera, Gasabo District, Kanombe in Kicukiro District, and Nyamirambo and Kigali sectors of Nyarugenge District.

Bank of Kigali’s mortgage product (BK mortgage), finances home loans with a deposit of 20 to 30 per cent of the total amount for the home. The BK mortgage interest rate is 16 per cent per annum. 

Frank Abaho, the Rwanda Development Bank (BRD) public relations and communications officer, said the bank’s ‘Gira Icumbi’ home loan product finances houses that are above Rwf20m at 16 per cent interest rate, which has a depreciation rate of 0.5 per cent per year. One can repay the mortgage for up to 20 years.

"This could be the most convenient home loan product on the market for both property developers and private home buyers. BRD wants to help the public own homes and facilitate home development master plan as per the national vision,” he said.