Most people dream of owning decent homes, but for many low-income earners, this dream is never realised because of the high costs involved. The situation has forced many people to live in inhabitable dwellings, especially in urban centres.

However, the entry of a new developer in the affordable housing market segment could provide relief to many low-income earners that want to acquire decent homes. The proprietor, Skat Consulting Limited, says their model is two-pronged; easing access to low-cost decent homes and sustainable real estate development to safeguard the environment.

Daniel Wyss, the managing director of Skat Consulting, said the firm offers a range of affordable houses for as low as Rwf8 million per unit. The project is supported by Swiss Agency for Development and Cooperation, according to Wyss. "At only Rwf8 million, low-income earners will be able to acquire decent houses, which will help reduce the challenge of access to affordable housing in the country,” Wyss told Business Times last week.

How to acquire the Rwf8 million home

Most low-income earners don’t have assets that they can use as security to secure mortgage loans from local commercial banks. The problem is compounded by the high interest rates charged by banks on mortgages, which has put access to affordable housing out of reach for low and middle segments of the pyramid.

Wyss said the Kimisagara-based firm will set up estates at Nyakabanda, Rwezamenyo, Gitega and Kimisagara, where buyers can acquire homes either using mortgage loans or personal cash.

Stephen Ruzibiza, the PSF chief executive officer, said access to affordable housing remains a big challenge, especially for low-income earners, despite initiatives by different investors and government to reduce the gap. Therefore, we are hopeful that the new initiative will contribute significantly to efforts aimed at easing access to low-cost decent homes going forward, Ruzibiza said last week.

New technology key to low cost houses

Skat Consulting has embraced new alternative technologies to reduce cost of construction and what the final buyer pays, according to Wyss.

The firm employs a building model, constructing modern residential units using holed fired clay bricks of different dimensions, which saves on cement, sand and stone, he added. The two-storey houses are built in blocks of eight units.

"We put columns in the holes, which saves on the amount of cement and concrete used. By having the ground floor acting as the foundation, you reduce the surface area of the roof, as well as the foundation, which are the most expensive stages in construction,” Wyss explained.

The technology has been used in Rusizi District, Burundi and the Democratic Republic of Congo.

With this technology, constructing one square meter of a wall using the new technology is 30 per cent cheaper compared to using traditional fired bricks.

The building project will run along the heavily settled 4.3-kilometre water drainage channel from Nyakabanda, Rwezamenyo, Gitega and Kimisagara on the Nyabugogo side.

"We are constructing model flats at Kimisagara. Each unit will cost between Rwf5.5 million ($6,500) to Rwf8 million ($9,400), depending on the needs of the community,” Wyss said. We use locally-available materials that are also environmental-friendly, he added. This model has been successful in India, Nepal, South Africa, Burundi, and Latin America.

Stakeholders speak out

Steven Milindi, the managing director of Misteph Company, a real estate developer and property manager, said entry of new players will ease access to decent homes and at competitive rates.

He added that high cost of most houses on the market is mostly due to factors like importation of construction materials and high mortgage rates. Some properties that are marketed as affordable go for as high as Rwf150 million depending on the facilities, location and size, putting them out of reach of the intended market. However, there are some that go for Rwf25 million in city outskirts, which are also not that affordable considering that the many civil servants and corporates earn less than Rwf400,000 a month.

Kenneth Agutamba, the Bank of Kigali marketing and public relations manager, said their customers generally seek funding for decent properties under Rwf25 million. "A product of Rwf8 million is, therefore, good news to majority of Rwandans… we are looking forward to supporting anyone that meets our mortgage requirements to buy a decent home,” he added.

Govt fund

Leopold Uwimana, the affordable housing division manager at the Rwanda Housing Authority, said the Affordable Housing Fund project supported by government will go a long way in solving the problem of affordable housing shortage.

Developers and building material makers will be able to access the fund that is managed by Development Bank of Rwanda (BRD) starting next month, according to Uwimana. The Rwf209 billion ($247 million) fund will finance new home-owners and property developers to reduce borrowing costs aimed at boosting the supply of low-cost housing in the country.

Kigali has a shortage of over 400,000 houses, and many city dwellers live in unplanned neighbourhoods, a report on the city’s housing needs and opportunities for investors in the sector indicates.

Challenges

Uwimana said the land is expensive and many of the materials used are imported, which pushes up the cost of houses.

"Interest rates from banks are also high and paid in a shorter period,” he added. However, he is optimistic that the operationalisation of the fund will greatly help reduce the cost of financing and trigger interest in low-cost housing, spur supply and ease access.