Land administration systems in Ghana and the provision of affordable housing

Abstract

House prices have risen dramatically and it is evident that this has prevented many people from buying their own home, consequently increasing the demand for affordable housing within Ghana. Furthermore, demand for affordable housing across the country exceeds potential supply. Housing provided by the formal sector in the country is generally too expensive relative to income levels and the number of units built is insufficient. The formal sector caters mostly for upper income households where it is profitable for private developers to produce housing. Despite government efforts to provide social housing to attend the demands for housing of poor, only a fraction of the poor have been accommodated in this way. As a result, the housing problem in Ghana is the shortage of affordable accommodation for the urban poor; the low-income majority.

In view of their inability to access housing through the formal channels, the poor take it upon themselves to build their own housing. Self- build housing or progressive housing has played a major role in the production of Ghanaian’s low-income housing stock. However, the ability of most households to build on their own is affected by many factors. The literature review found that the main constraints observed on the supply of this housing are access to titled land and access to construction finance.

The land administration systems in Ghana can be described by two adjectives; complex and multiple. The entire systems have been governed by multiple laws, regulations, processes, standards and have been managed by multiple institutions with highly fragmented land administration structures, limited cooperation and coordination. As a result there are overlapping and duplication of functions and organisations and institutional management weaknesses are evident. This results in general indiscipline in the land market. There is a large number of mortgage financing institutions in Ghana, all of which have a mandate to provide credit facilities to the lower income groups at lower than market interest rates and long repayment periods. However, many self-builders households face series of problems in attempting to access finance with which to resolve their housing needs even though they have regular employment and income.

To place the study in context, this volume aims to assess the impact of land tenure and administration systems on the provision of self-build housing by low income households with an argument that homeownership among low-income increases mostly through access to mortgage credits. Drawing on the insights from New Institutional Economies (NIE), the empirical analysis is undertaken in Kumasi, a major city of Ashanti Region, Ghana. The research is designed to triangulate data from a range of sources including questionnaires surveys, focus groups’ discussion and key informant interviews. The starting point is that there are significant problems surrounding affordability and accessibility to home ownership within the housing market. The research considers to what extent the lack of accessibility/affordability is determined simply by low incomes or access to credit or both. To address this problem the research focuses on the experience of key workers with low but regular verifiable incomes.

The study showed that lending to self-builder households generally involves greater risks for lenders, and banks do not like to lend to these developers resulting in financial exclusion among the majority of households. At the same time the study found that the verification of incomes of loan applicants is insufficient and legal security of land tenure is a necessary prerequisite for the sanction of loans. The findings show that majority of the households lack formal title to their lands and building permission certificates to their properties. Further analysis suggested that this is a reflection of costly and lengthy administrative red tape of land institutions and agencies that is associated with acquiring land, developing land, registering and transferring titles and obtaining construction permits. In effect, the findings suggest that majority of households face financial exclusion. This has meant that many aspirations to homeownership have remained unfulfilled.