Low-income earners face housing crisis

Few Malawians can afford to own or rent a decent house, a development that is further worsened by the financial sector’s mortagage policy, the Centre for Affordable Housing Finance in Africa (Cahf) analysis shows.

In its Housing Finance in Malawi report, the think-tank that works to supportt and grow the housing market in Africa says commercial banks’ mortagage policies are prohibitive, with a requirement that an applicant’s monthly repayment should not exceed 35 percent of monthly salary.

The average mortgage rate in the country’s nine commercial banks is at 19.5 percent, which is offered based on a client’s income, according to  the report.

This means a client is expected to repay about K232 166 ($315) a month from a minimum income of K663 333 ($900) for a K12 million ($16 284) mortgage while the average salary for most mortgage applicants is about K400 000 ($543).

On the other hand, the minimum mortgage offered by banks ranges between K12 million ($16 284) and K16 million ($21 712).

Reads the analysis in part: “About 70 percent of the urban population live in slums located in the outskirts of major cities.

“For middle-income earners, it is relatively cheaper to rent rather than own a decent house due to high costs associated with construction and land acquisition procedures.”

In 2019, Habitat for Humanity reported that Malawi needs approximately 21 000 housing units every year for the next 10 years to meet the demand for the current backlog and future growth.

In his reaction, Consumers Association of Malawi executive director John Kapito observed that with a a minimum wage of K50 000 and no house provisions and regulated house rentals, consumers are bearing the brunt.

He said: “The housing market cannot be left to market forces to determine when incomes and wages are regulated by government.

“Government needs to take up its role and responsibility of making available cheap and affordable decent houses for most of the underpaid Malawians. The current situation is sad.”

The policy and legal framework governing the housing sector includes the National Housing Policy, the National Urban Policy, Malawi Housing Corporation Act and National Land Policy.

In addition to the above, there is a policy and legal framework for land tenure and management drawn from the country’s Constitution

In an interview yesterday, Land Economy Board registrar Mickson Chiundira  said access to land and limited financial access has made it even worse for low -income earners to own or afford decent housing.

“Apart from relying on banks, it is high time institutions  established home ownership schemes thrrough which one can borrow money to pay over a number of years,” he said.