The Ghana Real Estate Developers Association (GREDA) are calling for an evaluation of the Home Finance Mortgage Act, 2008 (Act 770) to help promote and develop the mortgage sector.
With the review of the Act, has called for a simple and unambiguous act, to allow for easy interpretation and application for stakeholders who consist of the judiciary and law enforcement agencies.
They say, the should also to remove all bottlenecks on the part of the mortgagee in order to make home mortgage finance attractive as an investment alternative.
President of GREDA, Mr. Patrick Ebo Bonful expressed the grievance of the Association, during its annual Chief Executives (CEOs) breakfast meeting, last month in Accra. He also underscored the need for the decoupling of the act from the Mortgages Decree of 1972.
This, according to him, was because home finance mortgage was not the same as the conventional mortgage system where a borrower of a commercial loan secured the same with a mortgaged property.
He explained that the development of a strong secondary market for home mortgage financing in this country could not be overemphasized, in view of the bright prospects it held for the economy in releasing liquidity to the mortgagee.
“For a home mortgage financing to be attractive, it requires a secure, smooth, transparent and efficient land title registration process,” he said.
Mr. Ebo Bonful, also noted that, the current situation whereby it took between one year to four years to go through the land title registration process is to say the least unacceptable, fomented illicit land transactions and created unnecessary uncertainties for the mortgagee and by extension therefore, the entire home mortgage finance system.
The digitisation process of land registration, he said should be fast-tracked as a matter of urgency, he intimated.
The GREDA president furthered that, in terms of size, depth, penetration and flexibility, investments in this segment of the real estate delivery value chain had significantly declined over the years.
This is due in part to the extremely difficult and often laborious recovery regime the mortgagee faces in trying to recover homes from defaulting customers.
On his part, a Deputy Director General of the Securities and Exchange Commission (SEC), Mr. Paul Ababio, announced the readiness of the Commission to operationalise the Real Estate Investment Trust (REIT) legislation before the end of the first quarter of this year.
He stated that the legislation when in force, would facilitate a robust real estate sector. The REIT focuses largely on owning, operating or financing the real estate sector.
He explained that trust was to serve as an investment vehicle which held real estate securities and income producing real estate asset for industry players.
“It guidelines will stimulate that at least 85 per cent of its asset should be an income producing asset and it had to pay out its profit. We are looking at rolling it out in the first quarter of this year.
“We have developed a vehicle that will be able to attract a lot of investment into the real estate sector in this country. So, we are developing regulations that will enable people who want to establish REITs to mobilise funds and list them on the Ghana Stock Exchange (GSE),” he added.