[ 2016-08-02 ]

Banks demand tax cuts to bridge housing gap
Banks in the country want government to slash
taxes slapped on them to be able to offer cheaper
mortgage loans to their customers.

They argue that the continuous imposition of
taxes on interests earned on mortgages, make it
difficult for them to reduce interests for the
average Ghanaian to access mortgage services.

“If institutions like HFC are able to get some
type of tax credit for the interest income; for
instance if the government would say interest
income on mortgages under ¢250,000 is tax free,
it will mean that for the interest that HFC earns
on mortgages under ¢250, 000, it will not have to
pay tax on that income. But that is not the case
as such, the high interest is a way that the
financial institutions could pass on that tax,”
Managing Director of HFC Bank, Robert Le Hunte
told Citi Business News.

Currently, interest rates on mortgages hovers
around 50 percent which serves as a disincentive
for customers to access credit.

The situation is said to be impacting hugely on
the country’s ability to solve its 1.7 million
housing deficit gap which is also anticipated to
increase to about 1.9 million by 2019.

However Robert Le Hunte explained to Citi
Business News that slashing the taxes will help
banks to also contribute better to the mortgage
industry.

“If for example, the taxes are reduced, you can
see the mortgage interest rate declining from
about 50% to about 20 %,” he stated.

Meanwhile Robert Le Hunte has cited the uneasy
accessibility to mortgages; short term nature of
funds that banks receive to fund mortgages and the
high interest rates as some critical challenges
confronting Ghana’s ability to bridge the
widening housing deficits.

Securities Industry Bill to facilitate mortgage
in Ghana

As part of efforts to increase access to housing,
the Securities and Exchange Commission (SEC) has
intensified moves to get the Ghana Real Estates
Developers Association (GREDA) to utilize the
capital market to raise funds.

The move follows the approval of the Securities
Industry Bill by parliament which allows the
Securities and Exchange Commission to license Real
Estate Investment Funds.

The Director-General of the Securities and
Exchange Commission Dr. Adu Anane Antwi explained
that GREDA can raise bonds on the capital market
as an alternative measure to listing on the Ghana
Stock Exchange (GSE) to help close the 1.7 million
housing unit gap in the country.

“We have being engaging GREDA to ensure that
they can utilize the capital market to raise funds
to help in their operations and build more
houses,” he said.
He reiterated that there is always an option for
GREDA to raise bonds on the capital market to
boost its operations.

Explaining the purpose of the Real Estate
Investment Funds, Dr. Anane Antwi stated that the
fund will serve as a mutual fund by mobilizing
money to support stakeholders in the real estate
industry.

Source - citifmonline.com

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