Proof of income requirement hinders mortgage seekers
FAILURE to provide proof of income by mortgage seekers operating in the informal sector has resulted in a low uptake of mortgage facilities, players in the housing finance sector have said. According to the Zimbabwe Association for Housing Finance “providing proof of incomes from informal business activities continued to be problematic for increasingly cautious lending institutions.”
The association also said the unavailability of freehold title has also been a major hindrance from accessing housing finance.
“Unavailability of freehold title in some urban areas also continued to inhibit potential home owners from accessing mortgage finance,” said ZAHF.
Most Zimbabweans, especially in urban areas are still staying in properties that have not yet been regularised by the city fathers.
This is partly due to some property developers who are failing to complete all stages required by city councils for properties to get title. Some areas are still to be connected to water, sewer, tarred roads, which are some of the requirements for regularization.
This has seen many going for years without title meaning the houses do not qualify as security at financial institutions.
“The high demand for housing across all residential densities therefore forced some home seekers who could not access the conventional mortgages to resort to alternative financing methods such as rent to buy and deed of sale arrangements.”
Turning to the housing market, ZAHF said sellers of high value properties in low density areas were generally opting to hold on to their properties due to fears of a possible loss of value of the sale proceeds.
“Socio-political events that took place in the last quarter of 2017 also induced a ‘wait-and-see’ attitude on the part of sellers. This limited the number of properties available on the market,” said ZAHF.
Estate Agents however, indicated that sales were still being concluded through local transactions, particularly where sellers were in extraordinary circumstances such as financial stress and divorces.
Commenting on the construction side ZAHF said interest in cluster home developments continued to increase.
“Some developments have been undertaken and completed in the Highlands, Greystone Park and Mainway Meadows areas of Harare while others were being planned on vacant land or as additional structures on large properties.
ZAHF said some developers have opted to demolish existing houses and replace them with clustered units.
“This trend appears to be influenced mainly by the need for security, particularly for elderly persons who prefer secure access-controlled properties in close proximity to other residents.”
According to ZAHF, Zimbabweans currently in the diaspora were also said to be buying cluster homes for future occupation when they return.
“Several enquiries for funding were made for funding by prospective developers intending to develop such properties for sale or leasing.”
Brick and mortar still remained the preferred construction method however, promoters of modular construction methods that promise speedy construction of more durable structures at lower cost have become more aggressive and have put up some demonstration units at some sites.
“Chromadec roofing material also gained popularity as it was said to be affordable and aesthetically better than other roof coverings,” said ZAHF.
The association also noted that enhancement of existing properties through alterations and extensions were on-going as evidenced by numerous stacks of bricks and piles of sand and stones on roadsides.