Banks to manage homes construction

HARARE - Zimbabwe is crafting laws that allow financial institutions to manage the construction of homes as part of efforts to bring transparency and accountability in housing cooperatives.

Local Government minister Ignatious Chombo said government also wanted the banks to take over the servicing of stands.

“A reliable and sustainable financing system is critical to effective housing delivery.

The various financial players dominant in the housing value chain will come up with innovative financial instruments to attract affordable medium to long-term financing as well as providing mortgaging finance to potential beneficiaries,” he told a

Construction Industry Federation of Zimbabwe (Cifoz) conference this week.

Chombo said it will be mandatory that members’ contributions be deposited with banks for accountability purposes.

This comes as most homeseekers are failing to access mortgages and have opted for housing cooperatives.

However, some cooperatives have mismanaged funds resulting in them failing to service allocated stands.

According to government figures, Zimbabwe has a nearly 1,3 million housing backlog, resulting in some falling prey to bogus cooperatives and land developers.

“We want cooperatives to pay their money into a bank so that the money is recorded under their name. When and if they quit that co-operative they must be given their money plus interest that has accrued to them and in case they want to sell their membership they can sale to an individual and get their money back,” he said.

“We want sound registered commercial banks to be the ones that receive money from cooperatives,” he said.

Under the new rules, the financial institutions’ duties will be to find experts who will develop the land by laying roads, sewers, Wi-Fi connections and construction of schools, community hall and playing grounds among other social amenities.

Chombo said banks would then have to source funding to augment the cooperatives’ deposits and pay off contractors to complete the servicing and construction of houses within 36 months.

This was after banks, building societies, pension funds and insurance firms, who rushed to take up licences for mortgages in 2009 when the country dollarised, are still pricing their properties beyond the reach of the ordinary people.

“Housing cooperatives will continue to play an important role in augmenting the role of the State and financial institutions in mobilising housing finance and in the actual construction of houses,” he said, adding that current efforts were directed at sanitising the housing cooperative sector to make it more effective and efficient.

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