Edgar Brandt
WINDHOEK – Alternative housing pundit Heinrich Schroeder, the founder of Kavango Block Brick, is fiercely advocating the establishment of local building societies as well as changing standard housing repayments, from monthly to daily payments. A building society is defined as a financial institution owned by its members as a mutual organisation that offers banking and related financial services, especially savings and mortgage lending.
“During the apartheid years, building societies were established to provide home loan finance particularly for the poorest of the poor at much lower interest rates than the banks of today can offer. Since the abolishment of building societies, the rich continue to get richer and the poor continue to get poorer,” said Schroeder.
During an interview with New Era, Schroeder said that in addition to bringing down the cost of dignified housing, his new Kingdom Brick (K-Brick) project demonstrates the cost of owning a house per square metre per day, per month and per year.
Schroeder used what he called a typical example of a K-Brick Housing financing formula, citing a 60m² housing unit which has a financing cost of N$1.00 per square metre, which works out to N$60 per day.
“The first step to fight poverty is to calculate mortgage repayments on a daily basis and not on a monthly calculation basis. For example, at 28 days in the month, N$60 per day equates to N$1,680 per month. At 30 days it is N$1,800 per month and at 31 days it is N$1,860. With 365 days in the year, this equates to an annual mortgage loan repayment of N$21,900,” said Schroeder.
“We need to force the public and private sector to work together to make serviced land available in order to demonstrate and showcase to the world this revolutionary K-Brick building system. Not only will the feasibility of the building system be demonstrated, the cost to deliver such a home in its class at the cost saving calculated will also be demonstrated. Public entities such as the National Housing Enterprise (NHE) and the Development Bank of Namibia (DBN) need to come on board to showcase this concept of affordable dignified housing delivery,” Schroeder added.
Building societies currently exist in the United Kingdom and Australia, and used to exist in Ireland and several other Commonwealth countries, including South Africa and Namibia. Building societies are similar to credit unions in organisation, though few enforce a common bond. However, rather than promoting thrift and offering unsecured and business loans, the purpose of a building society is to provide home mortgages to members.
Borrowers and depositors are society members, setting policy and appointing directors on a one-member, one-vote basis. Building societies often provide other retail banking services, such as current accounts, credit cards and personal loans. The term “building society” first arose in the 18th century in Great Britain from cooperative savings groups.
In the United Kingdom, building societies actively compete with banks for most consumer banking services, especially mortgage lending and savings accounts, and regulations permit up to half of their lending to be funded by debt to non-members, allowing societies to access wholesale bond and money markets to fund mortgages.
The world’s largest building society is Britain’s Nationwide Building Society. Further, in Australia, building societies also compete with retail banks and offer the full range of banking services to consumers.
During an earlier interview, Bank Windhoek Executive, Chris Matthee, said while his institution has not introduced any new products and services specifically for mass housing, he stressed: “Bank Windhoek welcomes all responsible efforts to alleviate the housing challenge in our country and will as far as possible endeavour to be part of the solution by providing financial assistance to home owners, within the parameters of responsible lending and subject to our normal credit criteria.”
He said Bank Windhoek introduced favourable terms and conditions for home loans for first-time buyers to make it easier for them to own their first home.
“Nevertheless, the most important determining factor when considering a new home loan application should always be the ability of the client to repay the loan, also taking into account potential interest rate increases,” said Matthee.