More than 2 500 people have been able to buy their houses, thanks to the liberalisation of the pension fund regulation to allow the Government Institutions Pension Fund (GIPF) to extend home-loans to members to buy houses in urban areas.
Since the launch of the programme in May last year, home loan applications worth N$1.345 billion were received by the end of July this year.
The purchase of new homes through the GIPF was not restricted to those living in Windhoek or the Khomas Region, where 40,6 percent of the home loans were advanced. Otjozondjupa Region received 15 percent of the total home loans, followed by Erongo with 10 percent and Kavango Region with 8 percent.
Of all the home loan applications received 7 percent came from Hardap, with Oshana Region at 6 percent and the Omusati, Oshikoto and Zambezi regions at 3 percent each. The Ohangwena, Karas, Omaheke and Kunene regions each accounted for 1 percent of the total spending on home loans.
The high success rate prompted GIPF’s general manager for marketing and corporate communication, Elvis Nashilongo, to note that the fund did more to alleviate homeownership in one year than the country has ever experienced.
“Imagine what the success rate [in securing home ownership in the country] would be if all other pension funds in the country were to come to the party. If we can all do that we can all reduce the housing demand,” Nashilongo says.
The GIPF’s home loan scheme was not without teething problems though, given the large number of people who applied for home loans versus the relatively small amount of money that the GIPF had set aside for such loans.
GIPF also had to forego the practice whereby prospective homebuyers were given assistance to pay off their short-term debts, in order to help them cope with the monthly repayment schedules. The practice was found to be in contravention of the pension scheme and was stopped.
Nashilongo, in an exclusive interview with New Era, was at pains to point out that the fund would not always be able to meet the demand, and it is thus up to beneficiaries to keep up with their payments in order for the fund to continue advancing home loans.
“There is a limit to what we can do. We cannot dedicate all our resources to housing, otherwise we’re going to expose ourselves to a risk area,” he says.
Nashilongo is also adamant that GIPF members should understand that a home loan is not a benefit to GIPF members, but a loan that has to be paid back. The housing fund is a revolving fund and incoming payments are re-used to extend new home loans to other members.
GIPF’s involvement in home loans is part of its social investment directive, where the aim is to invest in socially uplifting sectors to support government’s poverty eradication strategy.
Currently about 1 720 applications – worth N$958 million – have Deeds of Sale contracts, while 680 applications – worth N$397 million – were mere general pre-approvals for people who are searching for properties to buy.
By the end of July 2015, 1 310 direct home loans to individuals were approved and funded – valued at N$704 million – and submitted to lawyers and deeds office for lodgements and registration.
With such a high demand on the fund, the initial N$100 million injection was exhausted by September 2014. To meet the growing demand, the GIPF made another commitment of N$300 million in December 2014 and approved a further contribution of N$350 million in July this year.
By end of June 82 percent of the home loans advanced were allocated to borrowers earning between N$3000 and N$20 000 per month, while 18 percent was allocated to those earning above N$20 000 a month.
The allocation split is a deliberate and calculated move by the GIPF, intended to benefit those in the lower income group, as people in the upper-income bracket can more easily borrow from commercial banks.
A N$20 million loan granted to Ondangwa Town Council also produced 270 residential plots, as well as 20 business and institutional plots, while the N$10 million advanced to Outapi Town Council resulted in 164 residential plots, as well as 14 business and institutional erven.
First Capital currently manages the GIPF’s home loan fund.
New Era Reporter
2015-08-24 11:02:11 | 5 years ago