GREDA pushes for review of Ghana’s Mortgage Act

The Ghana Real Estate Developers Association (GREDA) has asked for a review of the Home Finance Mortgage Act, 2008(Act 770) to help promote and develop the mortgage sector.

An amendment, the association stated, should make it simple and unambiguous for easy interpretation and application for stakeholders who consist of the judiciary and law enforcements agencies.


It should also seek to remove all bottlenecks on the part of the mortgagee in order to make home mortgage finance attractive as an investment alternative.

At the annual CEOs breakfast meeting by the association on February 26 in Accra, the President of GREDA, Mr Patrick Ebo Bonful, underscored the need for the decoupling of the act from the Mortgages Decree of 1972.

This, he said was because home finance mortgage was not the same as the conventional mortgage system where a borrower of a commercial loan secured the same with a mortgaged property.

He explained that the development of a strong secondary market for home mortgage financing in this country could not be overemphasized, in view of the bright prospects it held for the economy in releasing liquidity to the mortgagee.

“For a home mortgage financing to be attractive, it requires a secure, smooth, transparent and efficient land title registration process,” he said.

According to him, the current situation whereby it took between one year to four years to go through the land title registration process is to say the least unacceptable, fomented illicit land transactions and created unnecessary uncertainties for the mortgagee and by extension therefore, the entire home mortgage finance system.

The digitisation process of land registration, he said should be fast-tracked as a matter of urgency.

Real estate value chain

Mr Bonful noted that in terms of size, depth, penetration and flexibility, investments in this segment of the real estate delivery value chain had significantly declined over the years.

This is due in part to the extremely difficult and often laborious recovery regime the mortgagee faces in trying to recover homes from defaulting customers.

A situation which if not checked, he added threatened to cripple sales in the residential real estate space.

“Any efficient home finance mortgage market will require a legislative infrastructure that ensures smooth application of the processing of home mortgage finance transactions and foreclosures.”

REIT legislation

A Deputy Director General of the Securities and Exchange Commission (SEC), Mr Paul Ababio, announced the readiness of SEC to operationalise the Real Estate Investment Trust (REIT) legislation before the end of the first quarter of this year.

He stated that the legislation when in force, would facilitate a robust real estate sector. The REIT focuses largely on owning, operating or financing the real estate sector.

He explained that trust was to serve as an investment vehicle which held real estate securities and income producing real estate asset for industry players.

“It guidelines will stimulate that at least 85 per cent of its asset should be an income producing asset and it had to pay out its profit.

We are looking at rolling it out in the first quarter of this year.

“We have developed a vehicle that will be able to attract a lot of investment into the real estate sector in this country.

So, we are developing regulations that will enable people who want to establish REITs to mobilise funds and list them on the Ghana Stock Exchange (GSE),” he added.

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