Registration for the new government housing scheme, dubbed 40/60, is to start in 10 days, following a 1.3 billion Br loan approval by the Commercial Bank of Ethiopia (CBE) to the newly established Addis Abeba Housing Development Enterprise, which is in charge of constructing the houses.
The Enterprise will also get 750 million Br loan for low income housing and 4.1 billion for condominium housing from the CBE in addition to 70 million dollars to procure construction materials for all the housing projects it conducts.
“The loan for the 40/60 scheme will be given to the Enterprise, with the city administration as a guarantor. The Enterprise will disburse the money as it sees fit,” an official of the CBE in charge of the scheme said.
The money that potential home owners deposit will balance the money that CBE advances as a loan, and the Enterprise can pay back from the management of the shops which will be placed in the first floors of the 40/60 buildings, the official said.
The Bank and the Enterprise will sign a Memorandum of Understanding (MoU) on Monday September 24, 2012. In addition the Enterprise has also picked five contractors to start constructing houses in Sengaterra, one of the four sites set aside for the housing scheme.
It was in 2011/12 that the government announced its plan to offer 45,000 houses for ownership in accordance with two payment schemes it had devised. More details emerged as Kuma Demekssa, Mayor of the city, Mekuria Haile, minister of MoUDC, and Abayneh Mehari, vice president of loan administration at CBE, held a press conference on July 19, 2012, detailing the payment scheme and the type of houses that the city plans to offer.
Ten thousand houses will be offered for those that can initially advance, or save within five years, 40pc of the total cost of the house which is 128, 590 Br for a one bedroom, 200, 475 Br for a two bedroom and 320,000 for a three bedroom house occupying a space of 55sqm, 75sqm, and 100sqm, respectively.
The Commercial Bank of Ethiopia (CBE) will loan potential homebuyers 60pc of the cost of the houses, which they must pay back in 17 years, at an interest of 7.5pc which is lower than the 9.5pc interest rate that banks usually charge. The 40pc deposit that home-buyers save will also have an interest of 5.5pc, which is more than the five percent interest that CBE gives to those depositing money.
The 35,000 houses will be built on 29sqm space and are reserved for low income buyers, costing 76,615Br, 67 pc of which is advanced as a loan to be paid in 17 years and 4,495Br which the potential home owners must deposit.
Some of these houses will be ready in eight months the enterprise had announced than.
With the housing situation in the city as it is, people are eagerly awaiting registration. Photocopies of the news that Addis Zemen did based on the news conference, was being sold on the street for one Br each. Officials at the Ministry of Urban Development and Construction (MoUDC) state that there are a lot of questions coming from inhabitants inquiring about the scheme.
The Commercial Bank, which is where people must go to register for the housing scheme, had to prepare a procedural document outlining how loans will be allocated and clients will be registered, while the city administration had to prepare space for construction and pick contractors.
CBE has finished preparation of internal procedural documents for registration and sent it to its own staff at branches, according to its official in charge of the 40/60 project.
“Potential home buyers who come to register for the houses will have to bring an ID that shows he/she is a resident of Addis Abeba, along with two passport size photos and at least a month’s worth of deposit,” the official at CBE told Fortune.
A potential home buyer must also sign a legal document to guarantee that they are not previous homeowners and that they are not registered for any other housing scheme. “The document is enforceable. If homebuyers are found to have lied on the document, they will be held liable and will be punished under the law,” the official told Fortune.
The Enterprise has prepared space for construction at four sites including Senga Terra, in Lideta, behind Imperial Hotel in Bole, and near General Winget school on the road to Asko. A total of 26.86ha of land has been cleared and the enterprise will clear another 18.59ha of land, according to an official from the MoUDC.
ETG consult will supervise the construction of the houses and has already provided the design.