Riposte: “Don't Think Building a House to Live in is an Investment”

Speaking on Joy FM’s Super Morning Show, Thursday, a Financial Advisor cum stockbroker, Abena Amoah is reported on Myjoyonline to have said that only a house that makes its owner money through rentals can be called an investment.  Abena says a house becomes an investment only when it is rented out to tenants for occupation. She noted that since a house cannot generate income until it is rented out, living in it only makes it a utility and not an investment as quoted below:

“It is a utility because you need shelter and it needs maintenance. So having one house is not an investment. If you have one house to live in and you’re able to build five other things that are able to generate rent for you where if you fall on hard times you are able to sell one of them, then that other one is an investment, not the one you live in,” she explained.

I wish to disagree with this view. Before, I begin my argument, I wish to state that I will not be surprised if she has been taken out of context, as is the trade of Joy fm in recent times. The media house’s penchant for sensationalism has become a concern to many people.

Indeed, there is nothing new under the sun. This view that homeownership is not an investment is nothing new. Traditionally, economists have viewed housing as a consumption good and not an investment good. As Arku (2006) opines about 1940 and 1950 economics: "It was seen as an unproductive investment, and its role was downplayed and labelled variously as a ‘‘resource-absorber’’, a ‘‘consumer good’’ and ‘‘social overhead’’. Critics, whom Solow (1955: p. 52) dubbed the ‘‘down-to-earth, hard fact analysts’’, believed housing had an extremely high capital-output ratio, especially when compared with investment in other sectors. These critics pointed out that housing investment contributed to inflation, used valuable foreign exchange resources, exerted pressure on the balance of payments position and tied up resources for a very long period of time (cf. Weissman, 1955; Harris & Gillies, 1963). The general assumption was that resources were limited and that there was a need to develop strategies that would use scarce resources in the most productive and efficient manner, mainly in sectors (e.g. industry) that promised quick returns and that enhanced the productive capacity of an economy. Housing was not seen as an activity that could achieve this goal". In this context, Abena Amoah's view is supported but technically flawed, which I will come to later.

Now, lets diagnose the statement sentence by sentence.  The first sentence, “[i]t is a utility because you need shelter and it needs maintenance” suggests that investments are not utilities and are not associated with maintenance cost.  A utility is basically the satisfaction or benefit or value derived from something. Every investment, be it core investments like stocks and bonds, or alternatives like real estate and infrastructure are all associated with utilities or values – economic, social, or psychic, etc. Therefore, the fact that homeownership produces a certain utility (shelter) does not make it any less of an investment. Besides, being consumption good does not mean that it is not an investment good. The relationship is not mutually exclusive. Moreover, almost every investment, be it stocks or bonds among others is associated with costs. The cost of maintenance associated with homeowners is just nothing new. The second sentence, “[so] having one house is not an investment”, which flows from the first sentence is just incredible. To suggest that a person necessarily needs to own two or more houses to constitute an investment is difficult to fathom. The third sentence is partially true. The idea that homeownership is not an investment because it does not generate a cash flow, which in the case of real estate investment is rent is flawed. 

What is an Investment?

To proceed, let us have a closer look at the definition of an investment:

“the act of putting money, effort, time, etc. into something to make a profit or get an advantage, or the money, effort, time, etc. used to do this” (Cambridge Dictionary).

“the outlay of money usually for income or profit : capital outlay;  also  : the sum invested or the property purchased” (Merriam-Webster Dictionary)

“An investment is an asset or item that is purchased with the hope that it will generate income or will appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth” (Investopaedia).

From these definitions, three views can be deduced. First, the capital outlay in itself is an investment. By implication, the money invested in a house is an investment. Second, making a profit or cash flow or income although expected does not necessarily define an investment. Indeed, an investment can make a loss. In other words, a rented house may generate a loss if the tenant defaults in rent payment. Third, investments do not only provide an income return but also a capital return (gains) when its value increases. Thus, putting money into something that does not yield income returns (rents) but capital returns is an investment contrary to Abena’s view.

Why Homeownership is an Investment

The view that ownership does not produce rent is in the first instance flawed. In a world where housing is either through homeownership or renting, the investment analysis must be done between the two options. Owning a house does not mean that you don't pay rent; in fact, you pay (imputed) rent to yourself. So, on the mere basis that the earning capacity of a house is what makes it an investment, then owning a house is an investment. But there is more to this. The market value of an asset (i.e. a house) is based on the free cashflow or net operating income and not just its earning capacity; that is, its ability to earn rent = "cash flow". For example, if a rented house is generating a rent of GS1,000 per month and the expense on the house is GHS1,000 or more, there is no free cash flow or net operating income to capitalise to determine the market value of the house. The market value of such an investment property is zero or negative from the investment approach to valuation.

To determine whether owning a house is a profitable investment or not, we must compare the imputed rent (Rf) on the owner-occupied house to the rents the same person would have to pay for renting another house (Ra) given his/her needs. If the imputed rent is greater that the rent passing on the rented property (i.e. Rf > Ra), there is a saving (cash flow or income) to the person if he owns the house than renting. That saving or income can then expressed as a percentage of the initial capital outlay to estimate the income return or be capitalised to estimate the capital gains or return if the estimated capital value at any point in time is greater than the initial capital outlay. Abena's point will therefore only hold if Ra > Rf and capital growth is zero (increase in the capital value of the house). 

Moreover, owning a house does not only entitle you to implicit income returns (Rf) (net rent when the imputed rents are greater than the rent on a comparable house; i.e. Rf > Ra), but also capital returns (Rc) when the capital value of the house increases over time. It is the desire for capital return that encourages speculation in land. People buy land and hold to sell on a later date when its value appreciates. Land therefore becomes a store of value and that is what an investment is. It is the same with homeownership. On this basis, investing is housing can be considered as legal speculation for capital gains.

Therefore, even if homeownership does not yield an income return, the value of the house may grow to produce a capital gain, which is the same in concept as capital returns on stocks.  Thus, homeownership has the potential to generate a total return (Rt) on investment, which is the sum of income return and capital return; i.e. Rt = Rf + Rc. Hence, if the imputed rent on homeownership is zero (Rf = 0) but the value of the house increases over time (Rc > 0), then the total return is the capital return (i.e. Rt = Rc). So the mere fact that homeownership may not generate an income (rent), does not mean its capital return or total return are also zero.  

In addition, besides the benefits of the house serving as collateral for credit, growth in the capital value can be accessed as income using a mortgage equity release product. So, these are but a few of the reasons to consider homeownership as an investment.

Conclusion

This riposte has argued the case to consider housing as an investment contrary to Abena Amoah’s reported view. Homeownership must be encouraged as an investment.

About Author: The author, Kenneth Donkor-Hyiaman is a Financial and Real Estate Economist at MeTis Brokers (a private equity real estate investment firm) and a PhD candidate in Real Estate Finance and Economics as well as a Teaching Assistant in Investment Appraisal and Real Estate Finance at the Henley Business School, University of Reading, UK.

Disclaimer: The view expressed in this article is solely the views of the author and not in any way reflect the views of the organisation he may be affiliated to, including MeTis Brokers and the Henley Business School, University of Reading, UK.

Social Deregulation and Crisis: Otiko Djaba and the “Indecent Dressing can cause Rape” Hypothesis

Introduction

Rape is inhumane and a vice in most societies. The problem with rape can be likened to food poisoning. In most cases, the problem is discovered only after the harm has been caused.  Since it is difficult to identify a rapist or someone who is motivated to commit such a crime, pragmatism requires that potential victims be on the look out. Similar logic imposes responsibilities on pedestrians to be careful when crossing the road because, even when you are careful, technological failure and in particular carelessness on the part of a driver could lead to your harm or demise.  But sometimes, being extra careful could save your life.  Thus, reasonable care and minimum effort requirements from both the people whose actions can cause harm and the potential victims are principles in law.  Not to hold brief for anyone, it is reasonable to believe that this logic perhaps influenced the advice given by the Minister to the girls (students) during an event in one of Ghana’s second cycle institutions (Krobo Girls Senior High School), which has received wide spread critique from various corners.

I wish to start a series of articles on the “indecent dressing can cause rape” hypothesis, with the hope of raising a more fundamental issue – populism and societal deregulation - that would make it practically impossible for the Minister for Gender and Social protection – Ms Otiko Djaba - to win on this matter in this dispensation. In this first article, I attribute this line of reasoning to political ideological differences between the Minister and her critics that have deeper roots in economics. I will also explore the assumptions of the arguments of the critics and identify some the flaws in them.

Background

The context of the Ministers advice requires an understanding of her background and expertise. Ms Otiko Djaba is the Minister for Gender and Social protection. Prior to becoming a Minister, she was the National Facilitator for the Campaign for Greater Discipline under Former Vice President Aliu Mahama in 2004. She also has so many years of work experience as a Consultant in Children’s Rights and rural women’s development for Plan Ghana in extremely deprived rural communities in Sissala districts of the Upper West Region. So this is not a person who is completely ignorant of the need for social protection for all. Indeed, if we are sincere, this is a consultant in matters, perhaps, peculiar to her critics.

During her presentation in one of the female senior high schools in Ghana, the Minister in a motivation packed speech also advised the girls to dress decently. Verbatim, she said:

“In conclusion, I will like to say to you that be bold, be confident, be respectful. If you wear a short dress, it is fashionable, but know that it can attract somebody who would like to rape or defile you. You must be responsible for the choices you make because you are the future leaders”.

Public reactions to this part of her speech are mixed. While some people have decently disagreed with her, others have condemned and trolled her in the media, especially on almighty Facebook. I like to share some of the arguments first. Papa Yaw Ashon, a Senior Policy Analyst expresses shock at the narrow view taken by some people of the motivational and beautiful speech delivered by the Minister. Henry Ernest Baidoo-williams pulls out academic studies by Gloria et al. (1997) and others to support his hypothesis that “dress can cause rape”, with an emphasis on gender bias in perceptions about the causes of rape. This study according to him shows that “the most predominant perception for the causes of rape when all respondents, male and female, are given equal weighting, is ”female precipitation” which believes that the woman’s actions or appearance is what causes rape. Immediately following “female precipitation” is the so-called “feminist theory” which believes that rape is caused by imbalance in power between males and females. One would think, only men would find nothing wrong with the Minister’s speech. But, even woman like Jidi Ewurama Ocran share similar views, particularly in the spirit of preventing rape in a world of unequal information among rapists, potential rapists and victims.

However, the critics are perhaps more than the apologists. On his facebook wall, Dr. Kwabena Opoku-Agyemang expresses his disagreement as follows:

“I disagree with this notion that dressing causes rape. Men are able (or should be able) to control themselves in the face of 'provocative' dressing. Rape is not logical in any case; it's an act of violence. This argument is like saying that if a man enters a wrong hotel room and sees a woman in lingerie he is justified in sexually attacking her because her dressing provoked him. Some way kraa”.

In another post, he describes the apologists as:

“Patriarchal princesses and their male counterparts (who have nothing to lose in this debate apart from ego and unnecessary privilege)”.

Another critic, Mss Ess, submits that “…these narratives are arming rapists with a defense thinking they can get away and yes, many are getting away because some judges share the view too”. This narrative she points out is a BIG problem. For this group of critics, the Minister’s advice purports to shift the blame for rape unto the victim and seeks to exonerate the perpetrators. On the Feminist theory, some academics like Dr Kofi Boakye, a Cambridge trained Criminologist contends that narratives like ‘indecent dressing can cause rape’ are myths and goes ahead to support his claim with his own study entitled “Attitudes Toward Rape and Victims of Rape: A Test of the Feminist Theory in Ghana”. But this study did not set out to explicitly test the “indecent dressing can cause rape” hypothesis. It thus cannot be admitted as evidence against the likelihood of indecent dressing causing rape.

The common understanding despite these disagreements is that none of the contenders support gender violence in any form, whether against men or women. The basic line of disagreement can be seen in their attribution of the causes of rape. While the apologists postulate that “indecent dressing can cause rape”, critics beg to differ. Although an apologist of the hypothesis that indecent dressing can cause rape, I wish to focus more broadly on the implications of the views of the critics for social sustainability. I will do this by evaluating the ideological underpinnings of the views of the critics, which are closely linked to neoliberal thinking, which is associated with both good and evil in society. Think of the United States and the junk-bond-induced takeover mania and resulting scandals of the 1980s; the corporate scandals of the 2000s; the egregious increase in the pay gap between chief executives and ordinary employees; and the real estate mortgage bubble and ensuing financial crisis.

Leaving in abstraction: The neoclassicals, faulty assumption and reality

In the 1970s, lovers of market economies as a tool for organizing social life emerged strongly and currently dominate discourses in most fields. They rely on perfect information and market efficient assumptions to disapprove the need for market regulation by the state. Thus, driving home the idea of self-regulation, the epitome of the freedom movement. This ideology fundamentally argues that human beings make rational choices by maximizing utility and minimizing cost. They often support their claim with reference to the words of the father of modern economics, Adam Smith: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest”. Therefore, a cardinal principle of the neoclassical school of thought is that each person is capable of making better choices for him or herself on the assumption that they always have full information. In context, the neoliberal will typically argue that the girls and women in general are always capable of making the best decisions for themselves, and hence require no help in the form of social regulation whether formal or informal, such as the advice provided by the Minister.

Unfortunately, we live in an imperfect world with imperfect information and thus, the assumption of perfect information is flawed. Therefore, decisions that anyone can make are as good as the limited information available to them. So, instead of achieving full rationality, humans can only make do with “bounded rationality” according to Economist Herbert Simon. Bounded rationality is the idea that in decision-making, rationality of individuals is limited by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make a decision. The girls obviously do not have perfect knowledge of the motivations of all men – those who want to rape them, those who could be attracted to rape them and those who by some constraints would not rape them irrespective of their dressing. So, these critics who argue that indecent dressing cannot cause a man to rape a girl are thriving on this faulty assumption of perfect information.  The reality is that similar faulty assumptions in financial markets continue to contribute to financial economic crisis in many countries with debilitating implications for social sustenance. Memorable among them is the recent 2007-2008 financial crisis. This is because, individuals continue to make seemingly rational but more accurately “faulty” bounded rational decisions that continue to hurt them and society at large.

In his book, “What money can’t buy: The moral limits of markets”, Harvard Professor of Philosophy, Michael Sandel acknowledges the important role of market economies as a tool for organizing economic activity. He however, observes the increasing marketization of society based on these flawed neoclassical principles of perfect information and rationality as particularly problematic. This we see in the continuous marketization of dressing as neoliberal thoughts increase. This flawed idea of total freedom and no need for regulation has penetrated the social fibre of society to such an extent that it has entered into the “dress can cause rape discourse”.  The liberals or democrats assert that people should be allowed to wear anything they want, whether decent or indecent, so far as they are fine with it, not society.  I term this posture as SOCIAL DEREGULATION. This posture often thrives on the back of populism. Most people desire to disentangle the webs of social constraints imposed by social institutions like religion and culture more broadly, particularly in this dispensation. Populism and social deregulation like financial and economic deregulation is the order of the day. Some have pointed to Brexit and the election of Donald Trump as evidence of this global wave of ideology. Those who claim that indecent dressing can cause rape are also faced with the challenge of defining indecent dressing, which could vary greatly even among them.

Statisticians are dumb, not the critics

To the liberals, the hypothesis that “indecent dressing can cause rape” is flawed. They argue that even well dressed women and babies are raped. Unfortunately, this view is also flawed at many different levels. First, it is flawed in that the hypothesis that indecent dressing can cause rape does not imply that decent dressing cannot attract rape. On this basis, it is important to note that the Minister never said that well dressed women cannot be raped or cannot be victims of rape. In statistics, this requires a one-way (tail) hypothesis test, in which the critical area of a distribution is one-sided so that it is either greater than or less than a certain value, but not both. If the sample that is being tested falls into the one-sided critical area, the alternative hypothesis will be accepted instead of the null hypothesis. An example of when one would want to use a one-tailed test is in the error rate of a factory. Let's say a label manufacturer wants to make sure that errors on labels are below 1%. It would be too costly to have someone check every label, so the factory selects random samples of the labels and test whether errors exceed 1% with whatever level of significance they choose. Acceptable values are those below or equal to 1%.

Disapproving the Ministers advice on the basis that well-dressed women are also raped is a common flaw in most arguments for many reasons. First, it involves the substitution of the original hypothesis or question for another. For instance, such acts of substitution is synonymous to the popular “what is a bird?” analogy.  For example, if a person is asked, what is a tree? Those who do not know the answer but are well vexed in birds could start by saying that birds perch on trees, and so, what is a bird? They then go ahead to answer that question instead of the original question: what is a tree?

Second, it is important to note that this hypothesis “indecent dressing can cause rape” is different from saying that “indecent dressing causes rape”. The latter hypothesis can easily be falsified just by one past or present evidence of rape caused by indecent dressing. But, the former is practically untestable because it does not only require past and present data but also perfect knowledge of all future events and their probabilities, which lies in the remit of only God. This is another evidence of the ‘what is a bird” analogy. The critics appear to have created their own hypothesis and answered it.  Besides, the Minister’s suggestion only raises a question of POSSIBILITY and does not provide a PERFECT DEFINITION of a necessary causal link, which her critics assume. To support this, I liken the "indecent dressing can cause rape" hypothesis to a pedestrian crossing the road and ask myself why we look left and right before we cross roads, and not assume that drivers are at all times responsible for us? Is there not a possibility that with a little carelessness, a similarly careless driver could easily knock us down?

In this brief note, I have laid the foundation for a more critical analysis of the debate on the “indecent dressing can cause rape” hypothesis. In the next part of this series, I will address a more theoretical issue with social deregulation (which forms the foundations of views of the critics) and the future of our society.

Scrap the Rent Tax and Maintain the Real Estate Sales Tax in Ghana

After over 3 decades of policy vacuum, characterized by piece-meal attempts to recognize housing in some policy documents by succeeding Governments, a new National Housing Policy was promulgated in 2015. This article argues that the 8% existing Rent Tax should be scrapped while the VAT on real estate sales maintained for reasons discussed below. The new Housing Policy is premised on pro-market principles aimed at creating and encouraging private sector leadership in housing delivery. This view is crystalized in objectives 1 and 2 of the new National Housing Policy as:

1.     To promote greater private sector participation in housing delivery;

2.     To create an environment conducive to investment in housing for rental purposes.

Policy initiatives to achieve these objectives include:

1.     Providing fiscal and monetary incentives for increased private sector investment in housing infrastructure for those benefitting lower-income households. The details of these incentives are contained in the country's investment code;

2.     Reviewing the Rent Act, Act 220 (1963) to streamline rent regulations and empower the Rent Department to encourage investments in the construction of rental housing as well as the protection of vulnerable households from abuse by house owners.

However, Government fiscal policy appears to stand in direct contradiction to the ideals espoused by the new housing policy. Lets consider these contradiction below:

Rent Taxation

The introduction of the rent tax in the same year 2015, when the new Housing Policy with a beautiful vision was promulgated is a policy worth considering in terms of its potential effect on real estate investments in general and housing delivery in particular. The Income Tax Act, 2015 (ACT 896) was passed to introduce a Rent Tax - 8% in the case of residential premises and 15% in respect of commercial premises of the gross rent paid to Landlords/landladies - to be withheld by tenants and remitted to the Ghana Revenue Authority. Rent tax reduces investors’ cashflow and increases the risk of profitability, which could make investment in private rented housing relatively unattractive and thus render the vision of the policy elusive.

Most private rented housing in Ghana were constructed with private equity. In the strict sense of corporate finance, equity financing does not provide any tax deductibility advantage as using debt. Look at it this way. Interest payments on debt are considered a cost in the production of goods and services. So, most countries including Ghana allow investors to deduct interest payments from revenues before paying tax. Therefore, the capital structure of an investment matters, and using debt financing provides a tax saving advantage over equity. The effect is that the tax savings increase the cash flow to equity shareholders and thus increase the value of the investment, as per the popular Modigliani and Miller theorem. Therefore, given that most private rented housing is equity financed, most landlords would pay more in taxes compared to the case of using debt financing, which is simply unavailable or available at a extreme high cost to investor.

Coupled with low rent levels in Ghana, landlords are more likely to pass the tax to tenants in the form of high rents, if enforcement is effective. This effect would increase housing cost and thus the cost of living of most low- and middle-income households and reduce their standard of living, ceteris paribus. Considering the capital structure of real estate investments, particularly housing in the light of the 1.7 million housing deficits, it is first and foremost, welfare maximizing and secondly, a possible stimulant of new housing investments to scrap the 8% rent tax.

Nevertheless, I argue that the VAT on real estate sales should be maintained against the backdrop of calls by the Ghana Real Estate Developers Association (GREDA) to scrap it. Two principal arguments could be advanced in this regard. First and most factual, most houses constructed by the GREDA are already out of the reach of the median income household, below which we find the masses, even most middle income households. With average prices around US$100,000, and priced in dollars in the face of an incessant depreciation of the cedi, their clientele is cut in high-income households, expatriates, foreigners and residents living abroad, who earn superior incomes and currencies. A survey shows that more than 50 per cent of the clients of GREDA are foreigners and residents living abroad. Thus, this tax has little to no adverse effect on the ability of low and middle-income households (who constitute the majority of the populace) to afford their houses. It will serve government well to continue with this tax. In other words, the target clientele of GREDA are more likely to afford the additional 8% VAT on real estate. Thus, the government would benefit if it maintains the tax.

Should there be a need to review the VAT on real estate, it should not be an exemption for all real estate developers. Policy provides an indispensable avenue to promote affordable housing development to reduce the huge housing deficit. In this regard, affordable housing developers should be exempted from the VAT, but not luxury home developers. I must say that implementing such a policy requires a proper definition of affordable housing in Ghana and mechanisms put in place to monitor delivery. In Ghana, almost all real estate developers claim to be developing affordable homes although their prices a way above the median house price. The new Housing Policy defines affordable housing as:

“The ability of a household to spend up to thirty percent (30%) of its gross annual income on the rent or purchase price of housing where the rent or purchase price includes applicable taxes and insurances and utilities. When the annual carrying cost of a home exceeds thirty percent (30%) of household income, then it is considered unaffordable for that household” (Ministry of Water Resources, Works and Housing, 2015).

However, this definition only measures the “housing affordability” concept in affordable housing. It therefore says little about the definition of affordable housing and it is fraught with challenges especially because it contradicts the practice in the banking and finance industry, where 40% (maximum) of household income is considered a measure of affordability. Lets consider this situation for instance; would houses priced at US$100,000 be considered affordable housing (given the income levels in Ghana) just because someone can afford it? Certainly no!

The old Planning Policy Statement 3 of the United Kingdom (UK) acknowledging the conceptual difference between “affordable housing” and “housing affordability” defines the former as particular products outside the main housing market; and the latter as a measure of whether housing may be afforded by certain groups of households. These particular housing products according to the UK National Planning Policy Framework (2012) is the sum of affordable rent, social rent, intermediate rent and affordable home ownership provided to specific eligible households whose needs are not met by the market (Woo and Mangin, 2009); subject to rent controls that require a rent of up to 80 per cent of the local market rent (including service charges, where applicable). Eligibility depends on local authority allocation policies, local incomes and local house prices depending on the type of affordable housing. Also, Peter O’Brien of the Royal Town Planning Institute (RTPI) in the UK provides a quantitative benchmark, making reference to past EU definitions that equate what is affordable as 75 to 80% of the market price or rent.

Notwithstanding that affordable housing is priced below the market house price, the material quality and quantity of rooms and services are specified. According to the National Affordable Housing Summit Group in Australia, two main concepts in this regard: (1) "reasonable adequacy” in standard and location, and (2) “sustainability” are worth considering. The KPMG (2010) reveals that reasonable adequacy means a 300 – 1200 Sq. Ft. house in Indian, which varies in other countries. There is also the agreement on quality design standards as one of the chief measuring tools, although it makes affordable housing expensive (Quigley and Raphael, 2004). What then is the value of design in so basic the need as housing? A common view is that good design costs more, and that while architects add value and quality to buildings, they rarely add economy (Davis, n.d). Housing is not merely shelter, or basic protection from the elements; it must also bestow on its inhabitants a sense of dignity. To ignore this aspect of housing or to consider it a perquisite for those who can afford market-based rate housing is to invite both social and financial disaster.

Moreover, those who can afford these skyrocketing house prices are those who finance them with mortgages. They then enjoy the tax deductions on the repayment of their mortgage interests, which can be considered as government subsidizing housing for the rich and high-income households, rather than the low and middle-income households, who need it the most. Therefore, the VAT on real estate somehow offsets the interest deductions allowed if they use a mortgage. Again, this interest rate subsidy provides an avenue for government to use policy to promote mortgage financing for the burgeoning middle-income class in particular and raking in some more revenue if properly targeted and aligned.

In summary, I wish to propose to the incoming government that a comprehensive study of the fiscal policy on real estate investment and development be done for efficient taxation and efficient delivery of real estate in Ghana. On the surface, it appears that scrapping the rent tax and maintaining the VAT on real estate sales would be prudent policy. I also propose for a review of the definition of affordable housing in the National Housing Policy so as to ensure that standards are met and delivery easily monitored. Last but not the least, another study should be conducted to properly target and align interest rate subsidies in Ghana.

Kenneth A. Donkor-Hyiaman

Finance and Real Estate Economists

Property & Planning Institute of Technology