Many international and local limited liability companies in the central business district of Accra resolve to fold up if the implementation of the Reviewed Rent Act fails. Businessmen say over hundred percent (100%) increment in rent advance for warehouses and shops in the space of one year is unbearable.
In an interview with the Public Agenda in an interview yesterday, most of the traders lamented how the slow rate of business coupled with the high import levies and other tariffs are already quashing their profit.
Mrs. Ama Owusu Ansah who spoke on behalf of the business and companies said,” Private businesses grows Ghana’s economy faster, and reliably than government institutions/companies hence favourable conditions should to be available for individuals to promote national growth while the government protect the interest of these businesses.
If government do not act fast to review the Rent Act many importers who are mostly investors are considering departing and redirecting their businesses elsewhere in the sub-region. Paying huge onetime advances every 3 – 5 years means money needs to be saved for the next advance cycle; this affects many pockets heavily, which may affect overall spending in Ghana.
However, if the maximum advance is say 6 months or less, and the rest of payment made monthly afterwards whatever the minimum stipulated years of lease, I believe that will improve spending and Ghana’s economy. I was paying fifty thousand Ghana Cedi’s (ghc50,000) as at last year for my ware house. This has been increased to one hundred and twenty thousand Ghana cedi’s (120,000) as we speak now.
We have held several meetings with landlords but it amounted to nothing, our only hope lies in the implementation of this Act. We pleading with government to expedite action to implement it”.
Ghana currently has a housing deficit of 1.7 million making landlords extremely powerful and dictators in terms of rental agreement. The Government has tried to intervene and control the upper hand of landlords by proposing an amendment of the Rent Act 220. Among many of the reforms in the Act is a proposal of a monthly rent payment as opposed to the 6 month rent advance payment detailed under the current law.
A monthly payment covers a month’s lease and may involve an automatic renewal unless the tenant or landlord provides a notice of non-renewal. The notice of non-renewal is set at 90 days however there is not much information if the reviewed Rent Act still pegs the notice at the same duration.
The reviewed Rent Act seeks to shift power from landlords to the Department of Rent Control who act as the facilitating body. The Department of Rent Control would be mandated by the new law to set a ceiling on standard rent to prevent landlords from exploiting desperate tenants.
It also seeks to empower the rent office to send inspectors around to educate both tenants and landlords concerning their rights and responsibilities. This will limit the powers landlords currently wield and protect tenants, while empowering the Department of Rent Control to be an influential mediator between both parties.
Although this strategy might seem unfavourable to landlords of the mandate given to the Rent Control Office to set a price ceiling on rent reduces their control on pricing and dictating terms of payment.
However, every cloud certainly has a silver lining. A careful examination of the newly proposed monthly rent payment could be beneficial to landlords as it could provide a steady stream of income. In the informal rental sector, tales are often told of landlords who after spending the rent advance payments inflate shared utility bills to still make money from tenants. Receiving monthly payment is akin to going to the bank to receive a monthly salary.
Termination of contracts with undesirable tenants would also be easier and quicker since all that would be required is a note of non-renewal with an agreed notice period, instead of waiting for the advance payment to fully expire.
For tenants, this new law is timely to shield them from wrong termination of contracts, eviction, and outrageous increment and demands for rent advance. The amended law promises to restore some sanity to the rental system.
The landlords however refuse to comment on the issue.
By: Afia Nyarko Asare