Why Landlords In Ghana Charge 1 Or 2 Years' Rent Advance Instead Of Charging Monthly Rent

Why Landlords In Ghana Charge 1 Or 2 Years' Rent Advance Instead Of Charging Monthly Rent

  • Landlords in Ghana are bent on extended rental periods, such as demanding 1 or 2 years' rent advance when other countries pay a monthly rent
  • Ghanaians have lamented the financial burden of paying for 1 or 2 years' rent, but landlords are adamant about changing their ways
  • The government has also not enforced strict regulations which would ensure that the rental sector is more favourable to Ghanaians

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In Ghana, there has always been a lot of discussion about the challenges of acquiring the lump sum necessary to pay rent in advance. But what does "rent in advance" actually mean? Paying rent in advance means paying the total sum for a rental property at the start of the rental period.

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A landlady (left) sweeps the compound of her house
A landlady (left) sweeps the compound of her house. Photo credit: Michael Tagoe and Bloomberg
Source: Getty Images

According to Ghana's Rent Control laws, landlords face a two-year prison sentence if they charge more than six months' worth of rent upfront from tenants before renting out their homes. However, that is not the case in several instances; landlords in Ghana refuse to rent out their houses if prospective tenants cannot meet their demand of a 1 or 2-year upfront payment for the property.

Below is a phrase from the amended Rent Act 1963 (Act 220), which reads:

Anyone who requires more than a month's rent in advance for monthly or shorter leases or more than six months' worth of rent in advance for leases lasting longer than six months is in violation of the law, and upon conviction by the appropriate Rent Magistrate, they face a fine of up to 500 penalty units, or about 600 cedis, or a jail sentence.

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Government authorities have issued several proclamations warning landlords against this infraction throughout the years, particularly those from the rent control agency. Yet, little has been done to bring the perpetrators to book. People have called on various regulatory bodies to enforce the rental laws, all to no avail.

Speaking exclusively to YEN.com.gh, Desmond, a landlord who owns an apartment complex at Afrienya, explained why he no longer gives out his property monthly. He said:

Initially, I was charging rent monthly but tenants always defaulted on payments. Asa result, cashflow was irregular and the money I received was never substtaintial enough to embark on other projects. It is the attitude of Ghanaians that made me to start charging yearly for my apartments.

Some landlords that give out their properties for rent annually have said that they do so out of necessity, not because they are greedy. Instead, they lament the high cost of building materials and the need to maintain their property. As a result, they believe that the only realistic way to make enough money to keep their properties in good shape and continue other building projects is to charge lump sums of money.

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In 2018, the Minister of Works & Housing, Samuel Atta-Akyea, stated that it was the job of citizens to enforce the taking of rent every month since the authorities did not know the landlords were violating the laws. He explained in an interview with Citi FM that:

You, the Ghanaian citizen, will inform the police that landlord X is attempting to break the law and should be arrested. You are fully aware that we must enforce laws for the sanity of the country. And until that point, the legislation will be useless.

The Minister added that landlords could charge rent advances because of the country's accommodation shortage. Ghana has a housing deficit of almost 2 million units, meaning landlords are getting a high demand for their apartments and can afford to charge as high or as long as they want.

As earlier mentioned, some landlords also claim that they cannot trust the average Ghanaian to be honest with his monthly payments, especially when the amount would not be deducted directly from their source of funds.

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Over the years, there has been much discussion on how to address the rent situation in Ghana, with a rent advance law or regulation being one of the leading alternatives. This helps to address the housing need, particularly in Accra. Over the past several years, efforts appear to have increased, although it is still unclear if they will be successful.

After all, Ghanaian landlords will always be prepared to accept rent advance payments as long as someone wants and can do so. This has forced certain banks, real estate companies, and startups in Ghana to provide rentgages (like mortgages but for rent) or rent pre-financing services to ease the burden on people.

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In an earlier story, YEN.com.gh wrote about tenants' rights that should not be compromised when one is looking for an apartment to rent in Ghana. Unfortunately, the housing shortage in Ghana allows many landlords to prey on those trying to rent a property.

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Make sure you know your rights and obligations as a tenant before signing the rental agreement and choosing a place to rent. Do not rent a house until everything has been put in writing, signed and witnessed by a third party, most likely an agent.

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Source: YEN.com.gh

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