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| Dar central business district |
The Tanzania Mortgage Refinance Company (TMRC) Chief Executive Officer,
Mr Rished Bade, told the 'Daily News' in Dar es Salaam yesterday that charging
18 per cent on prices of residential houses as VAT was backpedalling progress
being made by the infant real estate industry as it leads to higher prices
which the majority of families cannot afford.
"We are engaging the government through Ministries of Land,
Housing and Human Settlement Development and that of Finance and Economic
Affairs," Mr Bade said saying there is need for flexibility by the
government to assist the struggling industry to grow and meet demand.
According to Ministry of Land, the country has a shortage of an
estimated three million housing units mainly in urban centres with an annual
increase of 200,000 units.
With a population of over four million people in Dar
es Salaam alone and 70 per cent of settlements classified as slums, demand for
decent homes is high but prices are holding back many low and middle income
families.
With inflation at almost 20 per cent and bank interest rates at between
14 and 25 per cent, prices of new houses have quadrupled so too is rent.
"At least new residential houses or houses bought under mortgage facility
should be exempted from VAT to allow more low and middle income families afford
to buy them," Bade argued.
National Housing Corporation (NHC) which is the country's largest real
estate owner with over 7,000 units countrywide and its tenants have already
called on the government to waive VAT on residential houses which was
introduced by Finance Minister, Mustafa Mkulo last June.
NHC which used to pay
250m/- in taxes to Treasury is now paying over 600m/- thanks to VAT imposition
on residential houses.
A senior budget official at the
Treasury said VAT on residential houses is one of the items being discussed for
possible abolition in the next budget.
"But that will only depend on
government finding an alternative source of revenue which stakeholders should
assist to identify," the official who requested not to be identified,
said.
The TMRC CEO said abolishing Vat on residential houses will help
encourage real estate investors and banks speed up construction of residential
houses and give clients loans. "TMRC is for all real estate developers and
not only NHC," he pointed out.
Real estate investors are also demanding a regulatory authority for the
housing industry which is dominated by sole proprietors many of them don’t
respect rules of demand and supply in the market.
Source: The Daily News,www.dailynews.co.tz, reported by Finnigan wa Simbeye
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