Unpacking Ghana’s Long Term Rental Laws with meQasa’s Rashad Seini

Sylvana Lewin, Tuesday January 23rd 2018

In late October, there was a fire at Sand City Hostel, where MEST EITs had been staying. No one was injured, but the hostel suffered damage from the fire, which meant MEST needed to find new housing quickly. However, this was not an easy feat as the Ghana housing market presents particular challenges when it comes to rental contracts.

MEST was lucky enough to come into contact with Pastor Cecilia Afosah, who offered to rent out her building at an affordable price on a monthly basis - rather than requiring the typical one-year contract.

“When I came to MEST and saw the training program and the great work that was done there, I knew I had to help,” Cecilia said.

Pastor Afosah is Ghanaian, but she spent twenty years in America. She’s worked in Africa, Asia, and Europe and is the founder of El Shaddai Ministries International in Ghana. She recently returned to her home country.

Based on the same empathy Pastor Afosah had for MEST, she built a school in Oyarifa, a suburb of Accra, with the support of friends in the US and South Korea in order to offer educational opportunities to children living in remote and developing areas. El Shaddai School of Vision opened in September 2017 and currently has 49 children from two to fourteen years old enrolled. Helping her teach these children are six teachers, but she plans to increase the number of teachers as enrollment rises.

[caption id="attachment_6198" align="aligncenter" width="599"] Children at the El Shaddai School of Vision[/caption]

While MEST was able to find rentable housing for the short term thanks to Pastor Afosah, many in Ghana are not as lucky. We spoke to meQasa founder Rashad Seini to learn more about the rental market in Ghana, the long-term advance payment agreements that have become the norm, and what can be done to change it.

Which provision specifies the prescription of rent advance? And what does the provision say?

Section 25(5) of Act 220 states:

“Any person who, as a condition of the grant, renewal or continuance of a tenancy, demands in the case of a monthly or shorter tenancy, the payment in advance of more than a month’s rent, or in the case of a tenancy exceeding six months, the payment in advance of more than six months rent shall be guilty of an offence and shall upon conviction by the appropriate Rent Magistrate be liable to a fine not exceeding one hundred pounds.”

In other words, currently the law states that landlords cannot legally ask for more than six months rent at a time.

Wow so what you're saying is according to this law it's actually illegal for landlords to charge advance rent up front, but most of them do it anyway?

Yes. This law is due for a major update. Case in point: the imposition of a fine in pounds - a currency unrecognised in Ghana, today, as our national currency.

So in other words, the law is so outdated it specifies a fine in pounds, rather than the national currency, Ghana cedis?

Yes. This indicates how necessary it is for this law to be amended.

How did the practice of advance rent payment become the norm?

I think this may have started with a few landlords who had some basic legal knowledge arranging for rent to be paid in excess of the prescribed period and writing it in the contract to seem as though it was, in fact, the prospective tenant who offered to make such payment and he/she (the landlord/landlady) merely accepted. Since the tenant would be the one more likely to press charges in this situation, in the interests of not incriminating themselves, tenants would refrain from doing so after signing such a contract.

A homeowner could, in doing this, hold off on renting his/her property until a sufficiently desperate house seeker accepted the dubious terms. If they insisted on following the legally prescribed payment schedule, it would start a whole process that could take a long while to resolve. During that time, the tenant would still not have a home and the landlord may, unless estopped by the courts, still rent out the property to another. This, obviously, does not seem like a worthy cause to dedicate one’s time, money and effort to while their primary need of shelter is yet unmet.

Bertrand Russell said, “Life is nothing but a competition to be the criminal rather than the victim.” I translate this to mean that nobody wants to feel they are dumb for not taking advantage of certain opportunities. As such, envy of the “prospering corrupt” landlords (and landladies), eventually, motivated more law-abiding ones to join in, and as time went on, the need for hiding behind technicalities in the contract became less and less necessary, and the practice became more commonplace, leading up to current times when it can be boldly demanded that 1, 2, 5 or even more years of advance rent be paid up front in order to gain tenancy.

Some of the reasons I think this practice which favors the landlord quickly became acceptable could include:

  • Possibility of building a new property with the bulk sum paid

  • Possibility of acquiring land for future development

  • Generally, the availability of a lump sum with which to invest in new ventures, settle debts, or just cushion oneself financially

Why do tenants accept this?

The housing deficit does not help the case for tenants. The fact that there are more tenants or home seekers than there is available accommodation means that there is more demand than supply. When that happens, the supply side, logically, has the advantage and calls the shots.

A prospective tenant's choices are to accept what is offered (1 or 2-year advance rent payment up front) or face the possibility of being homeless. Since the latter is not really a choice, the former is accepted in most cases to the point it seems to have become the norm.

How can this be changed?

I believe the Rent Commissioner and other Officers as provided for in Act 220 should be given the required assistance and motivation to carry out their mandate by enforcing the law so some sanity is restored to the rent space. If the provision from the statute quoted above is any indication, though, it is highly probable that a lot of other provisions are not in sync with today’s reality, and this could pose a serious challenge to the Rent Commission until appropriate amendments to the law are made.

In the meantime, it is my humble opinion that a lot of education is required to show landlords/landladies the good side of charging rent on a monthly basis.

This includes benefits like:

  • The prospect of a regular, recurring monthly income over the course of the lease/rent

  • Ease of adjusting rent charged upwards to reflect current times

  • Possibility of replacing tenants quicker (in lieu of waiting a year or two) if it becomes apparent the current tenant is not compatible with landlord/landlady’s values

Also, it would be good to acknowledge and celebrate the few home owners that still charge rent on a monthly basis. If more follow their example, tenants’ woes should lessen considerably and the entire real estate industry benefit immensely as a result.

If you’re interested in supporting Pastor Ceicilia Adjoa’s El Shaddai School of Vision, you can contact her on WhatsApp at +233 20 131 6867. Learn more about the housing market in Ghana on meQasa’s blog!