Assessment of Affordability of Condominium Houses

This study assesses the effectiveness of land acquisition policies and practices for cooperative housing schemes in Bahir Dar, Ethiopia, aiming to identify challenges and propose strategies to improve the delivery of affordable housing solutions. The research draws on interviews with city officials and cooperative members, as well as a review of relevant documents.

Introduction
Rapid urbanization in developing countries, such as Ethiopia, leads to a high demand for affordability of housing, particularly for low-income households. Cooperative housing, where residents pool resources to acquire land and build homes, is often seen as a viable solution. However, many governments lack sufficient resources to provide affordable housing, making self-help housing strategies crucial. In Bahir Dar, the capital of the Amhara region, rapid urbanization and migration exacerbate this issue, making the land acquisition process for cooperative housing a key area of concern.

This study aims to evaluate the current land acquisition practices in Bahir Dar and suggest improvements to facilitate the delivery of affordable housing, contributing to the understanding of cooperative housing models and urban land management systems.

2. Evolution of Urban Land Tenure and Access Policy in Ethiopia

Ethiopia’s land tenure system has transitioned through three distinct political periods: the Imperial, Derg, and FDRE regimes.

• Imperial Regime: Land ownership was concentrated within elite groups such as the nobility, clergy, and military, with others having to rent or buy from them.
• Derg Regime: This regime nationalised all land, granting use rights to citizens but prohibiting sales, purchases, or mortgages.
• FDRE Regime: The current regime maintains state ownership but introduced a leasehold system for urban land, with lease periods ranging from 15 to 99 years depending on land use. While this system aimed to generate revenue and involve private investors, it was initially plagued by issues of corruption and speculation. The latest regulations allow land transfers through tender or allotment, with government-approved cooperative housing programs eligible for land at benchmark prices. This system is designed to offer affordable housing options for low and middle-income communities.

3. Cooperative Housing in Bahir Dar

Bahir Dar has seen a rapid increase in population, leading to a housing shortage and high demand for land1. The city launched its cooperative housing scheme in 2013, aiming to deliver affordable housing through self-help models1. However, despite many residents becoming members of housing cooperatives, only a small fraction have successfully built their homes.

• Policy Framework: The Amhara National Regional State has implemented regulations to promote affordability of housing through cooperatives, stipulating requirements for membership, land plot sizes, and construction standards.
• Land Allocation: The municipality is responsible for providing serviced land to certified cooperatives, prioritizing those who registered first, however, delays are common, with some cooperatives waiting over four years for land allocation.
• Challenges: The study identified several challenges, including land plots being too small (between 100 and 150 square meters) and the requirement for costly G+1 building standards, as well as a land acquisition system that often favors high-income groups who can afford to bid at auction.

4. Land Delivery Practices and Bottlenecks

Between 2014 and 2022, over 31,000 plots of residential land were transferred to cooperative members in Bahir Dar and its satellite towns. However, land allocation was interrupted for four years due to corruption.

• Interruptions: Significant pauses occurred in 2014 due to corruption issues, and from 2015 to 2017, no new cooperatives were formed or certified, except for a few special cases.
• Land Size Changes: To manage high demand, the size of allocated land plots was reduced from 150 m² to 100 m², before being restored to 150 m² in 2022.
• Shortcomings: The study found that the amount of land provided is often inadequate, with only around a third of eligible members securing land, and most of these plots remain undeveloped due to the high cost of construction1. The lack of an annual plan for land allocation, lengthy delays in land delivery, high building standards, and inadequate financial support for cooperative members, have all hindered the scheme’s effectiveness, and eligibility criteria and unrealistic building standards also contribute to the scheme not being affordable for its intended beneficiaries.

5. Recommended Improvements to Cooperative Housing Policy

To increase affordability and effectiveness, the following policy changes are recommended:

• Housing Finance: Implement accessible and affordable housing finance options, such as low-interest loans and subsidized mortgages, taking lessons from other African countries where governments provide long-term, low-interest or interest-free loans to cooperative members.
• Bulk Purchases: Facilitate bulk purchases of building materials to reduce construction costs for members.
• Digitalization: Digitalize data, including resident ID cards, to prevent fraud and dual registries.
• Transparency and Accountability: Improve transparency and accountability through regular audits and oversight measures.
• Flexible Building Standards: Avoid unrealistic building standards and promote high-rise buildings to increase land use efficiency, and make more efficient use of the scarce land available. High-rise buildings can accommodate more people in a smaller area and help reduce land costs for individual members by sharing the costs.

6. Conclusion

The cooperative housing scheme in Bahir Dar has struggled to provide affordability of housing, despite the number of housing cooperatives certified and land plots allocated. Key obstacles include high demand, limited land availability, corruption, and unrealistic building standards. The study highlights the need for policy improvements, particularly in housing finance, building standards, and transparency, to achieve the goal of providing affordable housing for low and middle-income residents and for the scheme to become more effective and sustainable. For further reading: Assessment of Condominium Houses Affordability Similar post on ACASH