NHC finds better way to curb rent defaults by tenants

The NHC Director General Hamad Abdallah said yesterday during the seminar with editors from different media organisation that the corporation now requires existing and new tenants to pay security deposits of 90 days, which is equivalent to three months’ rent fees.

He said this will ensure that there shall be no debt in case the tenant is removed from the property due defaults, noting that a tenant will be entitled to the refund of the security deposit, after the end of the staying tenure.

“Tenants who have yet to pay their security deposits should do so before the end of December this year,” he said.

As of July this year, the government’s fully owned corporation through the Treasury Registrar, had an accumulated unpaid rent amounting to 23.5bn/-, of which 20bn/- are unpaid by commercial properties tenants and 3.3bn/- by tenants of residential properties.

According to the DG, out of the unpaid amount of rent, 8.5bn/- are by individuals, 9bn/- by companies and institutions, and 3.3bn/- by the government institutions.

The DG said the corporation has also given the relief to debtors to start paying their accumulated rent debts in installments, while continuing to comply with their current rents obligations.

Abdallah explained that the corporation is expected to terminate the contracts with tenants who will fail to honour their obligations of paying accumulated debts, and the action will go hand in hand with confiscation of their properties, which will be sold to compensate the defaulted rent.

NHC has also entered an agreement with the Credit Information Bureau, where the details of all defaulters will be reported and their information be recorded, he said.

In a bid to improve the condition of houses, NHC spent a total of 8bn/- during the last financial year to conduct routine maintenances to its 200 properties, which have 2,000 tenants.

During the current financial year, he said, the state corporation has allocated a total of 7bn/- to conduct planning maintenance to its 101 properties in 15 regions of Tanzania.

NHC is currently collecting a total of 8.5bn/- per month from rent in its properties across the country and the amount is expected to increase to 10bn/- after the completion of new properties, which are under construction or refurbishment.

Speaking on how the government shift to Dodoma and the Covid-19 have impacted real estate in Dar es Salaam, the DG admitted that there are some effects, but they have not affected the corporation’s cash flow.

‘There is a cry in Dar es Salaam but productivity in Dodoma,” he noted. “It is just a little percentage of our properties are vacant, and that has not affected our cash flow.”

He said the vacant spaces are on office properties because of reduced spaces among companies due to the impact of Covid-19 as some of the tenants have reduced office spaces and opted to opt for “working at home” culture.

According to him, the current commercial properties vacant rate countrywide is just 2.5 percent, far beyond the highest standard rate of 20 percent.

However, he said there has been an improvement of business activities over the last two years, since the sixth phase government came into power, which has stimulated demands for properties for both commercial and residential purposes.

There is a mismatch in housing market in Tanzania as current demand is about 300,000 housing units per year, from both NHC and private developers, while the supply is less than half.

Currently, the country has a shortage of 3.8 million housing units, which means that under the current supply trend, Tanzania needs at 30 years to end housing shortages, without adding the annual growth of housing demands due to population growth.

Meanwhile, NHC is planning to issue the corporate bond at the Dar es Salaam Stock Exchange (DSE), as part of mobilizing financial resources to implement its various housing projects across the country.

The DG tipped yesterday that the issuance of the bond namely ‘Nyumbani Bond” will be done within 12 months.

“We are in the plan of issuing the bond and the write up has already been submitted to the board of directors for scrutiny and approval,” Abdallah said.

He said NHC is currently on tendering procedure to nominate an advisor.