Association calls for business, residential-friendly rent regime
The Council of Indigenous Business Association (CIBA), has petitioned government and civil society organisations to promote dialogue and facilitate consensus among stakeholders for the strict enforcement of the provisions in the Rent Act 1963 (Act 220).
CIBA made the petition in a statement copied to the Ghana News Agency in Accra on Thursday, which described the Act, which is under review, as ineffective and unreliable.
“The Rent Act 1963, (Act 220), which provides the law regulating affairs between landlords and tenants, is currently ineffective. Although this Act was promulgated to protect tenants, one cannot depend on this Act any longer. It does not afford any protection to Ghanaians in practice, and as a result tenants are being exploited by landlords,” it said.
According to CIBA, enforcement of the Act was one of the key issues needed to be addressed in the review of the Rent Act.
The statement described as worrying the understaffed and ill-resourced state of the Rent Control Department, the unit empowered to enforce the Act.
The Association raised some concerns over non-existence of an outreach to landlords and tenants regarding education of rights and adjudication procedures, lack of capacity for settling disputes and the fact that administration of the Chief Rent Officer was not overseen by a commissioner, as was mandated by the Rent Act.
The statement said the rental system in Ghana had been characterised as “pro-landlord” and market driven, against the best interests of citizens and particularly persons with low income.
“These policies are reinforced by the current Rent Act of 1963, which allows the cost of rent to be freely negotiated in Ghana but allowing for unrestricted price increases at the discretion of the landlord. Although the Rent Act established a Rent Control Division that is responsible for the establishment of guidelines relating to the monitoring of landlords and tenants relations, protection of tenants is minimal,” it said.
The statement said unrestricted price increases exploit individuals and businesses, as it subjects Ghanaians to frequent price elevations, which often times resulted in evictions and increased instability and poverty.
For Ghanaian indigenous business entrepreneurs who live and work on the same rented property for instance, their livelihood and security are doubly threatened, it said.
The statement also raised the issue of the provision for landlords to collect deposits or require advanced payments on rent.
“While the purpose of such a provision was to protect landlords in an unstable market, the effects on Ghanaian businesses are perilous. According to the Act, landlords can only charge six months’ rent in advance, and succeeding rents are due every six months; however, in practice, landlords can charge one to three years rent in advance,” it said.
The statement said because demand for accommodation exceeds supply, tenants had no choice but to accept the rent charges or lose their rental units to other tenants, adding the system was also characterised by high charges by estate agents or brokers and inefficient rent tribunals.
“The phenomenon has been exacerbated for some time now as the trading community is saddled with another monstrous illegality, termed “Good-Will” fee, which some property owners have been using to fleece hard earned resources of the traders,” it said.
The statement said the “Good-Will” fee had been designed to defraud traders who are seeking places to rent for stores or office accommodation especially within the big towns and cities.
“These days the fee charged ranges from $45,000 to $70,000 for a period between 10 and 15 years depending on the location of the business premises and its size. A practice that is very detrimental to small businesses since they are unable to raise such huge sums and consequently are crowded out by multinational and foreign firms who are able to meet such demands from property owners.”
It said the Rent Act had proven without any ambiguity that it was totally illegal and fraudulent in all intents and purposes for any landlord to take “Goodwill fees” from tenants.
“This is the likely reason why some landlords deliberately refuse to issue receipts covering such payments, as well as stating the fee in their Tenancy Agreements,” it added.