A lot has been said about housing cooperatives where members of the public have cried foul for long.
However, not much has been said about private land developers and housing trusts.
There is a lot of ambiguity on the housing institutional architecture vis-à-vis housing cooperatives, the private land developers and the housing trusts.
Some desperate home-seekers cannot distinguish between a private land developer and a housing cooperative, neither can they differentiate a housing trust from a housing cooperative.
Another dimension is on the distinction between a private land developer and a housing trust. I will make an attempt to separate the three albeit in a more rudimentary manner.
A private land developer is company registered under the Companies Act (Chapter 24:03) and run by directors.
It is a capitalistic institutional framework meant to make profit.
Therefore, the company invests money into property development and expects a return on investment.
The property is sold at cost plus margin.
Whereas, a housing cooperative, is a non-profit making entity registered under the Cooperatives Societies Act (Chapter 24:05), and is run by a management committee elected by and on behalf of the co-operators.
On the other hand, a trust is defined by STEP as “ . . . the formal transfer of assets (it could be property, shares or just cash) to a small group of people (usually two or three) or to a trust company with instructions that they hold the assets for the benefit of others”.
Similarly, Marume & Furidzo Legal Practitioners note that a “trust exists where the founder has handed over or is bound to hand over to a trustee the control of property which is to be administered or disposed for the benefit of the beneficiaries.”
The person giving the assets is known as the “trustor” or the “creator”. The people asked to look after the assets are called the “trustees” and those who benefit from the trust are called “beneficiaries”.
All the details are contained in a deed of trust and the assets placed in the trust are called trust funds.
Surprisingly, some of these trusts have been involved into property development as a business.
I stand to be schooled on how housing trusts are registered and involved in housing development as private enterprises meant to make profits. Such enlightenment is most welcome at the earliest possible time.
However, the paper is not meant to dwell much on the distinction between institutions, but their operations and whether the beneficiaries are getting value for their money.
The 2000 National Housing Policy provided for the participation of private land developers in housing delivery, following the clarion call from all over the world to leave delivery of the housing hardware to the private sector while Government concentrates on levelling the playing field.
The presumption was that the private land developer would mobilise resources for property development and deliver a finished product more efficiently when compared to the public sector, which was always blamed for inefficiency and bureaucracy.
The private developer, as an investor, would recoup the investment expended from the sale of the property developed.
A lot of indigenous private land developers accessed land from the public sector from as far back as early 2000s, some of which was sold at intrinsic value in the belief that it was meant to provide “affordable” housing.
Some delivered as expected, especially those working on the upper-end of the market. However, the challenge emanated from those who were doing “low-cost housing”. From around 2006, a new baby was also added to the family, housing trusts.
The striking characteristics of those property developers and housing trusts is that they had no money of their own to service stands, rather they adopted a pre-sale or off-plan sales of stands, well before the necessary planning processes and actual servicing of the stands commenced.
The rationale was to raise capital through sale of non-serviced or non-existing stands (in worst circumstances).
Some had the guts to sell stands based on a draft layout plan, and the unsuspecting clients would, oblivious to due care, pay their hard-earned money.
Not all private developers or housing trusts were in possession of official offer letters or bought private land for housing development.
Assuming that land access was aboveboard and the planning process was duly followed, pre-sale had its own challenges. The major challenge was to do with monetary policy pronouncements and inflation.
Some sold the stands off-plan before the slashing of the zeroes by the Reserve Bank of Zimbabwe around the mid-2000s. Other beneficiaries signed agreements of sale and have confirmations of full payment from the private developers.
In 2009, the multi-currency system was adopted.
The same beneficiaries who had confirmation of full payment were asked to top-up because it was now the multi-currency, which was predominantly denominated in US dollars.
While others obliged and paid, some felt aggrieved. The country reverted to the mono-currency system in June 2019 and restricted all domestic transactions to local currency.
The same private developers felt the “heat in the kitchen”, and I bet they are expecting price adjustment to the same stands sold from as far back as 2005.
Astonishingly, there are some corporates of repute, who have diversified and entered into property development.
Their initial agreements of sale indicate that the beneficiary was paying towards a fully serviced stand, with water and sewer reticulation, roads, storm water drains and electricity, all delivered in two years’ time from date of purchase, and the repayment stretched from five years to 10 years.
On realisation that they were incurring cost overruns and project delays, they amended the agreements to exclude electricity.
Beneficiaries are now asked to organise themselves and see to it that they electrify their places.
In some areas, the road network is in shambles, there is no water and sewer reticulation more than 15 years after sale.
There is virtually nothing to show for the contributions made by the beneficiaries.
From the housing trusts angle, at best, they have delivered pyramid schemes, where only the trustees and a few from the top echelons have benefited from the beneficiary contributions.
The contributors, who are mainly civil servants (due to their stable income), have nothing tangible in return.
The question now is, what will happen to these inept private land developers and housing trusts?
Is there any recourse for the innocent home-seeker who has been paying for infinity and yet the land remains unserviced for over a decade instead of a maximum of 24 months?
If you were to visit any of those developers and housing trusts today, they will tell you they still have stands for sale. Why are they not sold out since 2006, 2012 or 2018?–herald.o.zw