Business
No Such Thing As Cheap Accomodation in PNG
Low income earners forced to squat
There is no such thing as cheap accommodation in Papua New Guinea. Everywhere you go it's the same and there is only one cause of this - the unregulated high cost of rentals imposed by real estate companies. The high rents have made accommodation the single most expensive basic human need in the life of the low and average income-earning Papua New Guineans.
Those that are able to find a decent home are very few, while the masses have to make do with what they could find. The worst form of accommodation today would be a tin and cardboard shed or a shack, tucked away in the corner of one of the major centres in the country.
- ADVERTISEMENT -
 |
|
|
A brief study on the rentals of four properties in Port Moresby shows some varying differences. There isn't much distinction between all of them, except that they are in different locations in the city. They are also managed by four different real estate companies. The properties are flats, units or duplexes.
The first is going for K300 plus K30 Value Added Tax (VAT) per week. The rental covers water, sewerage, garbage, and security service. Electricity and gas supplies for the property are the responsibility of the tenant. It is a two-bedroom flat.
The second is a duplex with three bedrooms and is going for K350 per week plus VAT. No security service is provided and all the other costs are borne by the tenant.
The third also has three bedrooms and is going for K300 per week with no VAT added. It has no security service. The tenant meets the other extra costs. It's a unit.
The fourth is a two-bedroom flat, which is going for K300 per week plus K30 VAT. The rental covers the rent, electricity, water, garbage, sewerage, and security service. The rental also covers other amenities like a pool and a barbecue area. The tenant only pays for the gas supply.
The rents for other top level accommodation like houses, high rise apartments and penthouse suites start at K500 per week and can go as high as K1 million a month.
The lowest the industry can offer is K100 per week, which would comprise a single room in a block of flats with communal kitchen, shower and toilet facilities. But even so, a K100 is normally the maximum pay for a general labourer.
The National Housing Corporation, the government body responsible for housing in the country, does not have a system in place to cater for the needs of such low income earners.
Although there was once a low-cost housing scheme during the colonial administration, houses under the scheme have since been bought by tenants. The government is able to maintain a number of hostels in towns. But these have been used only by public servants.
The general labourer is left with no option, but to squat on government land in shacks, tinned and cardboard sheds. He joins others in the same bracket to create what is known today in Papua New Guinea as squatter settlements, found in every town throughout the country. Most of the settlements have expanded so quickly that they have now become shanty suburbs on their own.
This is particularly seen in Port Moresby where elected leaders, who get most of their votes from settlement dwellers, have to provide for their needs. They ensure that they are provided with basic needs like electricity and water from the city's main supplies.
The reason for the very high rents and other related problems is that the real estate industry has been its own regulator since independence 26 years ago. Real estate companies and agents operate with no control on their activities. While some of the rates are genuine, others are excessively higher than the value of the properties. There are cases where tenants are charged highly for properties that have not undergone maintenance for years, or do not have the necessary amenities to match the high rent.
Anyone can become a real estate agent. The persons’ business credentials, including his financial capability, size of business and other relevant requirements necessary for an effective service provider, are not important pre-conditions for the issuance of a trading licence. The business can be as small as managing one property only. The person charges any rental rate he feels comfortable with.
However, this will now be changing following moves by the National Housing Corporation and Consumer Affairs Council. They are putting together a submission to present to government. National Housing Corporation chief executive, Benedict Mick said discussions between his company and the Consumer Affairs Council have been on-going since mid last year. Both organisations hope to see the National Parliament enact legislation for the establishment of a regulatory body.
Mick agreed that rents charged by real estate companies are extremely high compared with higher quality rented properties in the Asia-Pacific region. The content of the submission has yet to be announced. However, some suggestions made include:
- the establishment of a Rental Bond Board to oversee rates charged;- audit of trust accounts to ascertain if monies are being made by the real estate companies to justify their rates;
- the issuance of certificates to genuine real estate companies;
- the government to meet the market needs through the release of National Housing Corporation's give-away schemes; and
- banks to reduce interest rates on real estate.
While the announcement has been meet with skepticism by the industry, the Papua New Guinea Trade Union Congress is convinced that the time is right for such laws.
General Secretary John Paska said many real estate companies were foreign owned and monies earned were remitted overseas. Paska said the industry has been its own regulator for a long time and some form of control needs to be put in place so that tenants are safeguarded.
"Some of the rents they are charging are exorbitant. There must be some authority or yardstick real estate people must be subjected to," Paska said. "We need to take stock somewhere and I believe this is the way to go so that the law sets the parametres in which the real estate industry can operate."
