The history and practice of rent controls in Kumasi, Ghana

41088 INURD WP # 88-1 URBAN DEVELOPMENT DIVISION POLICY, PLANNING AND RESEARCH STAFF THE HISTORY AND PRACTICE OF RENT CONTROLS IN KUMASI, GHANA by A. Graham Tipple April 1988 Working Paper The INURD Working Papers present preliminary research findings and are intended for internal review and discussion. The views and interpretations in these Working Papers are those of the author(s) and should not be attributed to the World Bank, to its affiliated organizations, or to anv individual acting on their behalf.  I I  Graham Tipple is Senior Research Officer in the Centre for Architectual Research and Development Overseas, School of Architecture, University of Newcastle upon Tyne, United Kingdom. This paper is an intermediate product of a World Bank research project on Rent Control in Developing Countries (RPO 674-01), directed by Stephen Malpezzi of the Bank's Urban Development Division, Policy, Planning and Research Staff. A forthcoming companion paper presents estimates of the costs and benefits of controls in Kumasi. Other case studies are underway of controls in Brazil, Egypt, India, and Zimbabwe. The views expressed in this paper are solely those of the author; they do not reflect those of the World Bank or any organization. The author is grateful for the assistance of colleagues at the University of Science and Technology, Kumasi, and the libraries of the Institute of Advanced Legal Studies and the Foreign and Commonwealth Office, London.  It  TABLE OF CONTENTS Page No. I. INTRODUCTION....................................... 1 II. THE EARLY DAYS OF RENT CONTROL .............................. 3 III. THE RENT ACT, 1963 AND SUBSEQUENT LEGISLATION....................7 The Fixing of Rents ................ ................ 7 Coverage .................................... 19 Advances and Side Payments ..................... 20 Eviction ............................. ............. 21 Supervision ................................... 2i Treatment of Houses in Government Estates .................. 25 Reletting after Renovations ........ ......... 28 IV. TAXATION ON RENTAL INCOME ........................ 29 Allowances ................................ 29 Tax Rates ................................................ 30 Comparison with Income Tax ..................... 31 Property Rates ............................................... 32 V. fHE HOUSING STOCK .............................. 35 The Housing Sectors ...... ..................... 35 The Tenement Sector ....... ............ ........ . 35 The Indigenous Sector ........................................ 35 The Government Sector ............... ............. .... ........ 35 The High Cost Sector ...... . ..................... 36 Urban Growth ................................................. 36 Housing Conditions, 1986 ............. ............. .......... . 37 VI. CURRENT RENTS IN KUMASI ....................... 39 Distribution of Rents in tne city ............................ 39 Rent and Service Levels ...................................... . 40 Rent as a Percentdge of Income ............................... 40 The Effect of Rent Control Policy on the Supply of dousing... 40 VII. THE POLITICAL ECONOMY OF RENT CONTROL: SOM-fE COAtENTS ........ 43 VIII. SUDMARY ................................ 47 NOTES ................................................. 49 BIBLIOGRAPHY ................................................. 51  I
7  I. INTRODUCTION Kumasi, the ancient capital of the Asante Kingdom, is the second largest city of Ghana. In 1970, population was 345,000 (Ghana 1972). Until 1985 the most recent population estimate was 590,000 as of 1980 (Tipple, 1984a and 1984b, Boapeah and Tipple, 1983). However, the recently published census results indicate a surprisingly small popula- tion in 1984 of only 488,991 (Ghana, 1985, Table 9.6). The survey of the city, to be conducted to provide data for this project, should, in the near future, give a clear picture of mid-1986 population. Lying in the belt of high forest which extends across southern Ghana, Kumasi is 180 miles from Accra by road and occupies a series of low hills separated by sluggish streams. The city was destroyed by the British in 1896 during the Second Asante War but became the center of British rule and influence in the interior of the Gold Coast in 1901. It was developed in colonial times on and around its old site as a spacious and well planned city, "the Garden City of West Africa." The informal settlement activity evident in many African cities takes place in Kumasi only under the control of local chiefs. Their exclusive right to allocate land was hardly disturbed during the colonial period and remained so with independence. While the state has rights to compulsorily acquire any land needed for government purposes (under the State Lands Act, 1962, and the Administration of Land Act, 1962), such action is relatively rare and affects only the few government estates and isolated sites for such uses as sanitary installations and reserves for main roads. Thus, although large areas of housing have been estab- lished outside formal planning control and are in this way analogous to squatter settlements, the occupants have legal rights to the land through recognised traditional systems (see Peil, 1976 and Tipple, 1983). Kumasi is now an industrial center with a formal timber processing industry and large informal woodworking, light engineering, and vehicle repair activities. The regional capital of the modern Ashanti Region, Kumasi also retains its pre-colonial function as the commercial and administrative center of a large area of Ghana, including the cocoa growing areas of Ashanti and Brong-Ahafo Regions. The city's central market at Kejetia vies with Onitsha in south-eastern Nigeria for the claim to be the largest market in West Africa. So universal is trading in Kumasi that, in the author's 1980 data, it was rare to find a house- hold without at least one trader among its members. There are about 20,600 houses in Kumasi (1) with a total of 165,000 rooms. The characteristic house type is the single story compound which tends to be almost square and up to 30 metres along each side. Ten to sixteen rooms range round three sides of the courtyard facing inwards and usually having verandahs on the courtyard side. The main entrance to the house is usually at the side and can be locked at night securing the whole compound. The fourth side of the courtyard usually contains a bathroom (simply a room with a drain hole at the base of the wall), a kitchen (a shelter open to the courtyard side and used for storage of utensils) and a bucket latrine. 1  Many houses are built of traditional materials - swish (rammed earth built in courses and known locally as "atakpame") with louvred wooden windows - while others are built of cement blocks. Some have two, three, or (rarely) four storys with the rooms on upper floors opening onto an access balcony. Some of these buildings may have 50 or more rooms but 15 to 20 is more common. They are almost all built of cement blocks, though some dating from before World War II are in brick with galleried wooden upper stories. More detailed analysis of the housing stock can be found in Chapter 5. 2  II. THE EARLY DAYS OF RENT CONTROL According to United Nations (1979, p. 7), "the fundamental purpose of rent control legislation is to set rents at levels which are fair to both tenants and landlords." While this appears to have been so in Ghana at first, it will be seen from the following that fairness to landlords was soon given a low priority. As with many other countries (UN, 1979), rent controls started in Ghana during the Second World War. During the war, the Gold Coast began to suffer the effects of inflation so that in 1941 a Temporary Relief Bonus was granted to all employees earning less than