Zambia

2. Housing supply 

Zambia’s existing housing stock is estimated at 2.5 million units, of which 64 percent is traditional housing, while 36 percent (or about 800,000 units) is urban housing. About 28.5 percent of the urban housing is detached housing (single units); 20 percent is traditional housing and 21.5 percent is improved traditional huts. 

3. Housing quality

About 40 percent of the urban housing is good quality housing while 60 percent is substandard housing. In Lusaka, nearly 70 percent of all housing stock is substandard and informal and accommodates over two-thirds of the city’s population on 20 percent residential land. 

4. Demographics

5. Economic indicators

6. Government policies

In Zambia building regulations and standards that mainly relate to sanitation and housing are prescribed in the Public Health Act and only apply to formal housing areas, statutory housing areas, or areas within an approved urban development plan under the Urban and Regional Planning Act. The regulations prescribe the materials to use, land use and zoning, construction, minimum space of a

room, size of windows, occupation and use of dwellings and basic urban services. The very high standards set by the regulations makes the provision of affordable housing unattainable. Prepared in 1952 and on the basis of European standards, the regulations are now deemed obsolete and require complete revision to meet contemporary Zambian needs in terms of building materials. The regulations do not apply to informal unplanned areas or improvement areas as these are covered by the HSIA (Housing Statutory and Improvement Areas) Act. The poor quality of most housing units in informal settlements is due to a lack of special building code or set of standards similar to those operating in formal urban areas. Informal sector builders know the regulations but do not follow them because they increase the cost of building beyond what ordinary people can afford. Under Section 66 of the Public Health Act, councils must prevent or remedy danger to health arising from unsuitable dwellings. Despite the existence of sanctions, enforcement of regulations and standards is very weak, closing orders on unfit dwellings are rare and housing construction and usage (including overcrowding) is rarely monitored. Zambia has not yet developed a critical mass of artisanal skills and labour to support affordable housing delivery. In formal housing projects, skilled labour often has to be imported from other countries, increasing the costs of the completed units. Government has been promoting the use of local building materials and labour to reduce high cost of the units. 

Government has developed the Peri-Urban Development Strategy which defines a peri-urban area as an informal or formal settlement, within the area of jurisdiction of a local authority, with high population density and high density low cost housing having inadequate or lacking basic services such as water supply, sewerage, roads, storm water drainage and solid waste disposal. This strategy has not been fully implemented to ensure sustainable service provision and to promote private sector participation in housing delivery schemes. The World Bank noted that Zambia has “a sufficient policy and legislative framework” for legalisation of informal settlements but there seem to be a lack of local policies and strategies to effectively deal with individual settlements. Settlement upgrading has also been constrained by the long time (often 5 or more years) it takes for government to approve the regularisation of informal settlements. While the TCPA treated informal areas as “illegal”, the new URP Act recognises and designates informal areas as special treatment areas for urban renewal and other initiatives. 

Despite having one of the most progressive laws and policies in form of the National Housing Authority Act, the Housing Act and the 1996 Housing Policy, Zambia has not achieved its objectives of producing sufficient affordable housing. This is reflected in the huge housing deficit of two million units. It is hoped that, under the Urban and Regional Planning Act and a new housing policy, this situation will change as more informal settlements will be upgraded. Although a good policy with an enabling approach, the 1996 NHP was never fully implemented due to inadequate funding and lack of

an implementation framework. It however resulted in the sale of institutional housing and the Presidential Housing Initiative. Building regulations remain too high to promote affordable housing development by low income groups. Clearly many gaps and bottlenecks exist in the affordable value chain. It is therefore recommended that government and various institutions mandated with the responsibility of housing delivery further review, streamline and improve the policy and legal instruments to remove these constraints and bottlenecks and to reform the institutional and governance framework for affordable housing delivery in Zambia. Some market-based measures that can be implemented include unlocking land supply in the right location and at the right time, reducing housing construction costs through value engineering and industrial approaches, increasing operations and maintenance efficiency, and reducing financing costs for buyers and developers to enable them venture into affordable housing development. Also, land legislation and land policy should be brought under one roof. 

7. Environmental factors

Earthquake hazard is classified as medium in Zambia according to the information that is currently available. Based on this information, the impact of earthquake should be considered in all phases of the project, in particular during design and construction. 

However, the local building regulations do not provide for earthquake protection as the country is not prone to earthquakes. A few minor tremors were felt in the past. 

When it comes to Zambia, there are not many environmental factors. Floods did submerge houses this year (2023). 

8. Market trends 

Real estate agency business brings together buyers and sellers which enable real estate markets to emerge and function. Thus readily available information on who is selling and buying becomes essential to this practice. A system for collecting, analysing and storing of this information is cardinal to improving efficiency in this business. Advancements in information and communication technology (ICT) is the way ahead. 

However despite its obvious benefits in other industries, particularly with the use of the internet, its adoption in real estate agency practice in Zambia has been sluggish - despite the traditional systems being slow, inefficient and costly.

The use of ICT in the real estate industry is however not without debate. While some see it as an important tool in the business, others view it as a threat to the traditional way of doing things. For instance, Baen and Guttery (1997) predicted that increased use of the Internet and information technology would have a dramatic and negative impact on the real estate industry in terms of both income and employment levels. If buyers and sellers are equipped with ready access to information through the internet, they will have no need for traditional ‘‘intermediaries’’. Thus Baen and Guttery (1997) predicted that improvements in computer technology would substantially reduce the number of active real estate agents because of improved efficiency as a result of user friendly market information and services. 

Another study undertaken by the National Association of Realtors (NAR) in 1999 in the USA confirmed Baen and Guttery's (1997) predictions then. The NAR study found that 37% of all potential home-buyers searched for a home online in 1999, up from just 2% in 1995 (NAR, 1999). A similar point was emphasized in Guttery et al (2000), asserting that if buyers and sellers can sit at their computers and gather enough information to enable them transact, why would they need an estate agent? These studies though agree that the use of the internet in business improves efficiency in communication, contribute to lowering transaction costs and improves storage of information, thus threatening the traditional way of practice which is slow, inefficient and costly. 

Tse and Webb (2002) and Guttery et al (2000) identified the following as some of the advantages of using Internet in real estate business: reducing the cost of property transfer, saving time, gives client a wider option, cheaper mode of advertising firm’s products and services, allows firms to offer additional products and services and improves sale volume. 

For instance, Cassam et al (2000) observed that if both buyers and sellers are in territories where they can easily access real estate information using the Internet, this would quicken the entire transaction, availing consumers with more market knowledge and in the process saving time, money and reducing risks associated such transactions. 

So, in the country of Zambia a majority of the people in the Real Estate sector go for traditional methods. However, for those who are exposed to technology and its benefits they go for online methods. People who are outside the country and want to invest back in their home country go for online mode of transaction. 

Awareness will help bridge the digital gap, and IREWA can help in this.

9. Financing options 

Rent-to-own programs are growing in popularity as an opportunity for households to purchase homes affordably. The Zambian government has signed agreements with unions and banks to construct more than 40,000 units within the next decade, a $1.4 billion investment for programs across the country. 

Other programs exist, such as Zambia Home Loans, which offers financing for construction and land purchases but requires applicants to earn a monthly income of more than ZMW6,600 (US$398), own a stand with a title, and demonstrate a steady monthly income. For a minimum loan amount of ZMW50,000 (US$3,000), the estimated monthly installment payment on a 20-year construction loan through this program would be ZMW1,135 (US$68.50) which can be unaffordable if you work in the informal sector with an average of US$91 monthly factoring in other necessities for living. A government initiative under the Multi-Facility Economic Zone program has designated land for home construction in the south of Lusaka. The National Housing Empowerment Fund is in its second phase of the Affordable Housing Development Project, which aims to deliver 130,000 affordable homes in Lusaka. MIHUD has also partnered with Horizon Properties and Habitat for Humanity Zambia to deliver low-cost units for households residing in informal settlements. The Horizon Properties units will be environmentally friendly, whereas Habitat for Humanity is scaling its efforts to supply adequate housing for the nation’s most vulnerable groups. 

It is difficult for a majority of the people to have access to financing options. Even mortgages are difficult because they don’t have collateral. However, there is a shift now, as the country is moving towards middle income. In urban areas, the land is controlled by the government. In the outskirts, the land is traditionally owned by the chiefs. These are affordable but not attractive as it is far from modern amenities. 

Here again, IREWA can help mitigate the difficulty of financing in Zambia when it comes to the Real Estate sector. 

10. Property taxes

Some of the main taxes applicable to real estate businesses in Zambia are as follows: 

Property transfer tax: This tax is payable by the buyer upon acquisition of any property in Zambia. The rate of tax is 10% of the purchase price.

Rental income tax: This tax is payable on rental income received by property owners in Zambia. The rate of tax is 15% of the gross rental income. 

Capital gains tax: This tax is payable on any gains made from the sale of a property. The rate of tax is 20% of the gain. 

Withholding tax: This tax is deducted from payments made to non-residents of Zambia for services rendered. The rate of tax is 20% of the gross amount paid. 

Value-added tax (VAT): This tax is payable on the supply of goods and services, including construction services, in Zambia. The standard rate of VAT is 16%. 

Local government rates and fees: These are payable to local authorities for services such as waste disposal and road maintenance. 

Payroll taxes: Real estate businesses are also subject to various payroll taxes, including social security contributions and personal income tax on employee salaries. 

11. Real estate agent practices

Real estate agents in Zambia are regulated by the Estate Agents Act of 2000, which establishes a regulatory framework for the real estate industry in Zambia. The act is administered by the Estate Agents Registration Board (EARB), which is responsible for registering and regulating real estate agents in the country. 

Under the Estate Agents Act, real estate agents in Zambia are required to be licensed by the EARB. To obtain a license, an agent must meet certain criteria, including completing a recognized training program, passing an examination, and demonstrating competence in the field. Real estate agents in Zambia are also required to adhere to certain ethical standards and practices. The EARB has established a code of conduct for agents, which includes provisions related to honesty, integrity, confidentiality, and transparency in dealings with clients. In addition to the legal and regulatory framework established by the Estate Agents Act, real estate agents in Zambia are also subject to industry best practices and standards. These include maintaining accurate and up-to-date records, providing clear and concise information to clients, and ensuring that all transactions are conducted in a fair and transparent manner. Overall, real estate agents in Zambia are subject to a robust regulatory framework that is designed to protect the interests of clients and promote professionalism and ethical conduct in the industry.

Real estate agent commission rates and fees can vary depending on the specific agent and market. Generally, agents charge a percentage of the final sale price of a property, typically ranging from 2.5% to 6% of the sale price. However, this rate is negotiable and can vary based on factors such as the location of the property, the type of property, and the level of service provided by the agent. 

However, the problem here is that it is not enforced. It is not even properly structured. Anybody can come up with the price for a property. Now the Act is there, regulations are there, but there is no enforcement. Some people are not even aware. People can wake up and just enter into real estate without knowing the rules and compliances in place. 

With IREWA we can work with the government and be able to train, and enforce the acts already in place. 

12. Rental market

The Purpose of the Protection of Tenants of Residential Premises in Zambia, -The Rent Act in general is for the protection of tenants of dwelling houses. This protection is largely achieved under the Act by limitation of rent payable for dwelling houses, and provision of a substantial measure of security of tenure for tenants of dwelling houses. At common law, the relationship of Landlord and Tenant was in general, one of contract. 

Here again awareness is a big gap. With IREWA we can work with the government when it comes to enforcing the policies already in place. 

This document has been prepared by: 

Mr. Mickelson Lyngdoh- IREWA Executive Member 

Mr. Bhausaheb Jangle- IREWA Executive Member 

Mr. Fredrick Nonde- IREWA Country Partner