DIFFERENTIATING HOUSING FROM REAL ESTATE

Myths about life lead many people to fear and wrong decisions. Until Galileo Galilei boldly stood for the fact that the earth was spherical the entire world was deceived by the myth that the earth was flat. People lost the opportunity of discovering new possibilities through travelling as they feared that continued sailing on the oceans would lead to falling into a precipices at the edge of the flat earth. Likewise many Zimbabweans lose the opportunity of real estate investing today because of flawed decisions due to a myth I also grew up hearing that people are prohibited to own more than one property. Like Galileo Galilei I would like to clear this confusion through this article aptly titled Differentiating Housing From Real Estate. 

Housing involves government policy specifically aimed at the provision of accommodation to the general public. On another hand real estate involves private sector actions to finance, develop, own, manage and sale immovable property for profit. Because housing is meant to alleviate the problem of accommodation multiple ownership of property is strictly prohibited as a measure to ensure fairness. This is were the idea that people are prohibited to own more than one property emanates but it does not involve real estate. In real estate the number of properties a person can own is not limited because the market is an open one. Your only limit is your pocket! Here are some major differences between housing and real estate to take note of.

1. Type of developer 

Under housing the developer which is the owner of the project responsible with all aspects of the endeavour is the government local or central. Usually the offices that handle sales are the Department of Housing and for Harare Municipality these offices are located at Rememberance Drive in Mbare. In real estate private owners of land individual or corporate are the developers and involves various real estate specialists to help them which usually include estate agents, conveyancers, and land surveyors. 

2. Target market 

Housing usually target low income earners in high densities who doesn’t have disposable incomes good enough to compete in the open market. In the 1990s the Harare Municipality entered into agreements with financiers like the then Founders Building Society so that it provided loans at concessionary rates.  Real estate is mainly dominated by high income earners who after regular expenses like bills still can save enough  to qualify for housing loans that are provided at open market rates.   

 3. Nature of payments 

The nature of payments in real estate appear to be steep, in many cases a buyer is expected to pay so much in a short space of time. For example it is a common market practise that a purchaser of say a $40 000.00 property would pay 60% deposit upon signing and balance in three months. Very few people are able to meet this condition.  But the advantage of steep payment terms is reflected on the quality of property one acquires which is usually good in terms of selling points like title deeds availability and level of finishing of the development.  Under housing payment terms are generally compassionate as small bits of instalments are spread over years. This however, comes with a sting in the tail as it results in poorly done housing developments. Poorly done developments are usually evidenced by malfunctioning water and sewer reticulation systems installed through a shoe string budget as project managers make do with what is there.

     
DISCLAIMER This article is made available for educational purposes only as well as to give you general information and a general understanding of real estate investing, not to provide specific advice. The article should not be used as a substitute for competent advice from licensed practitioners