One problem that plagues most of Ghana’s cities, and indeed many cities across the world, is the issue of accommodation—both in terms of availability and affordability. This problem arises because opportunities tend to be concentrated in urban centres, forcing people, especially the youth, to migrate from rural areas to cities in search of their share of the “national cake,” the cake that has a phobia of rural communities.

The result is quite straightforward: more people occupy relatively small land spaces with limited facilities, while only a small proportion of people live across the larger land areas of the country. For instance, in Ghana, about 38% of the population (approximately 12 million people) live within the major metropolitan areas of Accra and Kumasi, which together occupy less than 2% of the total land space of Ghana. With such skewed population concentration, the resulting challenge of accessing affordable accommodation is not far-fetched.

Young people who migrate into cities for jobs, education, or to begin their careers (if they are fortunate enough to secure employment) are often confronted with the challenge of searching for a place to at least rest their heads. However, this process quickly turns into an exhausting and costly adventure. With limited knowledge of the city and no publicly available, structured information on where accommodation exists and how to access it, they encounter the first major challenge in Ghana’s urban housing system: agents.

These agents are individuals who possess knowledge of available properties across different locations and act as intermediaries between landlords and prospective tenants. Typically, they require a potential tenant to pay a viewing fee—often between GHS 100 and GHS 150—before showing the property. If the tenant is not interested after viewing, the fee is forfeited, and another payment is required to view a different property. This implies that if a person rejects 10 properties, they may lose up to GHS 1,500 without securing accommodation.

For those who decide to rent, the financial burden increases significantly. Instead of just the viewing fee, the tenant is required to pay 10% of the total rent as an agency fee. For example, if a room costs GHS 1,000 per month and requires a one-year advance payment, the tenant must pay GHS 12,000 to the landlord and GHS 1,200 to the agent, bringing the total to GHS 13,200 for a single-room self-contained unit. It is worse when 2 year advance payment is required. This amount is excessively high and unrealistic for a young graduate who is about to begin work and has not yet received their first salary.

This is not an isolated experience—it reflects the reality of many, including myself. I am yet to complete the two-year rent payment for a room I secured in the heart of the city. The loan I took to pay the initial one-and-a-half-year advance – three months ago – has not yet been fully repaid, yet the remaining six months’ payment is already due. Meanwhile, agents continue to demand their 10% fee on the full two-year rent. This situation clearly reflects a systemic injustice.

In response, government of Ghana is seeking to enforce an Act that was passed 63 years ago, the Rent Act, 1963 (Act 220), which dictates that landlords should not demand more than six months’ rent advance. This policy is commendable and well-intentioned. However, the critical question remains: Will this implementation be effective, or will it join the many policies that exist only on paper while the problems they seek to address persist?

The answer depends largely on the economics of the situation.

Since the 1980s, Ghana has transitioned from a largely state-controlled economy under Osagyefo Dr. Kwame Nkrumah’s socialist orientation to a more liberal, market-driven (capitalist) system, where demand and supply largely determine prices. In such a system, when demand exceeds supply, prices rise—as seen in the housing market. Conversely, when supply exceeds demand, prices fall—as observed among farmers during peak harvest seasons.

In the accommodation sector, the problem is twofold. First, demand significantly exceeds supply. Second, contrary to the assumptions of a perfectly competitive market, information is not symmetric. Rather, agents and landlords control access to information on available properties, enabling them to dictate prices and conditions.

Economic theory also acknowledges that when markets operate purely on demand and supply forces, the stronger party often dominates. In this case, landlords and agents (suppliers) exploit the desperation of tenants (demanders), who face time constraints, limited options, and inadequate information. This leads to exploitative practices such as high rents and long advance payment periods.

Similarly, in agricultural markets, middlemen exploit farmers who lack storage facilities and are under pressure to sell quickly, offering low prices. This demonstrates that demand and supply alone do not ensure equitable distribution of goods and services. Hence, there is a need for a regulator—the government—to intervene when market failures occur.

The government’s decision to cap rent advance payments at six months is therefore justified. However, economic theory predicts that such price ceilings (or quantity restrictions) often lead to unintended consequences:

1. Withdrawal from the market: Property owners may choose not to rent out their properties, thereby worsening the shortage.
2. Emergence of black markets: Landlords may secretly demand longer advance payments (e.g., two years) outside formal channels.
3. Price adjustments: Landlords may increase monthly rent to compensate for shorter advance periods. For instance, a landlord who previously charged GHS 600/month for two years (GHS 14,400 total) may now charge GHS 1,200/month for six months, achieving the same financial objective while complying with the law.

Thus, while the law addresses the duration of advance payments, it does not address affordability, which is the core issue.

It is also important to understand why landlords demand high advance payments:

1. High cost of construction: Land acquisition, building materials, and labour costs are rising. Many property owners rely on loans with short repayment periods, forcing them to seek bulk payments upfront.
2. Rising demand: Ghana’s population is growing rapidly, increasing the need for housing and encouraging rapid real estate development.
3. Weak rental enforcement systems: Delays in rent payments and difficulties in evicting defaulting tenants make landlords prefer upfront payments as a risk mitigation strategy.
4. Lack of mortgage and housing finance systems: Limited access to long-term, low-interest housing finance pushes both developers and landlords to rely on tenant advances as a financing mechanism.

With these in mind, it becomes obvious that legislation alone is not enough to solve the problem of accommodation and advance payments in the city. A more pragmatic approach is required, and here are a few:

1. Government-provided accommodation options: The government, beyond drafting and implementing regulatory policies, can enter the market as a supplier by building affordable housing units within the city. This will reduce the pressure of demand on private property owners. With proper planning and sustained investment that is not dependent on which political party is in power, the dominance of private property owners can be reduced, and there may be less need for strict regulation of advance rent payments. The truth is that previous governments have attempted this but have either failed or stalled due to corruption or poorly selected locations. These projects can be revitalised, and new ones can also be initiated.
2. Incentive-based regulation: The government can also implement incentive-based regulations, such as reducing the cost of constructing new housing projects for property owners. This may involve assisting them in acquiring land, absorbing documentation and registration costs, or subsidising building materials. With these benefits in place, property owners will be encouraged to comply with new policies. However, it is important to recognise that they will weigh the benefits of these incentives against the potential losses from reducing advance rent payments before making a final decision.
3. Improved access to housing information: A critical but often overlooked solution is the need to improve access to information on available accommodation. This can be achieved through the creation of a centralised, publicly accessible housing portal where landlords are required to advertise their vacancies. Such a system will reduce over-reliance on agents and minimise the exploitation associated with information asymmetry. This platform can be regulated by the government or managed through an empowered association or union of property owners, similar to how organised groups in sectors like the Chamber of Aquaculture provide weekly price updates. With transparent and easily accessible information, tenants will be better positioned to make informed decisions, compare options, and reduce unnecessary costs associated with searching for accommodation.
4. Decongest the city: Above all, there is a need to decongest urban centres. Countries such as Nigeria have relocated their capitals from congested cities to newly developed areas to ease pressure and promote balanced development. While Lagos (the former capital) remains congested, the situation would likely have been worse without such intervention. Ghana has vast land resources that remain underutilised, and many regions are deprived of development because they are far removed from economic opportunities. For instance, a person in Pusiga in the Upper East Region may travel by road for approximately 24-26 hours to reach the national capital to access services unavailable at the regional level. Beyond relocating the capital, which may be costly, certain companies, industries, ministries, and organisations can be strategically moved to less developed areas to redirect economic activity. With fewer people concentrated in the cities, landlords may even be compelled to attract tenants, reducing the likelihood of demanding excessive advance payments such as two years.

In conclusion, while the enforcement of a six-month rent advance policy is a commendable step towards protecting tenants, it does not, in itself, resolve the deeper structural challenges within Ghana’s housing market. The issue is fundamentally driven by excess demand, limited supply, high construction costs, and weak access to information. As such, relying solely on legislation without addressing these underlying economic realities risks rendering the policy ineffective or even counterproductive.

A more balanced and sustainable approach—one that combines government participation in housing supply, incentive-based support for private developers, improved access to housing information, and deliberate efforts to decongest urban centres—is essential. Without these complementary interventions, the market will continue to adjust in ways that may undermine the intent of the law. Ultimately, achieving affordable and accessible accommodation in Ghana’s cities will require not just regulation, but coordinated economic and structural reforms that address both the causes and consequences of the housing crisis.