The Addis Abeba City Administration cabinet has granted housing properties erected on unlawfully occupied land reduced annual lease payment rates.

It is based on a regulation introduced in 2011, which gives the Administration the mandate to make adjustments on the lease payment modality to ensure low-income segments of the population access land at affordable prices. Three years later, the Administration began the process of granting title deeds to 44,547 undocumented homesteads that occupied land illegally in the 10 years beginning 1996.

Plots illegally occupied after 2005 are appropriated by the City Administration and put under a land bank while construction on these plots is subjected to demolition. To facilitate the lease process, the Administration established a land bank in 2013.

In 2010, the Administration had granted the same entitlement to 60,000 households occupying undocumented plots acquired before 1996.

Over three-fourths of the undocumented properties occupied before 2005 have completed the registration process since 2017, paying a down payment of 10pc of the total land lease amount determined by the Administration. The remaining 11,500 homesteads failed to register as they could not afford to make the payments, individuals close to the matter told Fortune.

The registered homesteads issued with title deeds are made to pay the lease fee over 40 years, with an annual interest rate calculated based on the outstanding balance. Based on the prevailing lending rate of the Commercial Bank of Ethiopia (CBE), the compound interest payments were much higher than the lease instalments themselves.

Last August, the Cabinet decided to alter the lease payment system, disclosed Jemal Aliye, head of the Addis Abeba Land Development & Management Bureau. The Administration collected four billion Birr from the lease payments and interest last year.

The lease payment arrangement, which dictated interest be paid on the remaining balance, is enforced in Addis Abeba to plots leased for residential and investment purposes.

“We received instructions from the Bureau to apply interest on the annual instalments instead,” said an official at the Gulele District Land Development & Management Bureau.

Alemayehu Teklehaimanot is a resident of Lafto District and one of the individuals who agreed to the terms of the lease payments when registering a homestead four years ago. He manages a property owned by his parents residing abroad.