The housing sector in Zanzibar was supervised and operated by the Department of Housing and Development of human settlement under the Ministry of Land, Water, Energy and Environment since 2000 up to August 2015. During that period, the sector was weak and had relatively low contribution to GDP. In response to this situation, the Government of Zanzibar decided to establish ZHC in September 2015 to strengthen the sector so as to foster economic growth.
ZHC's started operations towards achieving its mandate. However, the Corporation is facing a lot of challenges which negatively impacts its performance.

Historically, by far the most important influence on the housing policy was the adoption of a socialist development path after the revolution of 1964. The government assumed the role of direct housing provider. During the following two decades, the housing policy emphasized public control of land and other resources in a centralized planning system. Thus, the state was the major supplier of formal housing whilst the private sector played a subsidiary role.
In the mid-1980s, the government shifted its economic policy toward a market – led strategy. This shift encouraged the private sector to provide housing acknowledging that the government’ s role should be limited to facilitation and regulation. The land reforms that followed this policy change intended to create an efficient and equitable land market to improve land and property rights.
On the demand side, in the last twenty years, Zanzibar population began to grow rapidly in addition to considerable number of immigrants entering Zanzibar every year from overseas and nearby countries. Zanzibar also began to record increased tourists and other groups of people who preferred to live in Zanzibar temporarily. Increased tourists began to increase individual incomes. All these factors exerted pressure on the demand of housing in Zanzibar.
Currently, Zanzibar faces an increased housing challenge as a result of growing population and increasing urbanization. At the core of this challenge is the need to provide housing that is affordable by low-income households. They constitute the majority of urban and rural communities. The housing challenge is further compounded by the limited resources available to both the RGoZ and the private sector.
The government introduced polices aimed to provide opportunities to the private sector to cover the housing demand gaps in all income levels. Contrary to the government expectation, the goals of such policies have not been achieved and it is still widening.