The government recently unveiled its plan to ensure the national affordable housing programme comes to fruition. Of special importance and concern was how the project would be funded and how the government would ensure moneyed plutocrats do not manipulate the system to allocate themselves the units they can afford without regard to the less privileged.
The government will deduct one per cent of your gross income subject to a maximum of Sh. 5000 and the money will be contributed to a new fund dubbed the National Housing Development Fund. Employers will also deposit a similar amount on your account. There was a confusion on exact the exact rate following the budget speech in which CS Henry Rotich proposed 0.5 per cent while Finance Bill had stated it at one per cent. The CS later said the mistake was a typing error.
The State Department of Housing and Urban Development on the other hand wanted it at five per cent. However, CS Rotich has said the rate was likely to be progressive over time.
So how will you get to access the money?
The contribution to the National Housing Development Fund which will be accessible through a tenant purchase scheme for those in the affordable housing bracket. Alternatively, they could be securitized into mortgages for those individuals with the muscle to consider alternative options.
Individuals will get to own affordable houses by through a rental purchase scheme where you rent a property and the same rental payment goes towards purchasing it. For those in the mortgage bracket, the contribution can be used as a deposit when you want to buy a mortgage or interest rate buy-back to make the mortgage cheaper.
The state department of housing and urban development intends to create an online platform in early July which will assign every person an automated score on whether they fall under low-cost houses, social houses or the mortgage cap. Persons will be required to enter their details including M-Pesa transactions, bank records and Kenya Revenue Authority Pin for the prequalification.
The national government will work with the private sector to put up 2000 houses in each county per year. Persons registered in the scheme can book a unit and begin payments for the off-plan units after registration since the one per cent deduction is quite meagre.