The State Department of Housing and Urban Development has published new regulations under the government’s Affordable Housing Program.
The new Housing Fund Regulations, 2020, outline that every member shall contribute a minimum of Ksh. 200 per month to the National Housing Development Fund, credited to a member’s individual account on receipt.
Contributions shall be paid directly to the National Housing Development Fund Account through a designated Mode of Payment as may be specified by the National Housing Corporation.
The National Housing Corporation (NHC) shall establish and maintain a National Housing Development Fund Account for each registered member to channel their contributions. The NHC will also determine the annual rate of return on investment for contributions made by members into the National Housing Development Fund.
For a member to be eligible for a home under the affordable housing scheme, they must have contributed for at least 6 months and the total contributions must be at least 10 percent of the purchase price.
The new regulations state that NHC will process loan applications on a first come first serve basis. Loan interest under the regulations will be capped at 7 percent on a reducing balance basis under the National Housing Development Fund even though NHC may determine other rates. Members shall bear other loan costs.
In addition, the regulations will allow members to transfer their contributions to a pension scheme registered with the Retirement Benefits Authority, a registered home ownership savings plan, or to any member Registered under the National Housing Development Fund.
Members may also transfer their contributions to their dependants or receive their contributions in cash at any time subject to income tax.
In December 2019, Kenyan President Uhuru Kenyatta directed the National Treasury in conjunction with the State Department of Housing and Parliament to amend provisions that required a 1.5 percent mandatory deduction on employee salaries to the Housing Levy Fund.
This was after a court order was issued preventing deductions of workers’ salaries towards the Fund. The president said the amendment would enable willing Kenyans to participate in the affordable housing programme voluntarily.
If adopted by Parliament, the new regulations published by the ministry in a legal notice dated 15th will effectively revoke the Housing Fund Regulations of 2018.