According to the market updates report for the second half of 2019 published by the Knight Frank, these are the policy changes that will influence the industry in 2020 and beyond.
In September, Parliament rejected the National Treasury’s proposal to raise the Capital Gains Tax to 12.5% from the current rate of 5%.
This was due to concerns that the increase would negatively affect the affordable housing program through higher land prices, which would be passed on to buyers by increasing sale prices for the houses.
Consequently, the Capital Gains Tax was retained at 5% following assent to the Finance Act 2019 in November.
The Finance Act also introduced several tax exemptions. These include VAT exemption on locally purchased or imported goods for use in the construction of affordable housing.
A Stamp Duty exemption for houses being constructed under the Affordable Housing Program and transferred from the developer to the National Housing Corporation (NHC).
Income Tax exemption for the National Housing Development Fund (NHDF), which was set up to assist the AHP.
Tax exemption for locally issued green bonds such as the one recently issued by Acorn, which was subsequently listed on the Nairobi Stock Exchange and the London Stock Exchange.
The Finance Act also repealed the interest rates cap introduced in 2016 under Section 33b of the Banking Act, giving commercial banks free rein on the pricing of loans based on their own risk assessment once again.