Off plan properties

Treasury CS Henry Rotich yesterday affirmed the government’s commitment towards the affordable housing programme which is a key pillar of the Big 4 Agenda during his presentation of the 2017/2018 budget statement. The cabinet secretary said that adequate and affordable housing was a key concern for the government.

The CS noted that the task of providing affordable housing for all, will require a partnership with the private sector to develop houses on serviced land provided by government. He added that the government was ready to undertake reforms in the property registration process, access to financing and use of low-cost technologies to achieve the goals.

Already the Kenya Mortgage Refinancing Company was established in April of this year to raise capital and help in financing citizens. There are also plans to set up the National Social Housing Development Fund and strengthen the National Housing Corporation (NHC) for resource mobilization and management of tenant purchase schemes. These will also provide alternative financing strategies for low-cost housing and the associated social and physical infrastructure.

In addition, the CS said the government has come up with a system of incentives to get the private sector on board. Key among this is the initiative by the government to reduce corporate takes to 15 per cent for developers who construct at least 100 units per year. Clearly, the incentive is designed to promote scale.

Part of the proposed measure by the CS is the amendment the Employment Act to provide employers with the responsibility of contributing to the National Housing Development Fund. In the proposed amendment to the Employment Act, employers can contribute 0.5 per cent of the employee’s gross monthly payment, subject to a maximum of KSh. 5000 shillings to the National Housing Development Fund while employees will also be require to give 0.5 per cent of their earnings.

It is not yet clear how employees will react to these reductions given the array of reductions currently on the payslip, in addition to the ever rising cost of living.

According to the state department of housing and urban development, KSh. 3.0 billion has been set aside for construction of affordable/social housing units by GoK and Sh 1.5 billion for construction of housing units for police and Kenya prison officers this financial year.

Kenya faces an annual housing deficit of 200,000 homes, a figure expected to rise to 300,000 by the year 2020. Supply currently stands at 50,000 homes per year. Although the government’s program may not wipe away the deficit completely, it will go away in improving the state of housing especially for low-income citizens.