The government has created the Kenya Mortgage Refinancing Company (KMRC) to help citizens access cheap loans for home ownership. The loans will be channelled through banks to target civil servants, salaried employees and self-employed people with mortgages of up to 30 years.
The scheme could see individuals earning less than Sh. 100,000 finding it easier to own homes in a market where bank mortgages number less than 25000 in total. This is in line with the Government of Kenya’s plans to deliver 500,000 affordable homes by the year 2022.
The World Bank funded programme will see KMRC receive Sh. 16.1 billion from the global institution, to kick-start operations in a public private partnership type of arrangement.
Already, the National Treasury has pitched the idea in a document sent to bank bosses and Sacco CEOs. According to Treasury Cabinet Secretary Henry Rotich, the government will own a 20 per cent stake in the company, contributing Sh. 1.5 billion in fully paid share capital while the remaining Sh. 5 billion authorised share capital will come from development partners
The housing market in the country has for years been unable to cope with the annual demand for units partly due to the expensive and short-term nature of mortgages in the country, a situation that was made worse by the policy to cap of interest rates.
A government study showed that only 7 per cent of rural Kenyans can afford a house worth Sh. 1.7 million. This pauses a challenge as the average mortgage costs Sh. 9.1 million according to the Treasury CS. It’s no surprise that many Kenyans are unable to afford homes with the marginal increases in disposable income.
Under the recently announced Big Four agenda, the government plans to put up 500,000 social housing units and 800,000 affordable units by 2023 at a cost of Sh2.6 trillion. Estimates show that once complete, the houses may cost about Sh.3 million, still raising affordability concerns.
Source;Standard
