Scepticism and hope defines State’s new low-cost housing plan

Friday, September 23rd, 2022 05:26 | By
State Housing plan/ PHOTO/Courtesy
State Housing plan. PHOTO/Courtesy

During his campaign, President William Ruto pledged to ensure there will be an annual increase in housing with a yearly supply of 250,000 units through private public partnership.

According to the Africa Housing Finance Year book 2019, nationwide housing shortfall is standing at 200,000 units annually, while the accrued deficit is over two million units.

While experts say this is good news considering the fact that housing affordability is a key challenge in Kenya with many people unable to afford to buy or build, questions emerge on how this will be achieved.

“With proper planning, ensuring proper budget allocation for the housing sector and creating an enabling environment for the citizens can lead to achievement of these houses. A lot more can be done to ensure this is done by aligning the county plans to the National plans so that the counties also contribute to this agenda,” notes Mark Okundi, Habitat for Humanity Kenya.

Mark adds that housing in the rural areas, especially for the low-income and vulnerable populations should be considered since this category of people may not access the financial services to enable them build decent and affordable houses. “I also want to urge the new government to consider housing for the populations affected by disasters, including floods, address the disaster risks to enable the people to also have access to decent and affordable housing,” he says.

Progress so far

In 2017, retired President Uhuru Kenyatta launched affordable housing as one of the key pillars of the infamous Big 4 Agenda. The government worked towards building 500,000 affordable housing units for the lower- and middle-income population segment by 2022 and although it fell short of its target, it managed to construct and allocate 1,370 housing units at Park Road under the Affordable Housing Programme (AHP) at a cost of Sh4.9 billion. Under the Civil Servants Housing Scheme Programme, 870 housing units were constructed for Civil Servants in Kisumu, Machakos, and Embu Counties while 200 units in Kiambu County are at 97 per cent completion level. This is on top of the 1,710 units for the National Police and Prisons in the country.

In a bid to reduce the cost of construction through low cost materials and innovative technology, more than 21 Appropriate Building Materials and Technology Centres (ABMTC) were set up and an Expanded Polystyrene Building Panels (EPS) factory, which has so far produced over 450,000 square metres of EPS panels. To address affordability and grow demand, Kenyans were allowed to access up to 40 per cent of their pension savings to purchase affordable houses. To keep the affordable housing rolling and achieve a 100 per cent home ownership rate, these incentives to both parties need to stay in motion and even occasionally reviewed in terms of taxes and duties.

“The previous government had promised twice as much as the current government, but it only managed to do 1,370 units. The target is, therefore, a little too optimistic because the constraints are still the same,” observed Susan Mucheke, Senior Mortgage Officer, Enwealth Financial Services.

One of the challenges that Susan noted was the availability of funds, which made the project lag behind. The 1,370 units that the government built took up Sh4.9 billion. “If we were to go by the same cost of building, then the exchequer would be squeezed. But if the government works well to facilitate private developers to construct affordable houses and enable Kenyans to afford them by structuring affordable long term housing finance schemes, then we will celebrate. Social housing would grow the mortgage numbers significantly from the current 30,000 (or less), which would then push the supply of housing units close to the 250,000 target,” she says.

Waiving stamp duty

Some of the challenges that hinder Kenyans from owning their dream home, include low income against high cost of living, expensive credit, high cost of land and inherently high cost of housing units. On the other hand, high cost of construction, land shortage and limited infrastructure still stands in the way of developers. “It ought to consider incentives, such as waiving the stamp duty for first time home owners and reducing the mortgage lending rates. Again, the cost of construction is quite high, hence, embracing and educating the public on benefits of alternative construction materials and technology to reduce the cost of housing. Cost may also be reduced by encouraging developers, contractors and other players in the housing industry to harness the opportunities available for mass housing development to reduce the cost of construction,” explains Susan.

The government should have more affordable housing project in all our counties.

Moreover, like most other public entities, corruption in affordable units’ allocation needs to be done away with. The new government in its manifesto also promised low-cost mortgages of Sh10,000 and below. If this is looked into and favourable policies are formulated to enable cheap mortgages, then Kenyans have a reason to celebrate.

“The government should have a clear model of allocating the government affordable projects to benefit more members of the public. Additionally, bureaucracies in the approval and licensing of housing development proposals makes the process lengthy, costly and complicated for developers,” she notes.

The government also needs to enact strict measures to regulate land costs and rates. The continued rise of land rates, especially in urban centres, has greatly jeopardised affordable housing.

Regulate land costs

“Small pieces of land are being sold to small-scale, as well as large-scale investors in the housing sector at a very high cost, thus rendering the process of developing affordable housing for the growing population very expensive. The government should intervene to regulate land costs and prevent housing investors from being exploited by land sellers. This will cut down the cost of investing in housing projects and ensure houses are affordable even to the low-income earners,” noted architect Emma Miloyo, Co- Founder and Director at Design Source and Kiota School.

Emma adds that the government should also avail public land for housing and settlement. “The government owns large tracts of land in both urban and rural areas. This land should be released for public settlement, especially by squatters. It should also be availed to developers willing to invest in affordable housing, ensuring low and middle-income earners have access to affordable housing,” she adds.

Apart from that, the government should ensure that they develop infrastructure in both rural and urban centres. “There should also be effective zoning by the government to prevent investors from setting up expensive houses in specific zones known for low-income earners, such as the slums, as well as be keen with the quality of houses being set up in such areas,” she says.

Construction and real estate expert and director Beacon Africa Consultants, Nashon Okowa recommends that the new administration must do away with the financialisation of housing. “These are the policies and practices that promote the perception of housing as an investment product. This has to be an agenda on fulfilling a constitutional duty, not profits. The government must stop treating this agenda as an investment space instead of a space where a fundamental human need is met. It must discourage exploitation,” he says.

Nashon adds that for it to be successful, affordable housing, or public housing, must avoid the market and profit model. “We must begin to make a case for non-profit developments here. It is imperative that we break away from a dominant mindset that sees private sector property developers as the primary builders of housing. Greed for profit has shackled many among them and the common person, who can no longer afford their houses, yet they are the majority. The government, both national and devolved, must scale up the non-profit development of non-market housing on public and community-owned land. This is the long term key to achieving the public goal of affordable housing,” he says in ending.

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