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Snippet 20:19
By CONSTANT MUNDA
High-rise apartments on Cotton Avenue in Kileleshwa, Nairobi. The annual housing supply
in urban areas is estimated at 50,000 units, resulting in proliferation of informal settlements
for low-income earners. file photo | nmg
The majority of Kenya’s working class may not be in a position to pay more than Sh3,500
rent, says the Ministry of Housing and Urban Development, underlining the financial strain
that urban dwellers routinely undergo every month.
Principal Secretary Aidah Munano says about 60 per cent of the country’s workforce takes
home about Sh25,000 or less a month, making it difficult to comfortably afford rent and
settle other bills.
An average residence in Nairobi, Mombasa, Kisumu, Nakuru and Eldoret costs about
Sh10,000 a month.
“The majority of our population earn about Sh25,000 per month. They can only release
about Sh3,500 for their rent,” Ms Munano, an architect said. “We need to start speaking of
affordability of housing.”
The State has ramped up plans to put up 200,000 “affordable” units every year in
partnership with private developers as stipulated in Vision 2030, the country’s long-term
development blueprint.
The renewed push follows a directive by President Uhuru Kenyatta on November 28 that at
least 500,000 “affordable” units should be constructed by 2022 as part of his legacy
projects.
What constitutes “affordable” housing, however, remains contentious.
Affordability, Ms Munano said, may mean a decent house whose monthly rent does not
exceed Sh3,500 and which will cost a buyer not more than Sh3 million.
“We are thinking of houses where the sale value will be around Sh3 million. These are
houses such as studios, two bedroom and three bedroom units. If we go beyond Sh3
million, it will not be affordable housing any more,” Ms Munano said.
The annual housing supply in urban areas is conservatively estimated at 50,000 units,
largely in the mid and high-end segment of the market, resulting in proliferation of informal
settlements for low-income residents in the country’s five major urban centres.
Amid rapid growth in urbanisation, estimated at 4.4 per cent by the World Bank in 2015, the
housing deficit is now estimated at about 1.85 million units a year.
To meet the one-million low-cost units a year target in less than five years at a cost of about
Sh2.3 trillion, the State has pledged to offer private developers about 7,000 acres of public
land as part of an incentive package.
“We are putting together a land bank because one of the ways we are going to realise
affordable housing is when the government provides land for the private sector to work on
because 30 per cent of the cost of housing is actually land,” Ms Munano said.
“If the government can provide land, then we may be 50 per cent there (meeting the target
in affordable housing).”
The plan is to give incentives to private developers to put up 800,000 affordable units to be
sold under an off-plan arrangement — sale before the units are built — and a further
200,000 social housing units through redevelopment of land in slums.
“We are looking even into affordable mortgages. This is something that has been said
before because we have about 22,000 mortgages against a working population of about 15
million,” Ms Munano said.
Mortgage volumes fell to 24,085 in 2016 from 24,458 in 2015, Central Bank of Kenya
statistics show, signalling a quick decline in uptake of home loans in a decade.
The fall has largely been linked to inadequate long-term funds available to banks,
exacerbated by capping of loan charges at four percentage points above the Central Bank
Rate, currently at 10 per cent.
A task force on expanding affordable housing finance has been set up with a mandate to
establish Kenya Homes Refinance Company (KHRC), a wholesale financial institution which
will issue bonds in capital markets.
The proceeds will be extended as long-term loans to banks as security against mortgages,
said Treasury Secretary Henry Rotich in the Draft Budget Policy Statement for 2018 last