Own a House in Kenya Through the Affordable Housing Program

The affordable housing in Kenya program is an initiative by the government targeting to deliver at least 500,000 houses to the citizens.The cost of housing remains a key barrier for the majority of Kenyans in owning houses. This has led to the growth of informal settlements and an increase in the number of homeless people.

The objective of this plan is to ensure the government in partnership with private investors and financial institutions works together in delivering quality houses at a lower rate than the market rate.
By doing so, Kenyans in the lower income bracket will get a chance to own a decent home affordably.

This model is not unique to Kenya. Countries across the world have such similar arrangement that helps house the low income citizens. Access to decent housing is fundamental right globally. However, the costs of owning houses remain high with demand especially in the affordable supply outstripping supply year after year.

The government believes that adding an extra 500,000 houses to the market will assist bring a balance in the housing industry. Naturally, housing is a free market in the country with the prices determined by the forces of demand and supply. An increase in supply will help suppress demand resulting in the reduction of prices. It is also a step towards reducing the number of informal settlements available in the countyr.

Eligibility to Own a House

The Process of Owning a House

Upon verification that you meet the above conditions, you are then required to register in the Affordable housing portal known as Boma Yangu. It is also important to note that the application process is free. Upon registration, you should commence remitting your contributions monthly.

This housing initiative is divided into three categories based on income levels. Below are the three classifications;

Home Allocation

Upon registration and consistent monthly contribution, you are eligible for a house allocation based on your house choice type and income levels. Due to the high demand and low supply in the initial stages, getting a house is not a guarantee. It is based on availability.

To ensure there is fair allocation, a balloting process is used. Those that miss on allocation are put on a waiting list for prioritization in the next allocation. To qualify for the allocation process, you need to have contributed at least 12.5% of the total house price. As an example, if the house costs 1 million shillings, then you need to have a contribution amounting to at least 125,000 shillings. This is to ensure only the serious bidders get a house.

Types of Housing and Average Pricing

The houses available depend on the class housing and income levels. Below is the breakdown and the average prices.

Social Housing

The houses available depend on the class housing and income levels. Below is the breakdown
and the average prices.

The above breakdown shows the houses are cheaper in comparison to the market prices. On average, they are about 50% cheaper. Tenant Purchase Scheme This is a strategy whereby you pay rent to own a house in the long term. The tenant purchase scheme allows you to pay rent for up to 25 years then own the house. This is based on the fact that within that period, you will have already paid for the total cost of the house.

Rent remains constant for that duration. This is an idea born from the fact that you will always pay rent even without the affordable housing scheme. The only difference is that commercial rent payment will not get you a house in the long term as it will with the tenant purchase scheme.

Where are the Houses located?

The affordable housing scheme is a national project. This means the houses are being built across the country. There has been a misconception that houses are only being built in Nairobi. However, based on the population, it is inevitable that the majority of the houses will be in the capital.

This list indicates the project is running and across the country

Advantages of the Affordable Housing in Kenya

This program has various benefits across all parties. These include the buyers, investors, and the
government.

Some of these benefits are;

• The buyers can access cheaper and decent houses through the program as compared to buying a house on the normal market.
• Buyers enjoy tax cuts on contributions capped up to 9,000 shillings per month.
• Contributions earn some returns yearly. The relevant authority usually pays a return yearly for the contributions. This is an incentive for the buyers to save more and protects the funds from inflationary losses.
• Investors can get tax cuts and free land from the government. This acts as an incentive by the government to attract more investors. It is also one of the main reasons why the house prices are lower.
• Investors generate profits from selling these houses.
• The government manages to achieve its mandate of offering affordable housing to its citizens.

Challenges Facing the Affordable Housing Program in Kenya

• There is no guarantee of getting a house. The house allocation is through the ballot. Hence, it doesn’t guarantee allocation.
• Delays in completing the projects mean that potential buyers have to wait a long time before getting their houses. Since the launch of this program, very few houses have been completed. It could take years before achieving the 500,000 houses target.
• Challenge of getting back your contributions if you want to opt-out. You are required to wait for a minimum of 15 years to cash out. This is a long time to have your funds tied up.
• Little transparency in the house allocation process could enable some vices such as corruption to take place.

Role of the Government in Providing Affordable Housing

• The government (national and county) is the key driver in this process of making the affordable housing program a reality. However, it is cooperating with both the private and multinational investors to ensure it is a success. Below are some of the roles the government is doing.
• Provision of land to the investors for building purposes-This entails the government giving land to investors for construction. The investors in their part provide the capital necessary for the construction process.
• Development and construction of supporting infrastructure. These include water, roads, internet, and electricity.
• Development of both regulations and policies that support the program. A key example is a bill that supports the creation of the Kenya Mortgage Refinancing Company (KMRC). This is the institution whose task is to help the financial institutions provide a mortgage to customers.
• Offering incentives to both the investors and interested customers in form of tax cuts.

Conclusion on Affordable Housing in Kenya

The first project under this scheme is complete and house allocation was done to the successful bidders. This is an indication the process is ongoing. However, before getting into the process, it is diligent you visit the National Housing Commission to get more details. Currently, over 300,000 people have registered for the program. This number could increase soon as more houses come online and awareness increases.