The government has extended to a co-operatives mortgage tax relief and real estate development corporate tax to encourage growth and development of the housing sector through co-operatives.
“The threshold for real estate development entitlement for the 15 per cent corporate relief has been lowered from 400 units to 100 units so as to enable co-operatives to benefit from the corporate tax relief,” said President Uhuru Kenyatta.
Through the Miscellaneous Amendment Bill 2017, the new tax measures are designed to influence and encourage further growth and development of the housing sector.
“There’s great potential for co-operatives to venture into the untapped sectors such as energy, infrastructure and environment. This however cannot be achieved in isolation, I therefore urge all stakeholders, including relevant national government ministries, county governments, private sector, non-governmental organizations and our development partners to join hands and promote the co-operative business model for sustainable development,” Kenyatta said.
There has been an increase in housing cooperatives in Kenya due to the high demand of home ownership where land buying companies are converting into Saccos.
Kenyatta in a speech read on his behalf during International Day of Co-operatives the president said housing co-operatives have contributed to provision of affordable and decent housing especially for the middle and lower income segments of the population.
He noted that most housing co-operative societies under the umbrella of National Housing Cooperative Union are providing affordable houses to the middle and lower income earners across the country.
“Cooperatives now own substantial commercial buildings in major urban centres and take lead in provision of residential housing units,” he said.
The ministry attributed high penetration and growth of Saccos to financial inclusion and access to cheaper loans for those who cannot afford bank loans.
It is estimated that out of total 150,000 housing units required annually in urban areas, only an estimated 35,000 are produced, according to Vision 2030.
In rural areas, it is estimated that over 300,000 housing units need to be improved every year. Co-operatives are expected to boost the current housing supply by 25 per cent.