HOUSING AGENDA

State's poor track record deters Kenyans from housing plan - PS Hinga

In Summary

• Since the jubilee government took power, multiple scandals have been reported where billions of shillings were involved.

• Last week, a directive by the PS and Kenya Revenue Authority to employers to start deducting the housing levy from all employees was met by objection from the public. 

Housing and urban planning PS Charles Hinga
Housing and urban planning PS Charles Hinga

Lack of trust among Kenyans is the biggest barrier to achieving the agenda on affordable housing under President Uhuru Kenyatta's Big four plan, Housing Principal Secretary Charles Hinga has said.

The plan seeks to build 500,000 homes by 2022 to reduce the cost of home ownership by 50 per cent, eliminate slums by 60 per cent and increase the construction sector's contribution to GDP by 100 per cent.

In a tweet responding to an accountability question from the public on the 1.5 per cent housing levy, Hinga attributed the trust issues to increased scandals in the government.

“…the many scandals make this job very difficult,” he said.

Since the jubilee government took power, tens of scandals have been reported where billions of shillings were involved.

Among them is the loss of Sh21 billion in the Arror and Kimwarer dams being the latest scandal currently under investigations.

According to Hinga, while many appreciate and understand the importance of the project, they cite a lack of trust as the key challenge to realizing the dream.

Last week, a directive by the PS and Kenya Revenue Authority to employers to start deducting the housing levy from all employees was met by objection from the public.

The levy which has since been suspended by the courts seeks to raise Sh57 billion a year from 2.5 million salaried Kenyans.

Further, it allows voluntary contributions of not less than Sh200 per month expected to act as additional revenue.

The suspension order issued by Justice Maureen Onyango will allow consolidation of the earlier filed case by Central Organisation of Trade Unions and the current one by Consumers Federation of Kenya.

Employment lawyer Anne Babu said the move to implement the levy is unfair as not enough public consultation has been done.

“Are there enough checks made to ensure people's hard earned money is available after 15 years?” she said.

Her sentiments were echoed by National Taxpayers Association coordinator Irene Atieno who identified lack of accountability and safeguards to guarantee the security of Kenyans contributions.

While trust remains an issue, architectural professor Alfred Omenya notes a low demand for the houses as another challenge for lack of clarity on how contributors and homeless will benefit.

The PS, while appreciating a lot of unsolved issues in the demand side identified the cost of mortgages as a hindrance to home ownership.

“...the cost of mortgages is very high. With the rate cap and T-Bills at an approximated 13 per cent interest, this puts home ownership beyond the reach of the majority,” Hinga said.

Data from Central Bank shows that there were only 26,187 mortgage loans as of December 2017, up from 24,059 as of December 2016. This even as institutions offering mortgages dropped from 35 to 31 in 2017. 

The State department on housing and urban development is banking on the housing fund offers of three to seven per cent rates for up to 25 years to widen the homeownership gap.

In addition, Kenyans will be given an opportunity to purchase the homes through the housing fund while paying a monthly rate equal to their current rent expense.