Uhuru’s low-cost housing to cost Sh600,000 to Sh3 million

National Housing Cooperation houses in Kilimani, Nairobi /JACK OWUOR
National Housing Cooperation houses in Kilimani, Nairobi /JACK OWUOR

Individuals seeking to finance their own home mortgages will be allocated 300,000 units in the proposed housing programme by the state.

The government aims to build one million homes by 2022 through two programmes – social housing and affordable housing. Low-cost housing is one of President Uhuru Kenyatta’s Big Four legacy agenda.

Private employers and cooperatives will be allowed a maximum of 200,000 housing units each to sell to their employees, while county and national government workers, police and prison officers will get 100,000 units each.

The government will work in partnership with financial institutions, private developers, manufacturers of building materials and cooperatives to deliver homes faster and reduce the cost of construction by at least 50 per cent.

Details:

Once completed, one-bedroom unit under the social housing programme will sell for Sh600,000, while a two-bedroom unit will go for Sh1.05 million.

The cost of the units under the affordable housing programme will range from Sh800,000 for a bedsitter to Sh3 million for a three-bedroom unit.

Of the one million units, 800,000 will be under the affordable housing plan, while 200,000 will be under the social housing project. Kenyans will be required to establish tenant purchase schemes to buy units in the social housing plan.

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financing

The state will then provide a credit line to financial institutions for mortgages through the proposed Kenya Mortgage Refinancing Company. The repayment duration will be up to 25 years, with the government set to scrap stamp duty for first-time home owners, and reduce cost of arranging financing.

The government will then establish a local construction technology industry in line with its industrialisation plan, and centralise procurement of key input. Affordable and social housing is at the heart of Uhuru’s five-year plan to secure his legacy when he retires in 2022.

The government will rely on six main drivers to facilitate mass housing production. It will hinge its plan on project structuring, financing strategy, construction technology, land, supporting infrastructure and legislation.

The government will craft a demand-based master plan, scale up developer capacity and financing, grow mortgage finance market and use scale to reduce construction costs. Land for development will also have to be unlocked and a supportive environment created.

The government is in the process of establishing Public-Private Partnership models, including carrying out land swaps to encourage developers. It is also set to facilitate approvals for developers.

Some of the companies that have expressed interest include Suraya Property Group, which has proposed to put up 20,000 units, Akcel Construction LLC — 1,500 units, SIBCO Assets — 1,800 units and SCOPE Designs — 6,400 units. TATA Group and China Wu Yi Co. Ltd have proposed to construct 10,000 units each.

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incentives

To encourage investment in affordable housing, the government intends to offer a number of incentives, including a deduction of five per cent of cost per year for a rental residential building in a planned development area. It will also offer 25 per cent deductions from the cost where infrastructure has been provided by owner or developer.

Developers who sell more than 100 residential units will enjoy a corporate rate of 15 per cent, while industrial building allowance on qualifying commercial building will be set at 25 per cent.

There will be a mortgage relief of Sh300,000 per year on employees and tax-free interest for savings up to Sh3 million towards a home ownership

scheme.

A 10 per cent residential withholding tax will be levied on the gross amount payable in case of housing bonds of up to Sh300,000 and stamped duty fees on mortgages reduced from 0.2 per cent to 0.1.

To cushion manufacturers, the government will implement the EAC Gazette notice of June 29, 2010 on zero rating of petroleum coke raw material for production of cement. It will soon launch the one million housing programme and groundbreaking at Mavoko, where it plans to build 8,000 units on 55 acres. It will also commission the social housing programmes in Kibera B&C and Mariguini.