The question of owning a home is on everyone's lips what with the government's proposed housing fund. Critics of the proposal say most Kenyan adults already own homes in rural areas.
The 2019 national census showed that while 13.4 per cent of Kenyans (all age groups) own homes in rural areas, only two per cent own homes in urban areas.
When broken down into gender and age, 45 per cent of men aged 15-49 own homes compared to just 33 per cent of women in that age bracket. The homeownership rate for men in their fifties was 88 per cent.
Evidence shows that the government's affordable home programme is targeted at urban areas. Indeed, all of the government's affordable housing projects are located in towns. How does owning or not owning a house affect you from a personal finance perspective?
Investment: Owning a home is probably the biggest financial investment you will make in your life. In urban areas where land values are steadily rising, owning a home increases your net worth and contributes to inter-generational wealth. However, owning a home is not the magic bullet towards financial security. There are lots of people sleeping hungry in homes they own.
No landlord: Most tenants fantasise about not paying rent. As a homeowner, you are free to carry out improvements to your home as long as you have the necessary government approvals. The flip side to owning a home is that you are responsible for major structural repairs, leasehold fees and property taxes. You may also have to insure your property against damage from fire or other adverse events.
Fixed asset: One of the disadvantages of owning a home is that it makes it difficult to relocate in case of employment transfers or some other change in life circumstances. If you are paying a loan or mortgage for the house, you must keep up with payments whether or not you are living in that house. Most homeowners forced to relocate opt to find a tenant who will pay rent and keep the house occupied.
Location: After George Mwaura moved into his new home on the far eastern outskirts of Nairobi, an unforeseen problem emerged. "There were no schools in the area. The nearest school was so far away my son would leave home before dawn and arrive back after 7pm," Mwaura says. As his son was getting exhausted from the long hours of commuting,
Mwaura had to enrol him into a boarding primary school. Lots of people who own homes far from town have had to rent closer to their workplaces.
Health: Research shows that owning a home enhances self-esteem which is good for physical well-being. Compared to tenants, home owners are more actively involved in community matters and less likely to be socially disruptive. They build stronger social networks due to living in a particular location much longer compared to tenants.
In summary, owning a home is an investment worth exploring but the benefits are likely to be felt in the long-term.
