Who stands to benefit from Uhuru's affordable housing project

Last month, the first batch of houses completed under President Uhuru Kenyatta's affordable housing project was handed over to the government.

Some 228 units were handed over with a total of 1,730 units expected to be constructed at the Park Road, Ngara site.

Uhuru under his Big Four Agenda promised 500,000 affordable housing units for Kenyans by 2022 as one of the deliverables from his flagship projects.

According to the Ministry of Transport, Infrastructure, Housing and Urban Development , the sale of the houses will remain open up to April 28, 2020.

But completed application forms should be returned to Ardhi House secretariat offices during the sale period before April 24.

Housing and Urban Development Principal Secretary Charles Hinga said the allocation of the units would begin soon.

The PS said another batch of 260 houses for the Park Road project is scheduled for completion by June with the final batch set to be delivered by December 2020.

 “After receiving the initial batch of houses from the developer, the next stage is to begin the allocation process. The purchase allocation policy that will guide this process is complete. Our focus is to start the sale process within next month,” Hinga said in an interview with the Star.

Amenities to be shared by residents of the Park Road project include parking, rooftop gardens, children playgrounds and a running track.

The government estimates to spend about Sh5 billion to complete the Park Road project alone.

The Price

There has been conflicting information about the selling prices of the houses even as the government grapples with the definition of an affordable house.

 But PS Hinga said the lowest price for the one-bedroom unit 30 sq metres is set at Sh1.5 million but there might be slight variation for projects not on government land but registered under the AHP programme through the Bomayangu portal.

“Overall we shall have one bedroom of 30sqm selling at Sh1.5 million, 2 bedroom of 40sqm at Sh2million, 2 bedroom 60sqm at Sh3 million, 3 bedroom of 60sqm at Sh3, 550,000 and 3 bedroom 80sqm at Sh4 million,” he said.

This will apply for houses within Nairobi.

In Embu, a two bedroomed house will cost Sh3.5 million while three bedroomed will go for Sh4.8 million.

In Machakos, while a two-bedroom will cost Sh3.3 million, a three-bedroom will cost Sh4.3 million compared to Kiambu where one-bedroom will cost  Sh2.25 million, two-bedroom Sh4 million and a three-bedroom with master en-suite Sh5.4 million.

Under the same project, a one-bedroom in Kisumu will cost Sh2.25 million, two-bedroom Sh3.75 million while a three-bedroom with master en-suite Sh5.4 million.

Implementation model

Despite this development, there have been fears the Sh240 billion project might be thrown into disarray after President Uhuru Kenyatta in December last year ordered the termination of mandatory contributions to the National Housing Development Fund – NHDF.

The housing Ministry had bet on the compulsory remittance from employees and employers to shove up capital expenditure towards the ambitious construction of 500,000 cheap housing units by the close of the year 2022.

It had been holding onto a High Court ruling in its favour to allow for the mandatory contributions which would see all formal employees estimated at 2.5 million remit 1.5 per cent of their salaries to the scheme with an upper cap of Sh2500 per month.

As a result, employers would be compelled to match up to their employee contributions to the prescribed limit ending with a projection of Sh48 billion in annual remittances to the fund. This equals Sh240 billion in five years.

But Uhuru in his Jamuhuri day address cited the need to move on from the legal hurdles and obstacles to the implementation of the mandatory contributions by making voluntary, all contributions to the NHDF citing the risk of the project’s derailment.

Following the order, it is feared that voluntary contributions may result in lower NHDF collection.

But Hinga in his response to the claims said, “The project is not under jeopardy. The program has actually gathered a lot of momentum. We have a number of projects for the listing of approved projects”.

He added, “The government has put in place a raft of incentives including a 16 per cent VAT of construction material under AHP, stamp duty waivers, bulk on-site infrastructure like power, roads, sewerage, water, which will significantly reduce the cost of construction hence making the units affordable to most Kenyans”.

Hinga said some 17,000 Kenyans had registered for the project and started saving by end of December.

With the increasing pool of contributions, Hinga maintains the project will play a key role in the leveraging of private equity.

According to the PS, the State has pulled back on direct funding to stick to its primary enabling role and has seen private equity respond via the initiation of Public-Private-Partnerships (PPPs).

“It’s not for the government to build these houses. The government plays an important role but not a financing one. We are very comfortable having broken ground on thousands of units with not a single coin of taxpayers monies used,” he said.

He added, “Capital loves certainty. We have seen this through policy and fiscal interventions which have provided clarity and policy guidelines for investors to put in the money”.

So far, Hinga said the government has already broken ground on 10 projects around the country to include works in Ngara’s Park Road, Shauri Moyo in Kisumu, Embu, Machakos and Stoni Athi.

Combined, the 10 mini-projects are set to introduce 12,617 new units and will add to the United Nations-supported 100,000 units under construction around the country.

Recently the President launched over 8,800 housing units for United Nations staff in Machakos.

Hinga said the houses are part of the Affordable Housing Programme but it is, however, a mixed-use development with some affordable housing and some high-end housing.

Hinga said on completion, other units will be designated to the owners of the land under the UN-Habitat Sacco.

According to the PS, the Community potential homeowners will have access to decent and affordable housing.

“They will get a house where land is subsidised by the government, they get tax breaks like no stamp duties, the price is controlled, they get to live in safe, smart communities, affordable financing for the house with flexible options,” the PS said.

Terms and conditions

For one to qualify for the house, they must show interest in the project by registering on the bomayangu portal.

Secondly, one must also be a civil servant or a national police service officer.

Alternatively, an applicant should deposit the amount directly at the KCB account.

The balance will be paid under the Tenant Purchase Terms.

"A non-refundable application fee of Sh1,000 will also be paid to the fund through KCB account on the issuance of an application form or on return for those who download the form from the ministry's website," read part of the terms and conditions.

The applicant must also demonstrate the ability to repay the mortgage.

Stamp duty and transfer charges, insurance on fire and related perils, mortgage protection insurance cover for the principal loanee, service charge and land rents and county government rates are among other charges that will be met by the purchasers.

However first time owners and beneficiaries of the project will be exempted from payment of stamp duty.

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