• Employees will pay three percent of their salary into a new Housing levy and employers will match their contribution
• Many recipients of affordable housing have quickly sold their property and remained in informal settlements
Government is proposing Housing levy of three per cent on employees plus three per cent from the employer. After seven years, the employee will be entitled to a low-cost apartment or a refund of his or her contribution.
This initiative is commendable although unpopular as no-one wants three per cent to be deducted from their salary.
However there is a fundamental flaw in the plan. There is a high probability that recipients will swiftly flip the affordable housing to make a windfall profit. So, in the end, the property will just pass to the middle class, leaving low income people still stranded in informal settlements.
This is what has happened with recent affordable housing in Kibera and Majengo. It has not solved the problem of squalid urban slums.
After Independence, Nairobi built low income housing, such as Kaloleni or Jericho, for rent rather than for sale. That way local or national government could ensure that deserving poor people actually stay in affordable housing. This ensures that neighbourhoods remain socially mixed, and do not become the preserve of a single class.
So let government use the Housing levy to build low income housing for rent rather than for sale.
Quote of the day: "If you want a more productive economy, you need to invest in the skills of our workforce."
The British politician was born on May 26, 1949