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Govt’s Affordable Housing Project Overview & Framework
In his final term in office President Uhuru Kenyatta came up with the Big Agenda focusing on affordable housing, Universal healthcare, Manufacturing and Food Nutrition & Security.
On affordable housing, the government has proposed a reduction of corporate tax to 15 per cent for developers who put a minimum of 100 housing units per annum appears aimed at encouraging private investment in the sector.
To enhance program segmentation the affordable housing program (AHP) will focus on 3 segmented groups with an income range from Ksh 0-14,999, 15,000-49,000 and 50,000-99,999.
The AHP will ensure that the houses are built based on a proven demand master plan and mega city approach (along an identified segmentation) , mixed use developments with provision of social infrastructure, affordable developer financing, and in the right economic and political nodes (achieving equity).
The programme will maximize use of private-sector financing with Government support on land, bulk infrastructure and other incentives.
National Government Initiatives
Flagship projects Lot 1A
Lot 1A will start off with the breaking ground of Park Road with a total number of 1640 units. The projects are at advanced stages of master planning and urban designing and are intended to build investor confidence and create momentum for the programme.
Flagship social Housing Lot 1B
These projects are intended to improve informal settlements and slum upgrading.
County Projects Lot 1C
These projects are based on MoUs signed with Counties which will receive support from National Government on the development of infrastructure for land that will be made available for housing developments for 2,000 units per year. Signed counties have identified land and are awaiting master planning for urban centers. Counties in advanced negotiations are reviewing the agreement while identifying suitable land.
Kenya mortgage Refinance Company (KMRC)
KMRC’s objective is to help Kenya grow its mortgage finance market for affordable housing by providing medium and long-term liquidity to mortgage lenders.
The financier has been incorporated as a Private Limited Company owned by commercial banks and Sacco’s. Initially KMRC would be financed through the multilateral investments, credit lines and Government of Kenya equity investment.
Subsequently KMRC would combine the multilateral investments with equity investments from local banks, and with market funding as the company starts to issue bonds.
Financing Framework
▪ De risking developers by offering certainty of sales in the form of an off-take undertaking that will allow the developers access construction financing.
▪ Purchase the housing units for cash once construction is complete to allow the developers to recycle their capital and develop more units.
▪ Allow ordinary Kenyans to save for an affordable home via and the Home Owners Savings Plan which they can use as a down payment towards their affordable house.
▪ Offer home buyers the ability to purchase their homes via an affordable 25-year Tenant Purchase Scheme
▪ Allow home buyers the ability to purchase affordable houses nationwide through the Housing Fund.
