Jamii Bora and Koto Housing in Sh1bn homes building deal

What you need to know:

The houses are priced at between Sh3 million for a three-bedroom house and Sh8 million for a five-bedroom house through a mortgage loan facility.
Both JBB and Koto Housing said that the biggest savings will come from reducing the time between taking up a mortgage and moving into the completed house expected to be constructed within three weeks.
Koto Housing said that quick construction is made possible through the use of Expanded Polystyrene (EPS) panels.

Jamii Bora Bank (JBB) and Koto Housing Kenya have signed a Sh1 billion financing agreement for houses that can be constructed within three weeks.

Under the agreement, potential home owners will get funding from JBB and then choose a house design from Koto Housing, a Mavoko-based company that manufactures building materials and also puts up houses for customers.

The houses are priced at between Sh3 million for a three-bedroom house and Sh8 million for a five-bedroom house through a mortgage loan facility set at 18 per cent over a period of between five and 20 years.

Both JBB and Koto Housing said that the biggest savings will come from reducing the time between taking up a mortgage and moving into the completed house, a period where the borrower still pays rent in addition to the monthly repayments because the house is still under construction.

“You save time and rent. Some of our customers ask for moratoriums of between six and 12 months,” said JBB chief executive Sam Kimani.

Koto Housing said that quick construction is made possible through the use of Expanded Polystyrene (EPS) panels, a technology that is widely used in Malaysia and other South East Asian countries.

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The panels are manufactured at Koto Housing’s Mavoko-based factory which has capacity to produce up to 600 panels per day. Koto Housing chief executive Moses Nderitu said that the manufacturer has begun training construction firms on how to use the new technology.

The company is also engaging government agencies which have in the past shown interest in new building technology.

This will make it cheaper to roll out a big number of units to house the police and other civil servants.

“We are also talking to the ministry concerned with housing,” said Mr Nderitu.

Government-owned National Housing Corporation also has a factory in the same area which produces the panels.

Koto Housing also expects the EPS panels to be adopted in dispensary, apartment and hostel construction which is also another area with heavy demand.

“Kenya needs about 700,000 hostel beds but only 150,000 are available,” said Mr Kimani.

The bank has been bullish in this area having signed three deals worth Sh2.8 billion for hostel construction in three counties in 2014.

JBB signed a Sh1 billion agreement with Murang’a County to build hostels at Murang’a University College, a Sh1 billion deal with Jaramogi Oginga Odinga University of Science and Technology and a Sh28 million loan with Shanzu Teachers Training College.