Economy

Poor households to get subsidised housing

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Budalang’i MP Ababu Namwamba. FILE photo | nmg

The government will create a data-base of low-income households that are eligible for subsidised housing if proposed changes to the law are adopted.

Under the Housing (Amendment) Bill 2017, the Treasury will also provide wider incentives for companies that invest in low-cost housing.

“The Bill gives the Cabinet secretary responsible for Housing, in consultation with the Cabinet secretary for Finance, power to develop guidelines and incentives to investors including tax waivers in order to promote the construction of low cost housing,” writes Budalang’i MP Ababu Namwamba in a memorandum accompanying the Bill.

The proposed database to be hosted by National Housing Corporation will be updated yearly.

In creating the database, Kenya will be walking a well trodden path. Developed countries such as the United States and Germany subsidise housing for households below certain income thresholds.

Kenya faces a crisis in the housing sector with the World Bank showing that there is a deficit of homes while new houses are often beyond the reach of the poor.

Since 2000, the World Bank says, the price of the cheapest home in Nairobi has grown from Sh500,000 to the current Sh4 million.

These punishing prices mean that over 90 per cent of Kenyans cannot afford to buy a home while 60 per cent of urban dwellers have been pushed to informal settlements.

It is estimated that Kenya needs to build at least two million homes to plug the deficit. However, construction is far outpaced by demand. For instance, Nairobi gets 15,000 new housing units per year against a demand of 150,000.

To address these challenges the government last year introduced tax breaks for developers building at least 400 low-cost residential units.

These developers now pay a corporate tax rate of 15 per cent, down from normal 30 per cent.

Cytonn Investments has predicted that businesses will be eager to turn their sights towards middle and low-income households as prices in the high-end market stagnate due to oversupply.