EDITORIAL: Clarify affordable homes plan before rolling it out

The World Bank’s approval of Sh25 billion to help Kenya set up a mortgage refinancing company will inject much-needed cash in a key pillar of the Big Four Agenda of building affordable homes.

The funding will make it easier for banks to access long-term finance for cheaper home loans through the Kenya Mortgage Refinance Corporation (KMRC), which is set to start its operations next month.

A portion of the World Bank’s money will go into equity capital while the rest will be channelled as initial cash reserve.

The State-owned firm is an initiative of the National Treasury and World Bank aimed at increasing the accessibility and affordability of mortgage loans to Kenyans.

According to a past World Bank survey, approximately 40 percent of urban households and seven percent of rural Kenyans would be able to afford a mortgage on a Sh1.7 million house, yet the average bank mortgage is about Sh9.1 million

KMRC is also expected to fill the gap in a segment where mortgage companies have shied away from issuing home loans mainly due to lack of long-term deposits in the industry to match them.

The government’s agenda to give priority to provision of affordable housing to low-income earners is a noble plan, but as with many key government projects, implementation remains the biggest challenge.

There also remain a number of issues that need to be clarified with the Kenyan public, including who specifically qualifies to get housing under the new scheme.

Additionally, more needs to be done to educate taxpayers on how the planned statutory deductions on their payslips, which are already burdened by other mandatory deductions such as income tax, will benefit them directly to earn trust that this will not be yet another project they will pay for without getting any benefits in return.

For those that will not get the 500,000 affordable houses in five years but will have the KMRC deductions made from their monthly pay, the State needs to reassure them of refunds once it is determined that they will not benefit from the scheme.