Workers at a construction site in Nairobi. FILE PHOTO | NMG
Kenya’s housing deficit is currently at two million units and is quickly rising at the rate of 200,000 units per year. Compare Kenya’s housing situation to Singapore which got independence in 1965. The latter has a 90 percent home ownership rate, closely behind Europe’s highest, Romania, which stands at 94 per cent.
In Singapore, the government, through the Housing and Development Board (HDB), oversees the supply of housing and builds new units when demand is detected.
Funding for the HDB is sourced from workers’ and employers’ contributions through the Central Provident Fund (CPF), a compulsory savings plan for all working citizens and permanent residents. The CPF is also used to fund healthcare, and retirement investments and benefits.
The government has already begun the Boma Yangu initiative that calls all working Kenyans to register and contribute towards buying a home. The initiative already has 264,412 registered applicants. A great effort, indeed, but it can use a few adjustments to make it easier for more people to own their homes.
Instead of selling land to developers or purchasing land to put up the units, the government can put up homes in government-owned land and issue 99-year leases on the occupied land. This will reduce the cost of development and greatly reduce the financial burden on Kenyans trying to buy the units.
Public housing can be sold at below market rate and the government can issue subsidies based on income; the lower the family income, the higher the subsidy.
The government could also put measures in place to ensure that only Kenyan residents are eligible for the public housing programme. For instance, legal limits can be placed on how soon a homeowner under the subsidy can sell or rent out their property to discourage people from using public housing as a profit-making venture.
Private enterprise can contribute greatly towards affordable housing. Tatu City, for example, is working with the government and a few developers to put up 4,000 units of affordable housing. They are also working with banks and financial institutions to offer more favourable home loans to their customers.
Tenant purchase schemes can prove incredibly useful in addressing Kenya’s looming housing deficit. Imagine moving into a home and paying just above market rate rent and then after a period of time, the rent will count towards the cost of purchasing the house. This rent-to-own scheme will allow more people to enjoy living in decent housing over both short and long term.
However, the interventions by government and private enterprise can only go so far. Individuals need to rethink their spending priorities. They need to cut down spending on luxuries and save and invest their income.
Kenyans need to change their mind-set, not only in how their income is spent, but also in the type of housing they aspire to.
Studies into affordable housing schemes have shown that a large number of the population would prefer having stand-alone houses in their own compounds. Initiatives that work to give many people homes focus on apartment blocks which yield more housing units per acre of land and are therefore cheaper to develop.
The cost of buying land is a barrier of entry for many Kenyans who desire living in a house they own.
To paraphrase, a Swahili proverb, one must scratch where their arm can reach, but they can increase the reach of their arms over time. Instead of hoping for a miracle to grant them enough money to buy land and build a mansion, one can start by buying what they can afford, sell their asset later and upgrade.
Pooling resources amongst friends or relatives would be one way to purchase a plot and build homes. The only caveat is that the treasurer must be trustworthy lest they run off with the entire kitty.
Savings and Credit Co-Operatives (Saccos) offer a more structured alternative to informal table banking. They can be a useful source of funds as they give loans at lower interest rates than banks. Citizens should take advantage of the wealth of Saccos in the country.
The greatest thing that needs to change, however, is the implementation of policy surrounding construction. Real estate players, developers and buyers need avenues that make home construction and ownership an easy and enjoyable process.
Construction plans, at the moment, have to be submitted to multiple government agencies for approval which takes a long time. In the process, developers meet bad eggs who slow down the process even further in the hopes of getting a bribe.
Having a one-stop shop for building approvals, similar to what Tatu City has been implementing since attaining special planning area status in June, will reduce the time it takes for affordable housing projects to be completed. The master planned city already has a committee tasked with streamlining the construction approvals process.
Adopting the ideas that have worked in other parts of the world is a great first step towards reducing the housing deficit. These ideas, however, need to be refined for the Kenyan context. By having open discussions about housing, Kenya will be able to fix the situation before it is too late.
The writer is Head of Residential Sales, Tatu City.
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