President William Ruto administration collected Sh54 billion from the housing levy in financial year ending June 2024 and is racing to put houses to meet an ambitious annual target of 250,000 units.
Under the Affordable Housing Programme, the government is building social housing units [bed-sitters] targeted at persons earning less than Sh20,000 per month, affordable housing for those with monthly income of between Sh20,000 and Sh149,000 and affordable middle-class housing for people earning more than Sh149,000.
Sheila Waweru, the acting chief executive of Affordable Housing Board, spoke to the Business Daily.
How are you faring in terms of your annual target of 250,000 houses a year?
We have about 124,000 units comprising of those under construction and those that are about to start. We have done quite a bit, but Kenyans may not know about these projects because we have not been singing about it.
How many units are ready for sale?
We have put 4,888 units on sale as our first large cohort which we anticipate will be complete between now and June. But this will be a continuous process because houses are still being constructed and will be available continuously.
Why are you putting houses across the country concurrently instead of first bridging the huge supply-demand gap in major towns before moving to the peri-urban areas where demand is not as high?
This is in line with government programme of putting up a minimum of 2,000 units per constituency. It is also because we want to have a fair and equitable distribution and opportunities across the country in terms of availability of the units and jobs.
We are very keen on areas we identify, working with leadership in the counties, to put up these units. So, you may find an area that is not very modern, but every single constituency has its own town. We may not have quick uptake of these houses there, but there is demand.
It also spurs [economic] growth of those areas.
Are you worried uptake in some of these areas could be low?
Not really. But we acknowledge that units in some peri-urban areas may not be taken up as fast as some developed urban areas.
We don’t think they will stay vacant for long because in each constituency we have people such as teachers and civil servants who have moved to live and work there on rental terms.
So, the houses will definitely attract buyers because our terms are very affordable at about nine percent for 30 years if you are coming in on mortgage or tenant purchase scheme. This is a long-term plan.
There are concerns amongst potential buyers about ownership of these units because you are building them on public land…
We are not blind and are not burying our heads in the sand and saying, ‘we don’t know the concerns that Kenyans have out there’.
The projects that we are undertaking are on public land—either national or county government land. The reason we chose this strategy is to ensure affordability because land is zero-rated. That’s why we deliver these houses at minimum costs.
Some of the land where these units are being built do not have full ownership documentation or titling…
It is true some of them have not gone through the full ownership documentation process. There are teams out there from State Department for Housing, Land and others regularising all issues about land. For years, we have known that is government land and so no one will take it away.
Once these [housing] units are completed, then the ownership of the land and units will be transferred to the (Affordable Housing) Board.
The Board will then process sectional titles for each and every unit. So, if you own the unit, you will have the title in your name.
That will depend on where the land is. The land in urban areas is on leasehold. For projects which are in remote areas, some of the land is on freehold land. So, the existing laws apply on both leasehold and freehold land.
How will the units and facilities be managed and maintained?
The owners will form management companies and have shares. Therefore, the issues around management of common areas, collection of service charges, how the facilities are managed and abiding by the applicable rules, including payment of land rates, will be done by that company.
For units that will still be under tenant purchase scheme or not yet sold, and, therefore, still under our ownership, we will still have that share in there.
How have you ensured the units are sufficiently discounted given that you’re putting them up public and funding comes from Kenyans?
We have our experts in the built environment. We have done a lot of re-engineering to bring down the cost of construction. We have guidelines on how these units will be developed which has been standardised across the country. We, therefore know how much it will cost to construct a one-bedroomed, two-bedroomed house or studios.
And so, a one-bedroomed house cost of construction is the same everywhere and we use the same amount of materials. It may vary slightly, but generally the costings are plus or minus a range. The costing is per square metre and is standardised.
Prices of construction materials are highly volatile. How do you ensure there is some stability for supplies into these projects?
We negotiate with major manufacturers of building materials such as cement and steel to bring the cost of construction down. This is because we are offering high demand for those materials.
If you look at the number of units that we are putting up, it is business for them. If you can give us preferred price then we can almost ensure every single contractor will get materials from you. We are creating affordability across the value chain and that’s what is bringing the cost down.
How is that affordability filtering into prices of these units?
If you look at a 20-square metre studio, it is going for Sh640,000 compared to a market price as high as Sh7 million in areas like Kilimani (Nairobi).
If it is an affordable middle-class unit, a one-bedroomed house is Sh1.5 million while in most areas, it is going for about Sh4 million on average.
For three-bedroomed house, we are selling for Sh3 million to Sh3.5 million against Sh8 million to Sh11 million in the market depending on where it is located. So, you can actually see the difference.
