Nairobi residents spend 40 per cent of income on rent


Construction professionals are also advocating for use of alternative building materials to reduce costs with stabilised soil blocks particularly favoured. PHOTO | FILE

Nairobi residents are spending 40 per cent of their income on rent or nearly 10 percentage points above the United Nations recommended maximum of 30 per cent, a new housing survey has revealed.

The 2012/13 Kenya National Housing Survey, whose findings were released on Monday, also found that tenants in the capital are paying rent at seven percentage points above the national average of 33.1 per cent.

More importantly, the survey found that 80 per cent of Kenya’s urban dwellers are tenants suggesting that the substantial amount of income that goes to housing is the main driver of the thriving real estate sector.

More than 75 per cent of the buildings under construction in urban areas are high-rise flats for rent indicating high returns from the sector, Land and Housing secretary Charity Ngilu said while releasing the survey.

Nationally, the proportion of housing related costs rises substantially from 33.1 per cent with addition of other utility costs to gobble nearly half of household incomes, the survey found.

“The proportion of monthly income spent on housing related costs including rent and utilities is 44.7 per cent,”  Mrs Ngilu said, adding that counties should start providing cheaper rental housing to cool down the rents and cushion the more vulnerable urban dwellers who are hardest hit.

“Considering that most Kenyans have to commute long distances to their places of work, high cost of housing makes the cost of living in urban areas unbearable,” Mrs Ngilu said.

“I urge the county governments to put up social rental housing to cushion our people from the high rents.”

City Hall has announced plans to build 100,000 housing units under a public private partnership. There are no indicative prices although Governor Evans Kidero said that they would be pro-poor.

“My government is committed to ensuring that these houses are affordable, especially to the social groups with the greatest need,” he said.

High cost of rents is linked to growing demand for housing which has at times forced tenants to move into houses that are incomplete. Developers said 40 per cent of buildings in Nairobi are occupied before completion.

Mrs Ngilu said the annual shortage of 200,000 housing units is mainly attributed to a high population growth rate and high cost of developing property.

READ: City Hall plans Nairobi housing project investor forum

The survey was undertaken in 2012/13 and covered 44 counties. Wajir, Mandera and Garissa were left out because of insecurity challenges. Some 19,140 households were interviewed for the survey.

The last housing survey was done in 1983, but its outcome was never published. Besides renting, the survey found that unless major policy shifts are undertaken, the majority of Kenyans would continue living in inhuman conditions in the slum areas.

Median income levels of between Sh20,000 and Sh25,000 mean that home ownership remains out of reach for most Kenyans.

“If one was to buy a Sh1.5 million house on mortgage repayable in 15 years, at an interest rate of 15 per cent, the monthly repayment rate would be about Sh21,000,” the report said.

“This amount is way above what the middle income earners can afford based on the international recommendation that one should only spend one third of gross income on housing.”

Most of the houses developed in urban areas on average cost above Sh4 million for a three-bedroom unit, putting them above the range of most Kenyans who are forced to rent.

Houses that have recently been touted as designed for low-income earners sell at the range of Sh1 million to Sh1.5 million.

Developers and construction professionals are now calling on the government to grant them tax incentives that can attract investment into affordable housing for the poor.

“Both institutional and individual developers mainly singled out reduction of taxes on raw building materials as the main incentive to encourage housing development,” the report adds.

Construction professionals are also advocating for use of alternative building materials to reduce costs with stabilised soil blocks particularly favoured.

Other materials are reinforced concrete panels and prefabricated panels. Mrs Ngilu said that she would on Thursday meet housing stakeholders, especially financiers to examine ways to supply cheap housing.

“Over the years, we have concentrated more on houses that can be afforded by the higher classes in the society. I think time has now come for us to also understand the needs of the lower cadre in society,” she said, adding that the government will also need to invest more in housing to bring the cost down.

Between 2009 and 2012, the government only invested Sh4.5 billion in development of housing, an amount used to develop a paltry 3,000 units.

The National Housing Corporation has developed 46,000 units in its entire 46-year lifetime.

It is expected that the development of the survey will inform policy directions in the housing sector especially in urban areas where it is projected 54 per cent of Kenya’s population will live by 2030.