Proof-of-income test for affordable home applicants

A comedian assists in mixing concrete during launch of an affordable housing project at Blue Valley area in Nyeri town on February 16, 2024.

Photo credit: Joseph Kanyi | Nation Media Group

All applicants seeking to purchase units in the State’s affordable housing programme through mortgage financing would be required to present proof of income, the government said in new proposed regulations, a position likely to rattle many Kenyan ‘hustlers’ without regular pay slips.

Proof of income or funds is a document or papers that show a person or entity has the ability and funds available for a specific transaction.

“An application for allocation of an affordable housing unit shall be accompanied by – the deposit payable at the rate of 10 percent of the purchase price; proof of identification; a list of beneficiaries to the applicant; proof of income and ability to pay for the loan; a passport size photo of the applicant,” the draft Affordable Housing Regulations of 2024 by the State Department of Housing said.

Proof of income rule could prove problematic for non-salaried Kenyas popularly referred to as hustlers, unlike their counterparts in formal jobs who have salary verification letters as evidence that they have a job and can comfortably secure a loan or sign a lease. The rule could, however, be a boon for the Kenya Revenue Authority which could have a clearer view of the income status of the hustlers who have largely remained off its tax radar for a long time.

Further, the government is now proposing that Kenyans who make cash purchases of units under the government’s affordable housing agenda be allowed to sell them after eight years following the completion of payment and after seeking approval of the Affordable Housing Board.

Item 31 (1) of the Draft Affordable Housing Regulations 2024 states that, “For purposes of Section 54 of the Act, a purchaser shall not sell their affordable housing unit until eight years after completion of payment of the agreed price has lapsed”.

Item 31 (2) of the Draft Regulations expressly bars Kenyans who purchase their affordable housing units through mortgage arrangements from being eligible for the sale of the units.

They further provide that, in the event, that a cash buyer wishes to sell their affordable housing once the prescribed eight years lapse, they will have to grant the Affordable Housing Board the right of refusal before putting the unit on sale. This means that the board will be given priority as a potential buyer every time an owner wishes to sell a unit.

Any Kenyan who purchases an affordable housing unit through mortgage financing and fails to make scheduled payments for four consecutive months will be deemed to be in default and will be given three options as per item 3 of the Draft Regulations.

Kenyans who wish to secure mortgage financing from the Affordable Housing kitty for the construction of a rural home in line with Section 52 (4, b) of the Affordable Housing Act 2024 will have the amount borrowed capped at Sh 4 million if the proposal sails through in its present form. The regulations also propose to have the interest for financing tapped from the affordable housing kitty set at nine percent per annum.

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