The Treasury has announced plans to spur the building of low-cost houses by setting up a multi-billion shilling housing fund for cheap sacco mortgages, offering tax breaks for developers and eliminating levies paid to State agencies.
Treasury secretary Henry Rotich in his fourth Budget speech revealed that government was in talks with multilateral lenders to set up a housing kitty that will offer cheaper mortgages to low-income earners mainly through savings and credit cooperative societies.
The minister also extended preferential tax treatment to real estate developers who construct at least 1,000 low-cost houses per year, who will now enjoy a lower corporate tax rate of 20 per cent rather than the normal 30 per cent rate.
Furthermore, Mr Rotich has removed fees paid to National Environmental Management Authority and National Construction Authority in a fresh bid to reduce the cost of putting up houses.
“We are working with our development partners to put in place a mortgage liquidity facility which will provide long term funding to financial institutions, including saccos, to enable them provide longer tenure mortgages to the public,” said Mr Rotich.
Saccos will tap the facility for onward lending to members for periods extending beyond the five-year loan tenure offered by the cooperatives. This could see co-operatives offer low cost mortgages of up to 15 years.
Official data shows that Kenya had a total of 22,013 mortgage loans as at December 2014.
The Finance minister noted that Kenya’s housing demand is estimated at 200,000 units a year, but developers only deliver 50,000 units a year, resulting in a an annual deficit of 150,000 houses.
“To bridge this gap and also ensure decent low cost housing, I have introduced an incentive to encourage investors to enter into this sector.”