Personal Finance

Bring low-cost housing dreams under one roof

low cost

A stand-alone policy should bring on board medium-sized players and the tie between the government and private business. FILE PHOTO | NMG

One of the commitments of the newly elected government, is the provision of low cost housing units.

During his inauguration speech, President Uhuru Kenyatta, promised to create 500,000 new home owners by the end of his second term, through low cost housing. This is to be achieved through a number of administrative and policy reforms to lower construction costs and improve accessibility to mortgages.

This is good news for Kenyans who cannot afford housing, mortgages or land. This is despite the constitutional provision of equitability in land distribution.
In Article 60, the Constitution provides the national land policy whereby Article 60(1) encourages equitable land access to all.

Therefore, the presidential decree of provision of low cost housing is in line with the constitutional provision in Article 66 (2) which provides the legislative part in matters to do with land as the Parliament.

Meanwhile, the National Land Commission (NLC) is the policy making organ and at the same time oversees land use planning.

A lot of research has been done but interest is a draft national land policy prepared by the Ministry of Land. The highlights include the need for adequate land laws, administrative and technological changes. The draft policy is detailed and is a good read.

When it comes to provision of low-cost housing, land laws and policy are not the only requirements; several other laws and sectors come into play.

These include construction, financial sector, and regulatory window. Each of these sectors has their own set of laws and institutions governing them and therefore when one wants to understand the low-cost housing sector in Kenya, they also need to understand each of these sectors.

The Government gave a tax incentive for developers who build low-cost housing of 1,000 or more units and that is, 10 per cent off corporate tax.

While the construction sector welcomed this decree, they were of the opinion that the target of 1,000 units per developer was too high. They requested 400.

Provision of low cost housing is contained in several laws including land laws, construction, banking and finance and even county government laws.

Harmonising the land laws has been done.

However, we need a stand-alone policy on low-cost housing that covers several stakeholders and institutions.

A policy premised on the input of several experts and parties would be more detailed and inclusive.

READ: Jubilee urged to target low-income housing

A law is also necessary. There is a Housing Bill that was tabled this year and it touches a lot on low-cost housing.

However, experts warn that laws passed without the backing of policy end up being inadequate.

Nevertheless, there is a lot of opportunity for persons in the construction industry to diversify into low cost housing.

While some may feel the returns do not warrant this sector, the low cost housing is much cheaper than middle and high class housing in terms of land acquisition, technology and even materials.

The decree shall open up the market for new developers, particularly the small and medium sized developers.

Thus, we shall also see a lot of public private partnerships (PPPs) in the sector.