Civil servants mortgage deposit cut to 5 percent

Civil servants will be allowed to pay their mortgage loans up to five years after the official retirement age of 60 in a raft of proposals intended to encourage uptake of the public service mortgage scheme.

The Housing Ministry has in addition proposed a cut by half the value of cash deposit that government workers are required to put down as security to access the State-sponsored home loans.

Public servants will now be required to deposit five per cent of the value of the property, down from the current 10 per cent.

The incentives proposed by the Ministry of Housing under the Civil Servants Housing Scheme Fund (CSHSF) are intended to make home loans more accessible to low-income State workers.

Fresh data from the Ministry shows that the scheme had facilitated 989 civil servants with mortgage loans for construction and purchase worth Sh4.474 billion through the Kenya Commercial Bank (KCB) and Housing Finance (HF) Group as at June 30, 2018.

Advanced loans

KCB advanced loans worth Sh2.95 billion while HF disbursed Sh1.52 billion. The ministry said out of the houses developed through the CSHSF, a total of 411 housing units have been reserved for rental to civil servants.

“In total, CSHSF has facilitated 3,261 civil servants to access housing,” says Housing Secretary James Macharia in an audit report of the housing scheme.

Mr Macharia wants a review of regulations governing the scheme to also extend the term for repayment of loans borrowed to put up or purchase houses.

If the proposals sails through Parliament, civil servants will be required to repay their loans up to the age of 65 years, up from the current limit of 60 years.

“To ensure benefits under the scheme are affordable and accessible housing to civil servants, the civil servants housing scheme regulations are proposed for review… to allow those applying for construction loan to utilise the land as their deposit commitment,” Mr Macharia said.

The changes in the scheme’s regulations will also allow applicants to support their ability to repay their loans from other regular reliable sources of income over and above payroll deductions.

Public Private Partnerships (PPPs) will also be used in setting up civil servants’ houses.

Audit report

The audit report, tabled in Parliament by Leader of Majority Aden Duale, shows that the Ministry sold a total of 1,082 non-strategic government houses in Nairobi.

The Ministry said 25 civil servants were financed by the NSHSF to purchase the units sold by the National Housing Corporation (NHC) in Makadara Estate and another seven were helped to purchase units sold by the National Social Security Fund (NSSF) in Embakasi and Lang'ata estates.

“A total of 747 housing units were constructed through the Fund and sold on outright and tenant purchase basis in Nairobi,” said Charles Hinga, the Housing principal secretary and the administrator of NSHSF.

The High Court has issued fresh orders temporarily stopping the government from implementing the 1.5 per cent levy for the proposed Housing Fund.

The Employment and Labour Relations Court in April halted the government plan to effect deductions that would have seen every employed Kenyan remit 1.5 per cent of their basic salary for April to the National Housing Development Fund.

The deduction became law following the enactment of Finance Act, 2018, that followed the Budget statement presented to Parliament by Treasury Cabinet Secretary Henry Rotich.

The Jubilee administration is keen on the project as affordable housing is one of the four pillars of President Uhuru Kenyatta's Big Four agenda.