The Affordable Housing Levy was introduced to develop affordable housing and associated social and physical infrastructure and provide affordable home financing to Kenyans. Joining us on Sharp Dailly to weigh in on the hotly debated topic is Professor Alfred Omenya. Professor Alfred Omenya is a practising Urban Planning Expert with a background in Architecture and Sustainable Human Settlements and a lecturer in the aforementioned areas.
The housing fund is a great initiative from the government.
The intent to create a pool of funds to be used to provide housing is a noble idea by the government. It shows the government is focused on achieving part of the Big Four Agenda by encouraging everyone to contribute for themselves in a bid to provide housing for Kenyans. However, success depends on the implementation and execution of the idea, which the government has not clearly stated.
The need for housing and a housing fund is unquestionable among Kenyans.
Kenya has an annual housing deficit of approximately 200,000 house units which definitely gives the need for the construction of more houses to bridge the gap. Additionally, many Kenyans who are low-income earners live in low-quality housing situations, which calls for the need for quality and affordable housing in the country. This necessitates the need for a housing fund to finance our housing, especially for low-income earners.
Housing is a devolved function in the Kenyan Constitution apart from the policy bit of it.
Hence, constitutionally the National Government is not mandated to collect funds as well as build houses for Kenyans. The function remains with the County Governments under Schedule Four, where County Governments are to solely provide housing while the National Government is to provide policy and standards. Additionally, the housing fund is enacted in the National Housing Fund Act, 2018, which is a substantive Act of Parliament under Section 6 but doesn’t give the government the leeway to deduct from employees; hence the governments need to amend the Employment Act through the Finance Bill where the deductions have been moved to.
Mortgages are not the best instrument to provide housing for low-income earners.
Most of the Kenyans who desperately need housing do not have a steady source of income that can be used to pay for mortgages. The government can put the housing fund model depicted in the Finance Bill (long-term mortgage payment plan) to sell the already built government housing plans to test how effective it is and also encourage home ownership to the population that desperately need it. In addition, many jobless youths and slum dwellers who are in dire need of houses cannot afford to pay a 10.0% deposit to be able to own a house as part of the narrative states. The government then needs a realistic plan that will help the jobless and slum dwellers to have access to quality housing.
The housing tax is not meant to guarantee house ownership ultimately.
With a monthly contribution maximum capped at Kshs 5,000 monthly, the maximum an individual can contribute in ten years is Kshs 600,000, which wouldn’t afford the cheapest house in Kenya, costing approximately Kshs 1.25 mn. The government intends to use the contribution as a measure for mortgage qualification eventually which makes the narrative being sold different from the outcome. The maximum number of houses the government can provide from the fund is 500,00 units in five years, which means that from a pool of 3.0 mn contributors towards the fund, only 500,000 people would get houses.
It is crucial for the government to build trust among Kenyans concerning the Housing Fund contribution.
Given that the government has in the past initiated such funds like the Boma Yangu Initiative, where people voluntarily contributed with the end goal of owning a house through the government, and The Civil Servants Initiative, which targeted civil servants with the aim of providing housing for them. However, there has been little to show in terms of tangible results and audits with very low house targets by the government. The government, therefore, needs to provide a clear execution and implementation plan to win the confidence of Kenyans given that similar funds haven’t been successful in Kenya, which raises concern among Kenyans if there is hope for the success of the newly introduced Housing Fund.
Read more: Rebuttal to PS K’Ombudo’s Article on the Housing Fund
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