By Claire Wanja
The Government has taken a raft of radical measures including lowering of corporate tax for real estate developers in a bid to bridge the shortfall experienced in the country in the housing sector.
Currently, only 50,000 units are developed annually as opposed to 250,000 houses needed to meet housing demand, and the gap has kept growing with the population increase.
In his statement during this year’s budget, the Cabinet Secretary for National Treasury Henry Rotich announced that the Government would reduce corporate tax from 30 percent to 20 percent for developers who construct at least 1,000 housing units or more.
The government has also waived the levies payable to National Construction Authority and NEMA, which will reduce the cost of construction of houses and the resultant inconveniences.
The above tax incentive is expected encourage real estate developers to build more houses in a more friendly investment environment to meet the ever rising housing demand in the country, particularly low cost housing.
The budget statement further indicated that the construction industry grew at 13.6% while that of the real estate sector grew by 6.2%, all which stand above the average economic growth of the country.
While responding to concerns raised by some stake holders that it may not be possible for a single investor to put up 1000 units in a given year, the Principal Secretary in the State Department for Housing and urban Development Architect Aidah Munano said with the current use of industrial building systems and joint ventures, this was very pragmatic.
She said there were several suppliers with established manufacturing plants in the country for materials production including Expanded Polystyrene Panels (EPS), Interlocking Stabilized Soil Blocks, Interlocking Concrete Blocks, and Concrete Waffles for suspended floor slab and Fibre Cement roofing tiles among others.
“In fact, the Ministry is currently using these cost effective and faster technologies in the construction of 1850 Police and Prison houses with a completion period of 4 months”, she said.
Arch. Munano further explained that Ministry had received a number of project proposals from investors who are willing to develop over 5,000 housing units and some up to a minimum of 20,000 units.
She stated that the Ministry will continue engaging land owners including public institutions, County Governments and cooperative societies with large tracks of undeveloped land, developers and financiers with a view to encouraging partnerships and joint ventures for enhanced delivery of affordable housing.
The Principal Secretary expounded that the Government had also drafted a Built Environment Bill that provides a legal and institutional framework to address the provision of housing. “This includes establishment of a one stop approval process under one agency; the building code which has been reviewed under this Bill, has incorporated emerging best practices, technologies, building materials and components including ICT in building process, said she.
Other laws and policies that the Ministry is working on towards facilitating housing include amendment of the regulations under the Sectional Properties’ Act, the housing Policy, the Maintenance Policy and the Slum Upgrading Policy.
She expressed confidence that the above measures will enhance delivery of affordable housing as envisaged in Article 43(b) of the Constitution on the right to “accessible and adequate housing, and to reasonable standards of sanitation.”