The Housing sector is set to undergo rapid policy and administrative reforms geared towards delivering at least 350,000 low cost houses in the next five years.
Proposals brought forth by the National Treasury in the Budget Policy Statement intend to lower the cost of construction and improve accessibility to affordable mortgages.
To this end, developers of more than 100 housing units annually could also enjoy a reduction in corporate tax rate in coming fiscal years.
To kick-start the ambitious agenda of housing the growing population with low cost units across the country, the government is committing to develop 8,200 houses as a pilot project in Mavoko, Machakos County and whose results, if workable will be replicated elsewhere.
In the affordable housing agenda, the government says focus will be on raising low cost funds from public and private sectors for investment in large-scale housing production.
Deliverables for this agenda include establishment of a National Social Housing Development Fund, strengthening the National Housing Corporation in order to enhance resource mobilization and management of tenant purchase schemes and provide alternative financing strategies to finance low cost housing and a reduction in corporate tax rate for developers putting up at least 100 units annually.
Currently, residents’ companies are taxable at a rate of 30% while non residents’ at 37.5%.
Similarly, the National Treasury is banking on the already established Taskforce on Expanding Affordable Housing Finance in Kenya to set up Kenya Mortgage Refinance Company, a wholesale financial institution which will develop the primary and secondary mortgage markets by issuing long term bonds from capital markets with proceeds extended to long term loans to financial institutions thus providing access to affordable housing finance in Kenya.
It will be a PPP institution backed by the private sector to implement the low cost housing programme.
Expansion of slum upgrading has also been prioritized, and so is provision of clean water and sanitation, access roads, schools, health centers and income generating activities.
A review of the National Construction Authority Act, Built Environment Bill, and related legislations to address sustainable building standards and design procedures, as well as green building codes for sustainability and safety of the housing sub-sector is also a focus for the government.
These initiatives are tipped to help push the real estate sector contribution to the GDP to 14% from the current 8.8%.