The Kenya Mortgage Refinance Company (KMRC) is expected to issue a bond by October 2021 to raise additional financing for low-cost housing. It will also issue a bond to finance climate-friendly housing projects, Treasury Cabinet Secretary Ukur Yatani said yesterday.
The Housing and Urban Development and Public Works docket is among those allocated the least money in the Budget. It was allocated Sh21.7 billion for the 2021-22 financial year, with the most going to the Kenya Affordable Housing Project managed by KMRC, which got a total of Sh11.5 billion. Of this, Sh8 billion will go to the affordable housing project and Sh3.5 to operationalise the company.
CS Yatani said the high cost of mortgages and land has limited access to affordable housing, noting that the government’s interventions have begun to yield the desired results. “Significant progress has been made to enhance efficiency, transparency and certainty on land matters by re-engineering the land registration processes, digitization of land records and implementation of Sectional Property Act,” he said.
“The government is also in the process of streamlining and simplifying the legal regulatory process governing the housing sector and providing basic infrastructure service to develop housing.” Treasury also said KMRC is supporting the growth of the residential housing market by providing long-term funding to mortgage lenders to increase affordable loans. “As at December 2020, KMRC had refinanced 1,400 affordable housing loans worth Sh2.75 billion,” Yatani said.
An investor in the industry, Mizizi Africa Homes Chief Executive George Mburu said the government should come up with ways to free up public land to private developers at subsidised cost or payable in a flexible long-term period to reduce the cost of construction. “Over the last 12 months, the government has shown adequate support to the real estate sector by bringing in policy reforms and a host of relief measures to support construction and uptake of more affordable houses in line with its aspirations on the Big 4 Agenda,” he said in statement prior to the Budget Speech.
To further reduce construction costs, Mr Mburu said the government should review the value-added tax on construction materials. He said the prices of key building materials have risen significantly and stand in the way of delivering affordable houses. Mburu lauded KMRC for lowering annual interest rates on home loans by nearly half the prevailing market rates to seven per cent. He said the reduction is a big boost, especially for people with monthly income of below Sh150,000. With Kenyans now able to withdraw up to Sh7 million, or 40 per cent, of their pension savings to purchase affordable housing units, this is expected to increase liquidity in the real estate sector by off-setting Covid-19 disruptions, he added.
– The Standard Kenya