Affordable Housing Gaining Grounds In Kenya

Economic policies if implemented to the letter and are free from minimum consequences of corruption and political interference can transform a country to a state of economic vibrancy; wide spread sound infrastructure and responsible political governance.
Vision 2030 is founded on three pillars; economic pillar, social pillar and political pillar. In its Social pillar, the Government is to plan for adequate and affordable housing for its citizens.
The blue print guides policy implementers and stakeholders to aim at producing houses to all income earners at the rate of 150,000 units annually.
True to this policy, the country has currently increased its annual production to between 40,000 and 50,000 units annually according to the Ministry of Housing. However it is important to note that this annual production of the housing units is a global national figure. If one is to go into detail and survey the number of low cost housing for the low income earners, one may notice that the figures are extremely low and perhaps it is precise to say affordable housing is not affordable to all.

One major impediment of infrastructure development in Kenya, ironically it is the law itself.
In the yesteryears, none of the local authorities would approve drawings that did not comply with the good old Building Code of 1969.

With the enactment of National Building Authority Act and subsequent establishment of the National Construction Authority, the landscape of building development is set to change positively. This new law will allow a developer to construct green buildings with unconventional materials like Structured Insulated Panels (SIP) and interlocking bricks. The doors are now opened to more variety of construction materials at very fair prices. These fair prices of materials, should lead to affordable housing.
The law has given the construction industry a further major boost by amalgamating all previous land laws to only three Acts. Namely, the National Land Commission Act, the Land Registration Act and the Land Act.
The advent of Real Estate Investments Trusts (REITs) is another conspicuous sign that Kenya’s housing industry is not only growing but also maturing. Although the legal framework of how the REITs will operate has not been finalized, the Finance Bill 2012 has catered for its tax exemption. These are tell-tale signs that opportunities are now opening up that should lead to affordable housing.
If one is to track backwards the history of affordable housing in Kenya, perhaps technology would stand out as the most outstanding key factor in response to addressing affordable housing.
Vision 2030 did not exist ten years ago. National Construction Authority Act did not exist ten years ago. But prefabricated buildings did. Green technologies like solar panels and low cost building blocks did.
The Ministry of Housing has been in the forefront in advocating for low cost housing through technologies like Appropriate Building Material Technology (ABMT) and Expanded Polystyrene (EPS).The main objectives of ABMT is to lower construction cost, improve quality and speed of construction. It is believed such technologies can lower cost of construction by 50%.
Other technologies include a hydra form block which is a South African technology which uses interlocking hardened earthen blocks to minimize the use of sand and cement in wall construction. Tevi roofing tile, a technology from Ecuador creates micro concrete roofing tiles for low cost houses.

Publicity has played a significant role in raising awareness of the business opportunities in the property development industry. In the last few years there have been consistent and growing numbers of housing expos, thanks to the housing deficit. The positive consequences are that these expos are bringing together stakeholders, like minded professionals and international investors. This is a good sign because these expos only serve to generate interest and subsequently have knock on effect in bridging the gap of affordable housing. A good example is the recent housing expo organised by East African Housing & Construction Expo 2012 in Nairobi.

It is a fact that a decade ago there were only two mortgage lending institutions in Kenya. Today because of market demands, available opportunities and possibility to make profits through mortgage lending, there are close to ten banks ready to offer mortgage services. This has meant interbank competition which has favourable effect to would be house buyers. However it has come to pass that no matter how attractive a bank mortgage service may be if the base lending rate of Central Bank of Kenya is high, monthly payments of mortgage will also remain high.

In response to the growing housing deficit, a number of parastatals are now offering subsidized mortgage rates for as low as 5% through internally structured housing schemes. Not to mention that those rates are protected regardless of inflation. Statistics have shown mortgage uptake has gradually increased within such housing schemes especially for the middle class. Sacco’s have not been left behind in playing the role of mortgage lender. One such Sacco is the Stima Sacco. They are aiming at providing affordable housing to its members. The conclusion that can be drawn here is that lending institutions have not only increased in number but in nature and according to the needs of the potential home buyers. And all these should serve as a clear sign that concerted efforts are being made to address affordable housing.

Without no doubt such incentives have paid off and have contributed largely in bridging the gap of the 150 units housing deficit.
By all standards in as far as Africa is concerned, Kenya is among Africa’s top ten countries that has a vibrant, progressive and growing housing industry. Statistics are showing there is still more opportunities to invest in the housing industry but investors should tap more in the sector of low cost housing to address the larger housing deficit among the low income earners.

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