On February 6, 2022, government officials broke ground on the 605 affordable housing units project in Bondeni, Nakuru City.
The Treasury Cabinet Secretary, Ukur Yatani, announced a Sh27.2 billion allocation for new affordable housing units during this year's budget reading. This is in addition to the Sh37.3 billion allocated to the Affordable Housing Programme, which aims to provide mortgage-led housing through the Kenya Mortgages Refinance Company (KMRC).
The programme's mandate includes the construction of new units and the facilitation of a mortgage-led housing plan. The Kenya Mortgages Refinance Company (KMRC) is tasked with funding banks to offer 'capital' specifically to local lenders, who will issue single-digit interest rate loans to first-time home buyers.
However, the Housing Ministry has expressed concerns that the provision of new houses is skewed towards high and upper-middle-income households, with only 15 per cent going to lower-middle-income households and only two per cent going to low-income households.
To address this issue, KMRC is set to receive Sh4.6 billion from the national budget in the coming fiscal year to help Kenyans buy houses priced at between Sh1 million and Sh3 million built on government land by select housing investor-developers.
Financial institutions such as Absa Bank are now able to act not only as mortgage lenders but also to fund housing developers who build units for sale. This inclusion of local lenders in financing various mass housing projects is expected to expedite project implementation across the country.
For example, the bank has partnered with the National Housing Corporation to implement various housing projects. This partnership is expected to result in faster project implementation and will inform off-plan purchases from their customers.
Local lenders have also proposed customised mortgage products that speak to their customers' individual abilities and needs. Among them are rent-to-own and tenant-purchase schemes, which attract buyers with attractive terms based on a 25-year repayment plan.
The involvement of local lenders is expected to activate a ready-to-use end-user platform that customers can use as a one-stop-shop facility for the acquisition of decent housing units.
The lender involvement in the housing development market is expected to be a game-changer for Kenya's mortgage sector, which has only 26,971 active mortgages in a country with a working population of about 22.3 million.
