‘It is okay to be a renter’

Shelter Afrique Managing Director James Mugerwa.

Shelter Afrique Managing Director James Mugerwa says home ownership through loans and mortgages can’t work for all Kenyans and it is ok to be a renter:

1. Shelter Afrique is planning a three-day conference on the rental situation in the country and on the continent. What informed the move?

The debate has always been on home ownership through loans and mortgages. We have clearly seen it is not working and honestly, not everyone can own a house. The majority of Kenyans are renters. We are therefore asking: Why not capitalise on that? We want to shift the conversation in favour of the rental market.

2. Apart from moving the conversation towards the rental market, what else do you expect to achieve at the end of the conference?

The idea is to get as many stakeholders as possible to attend the conference so that the debate can be rich and informed. We expect that in the end, Kenyans will get a feel of the potential the rental market has and even stakeholders will start to venture into the market to meet the demand.

3. How do you expect people’s mindset to shift towards what is considered a “temporary ownership” when we know that many people yearn to be homeowners?

We expect to address the cultural perception that is making people to focus on what is not currently working. Not many people can successfully service a mortgage and it takes years for the majority to build a house on loans.

Because of rapid urbanisation, not many people can afford a house in urban areas. We are just saying: It is OK to rent.

4. Are we looking into home ownership through a tenant purchase scheme after a certain time or just rental as it currently is?

It can be both ways. We want financial institutions, the Government and developers to come up with products aligned to such.

One can get a scheme where the rent they pay goes into an account that would eventually help them own the house. One can also pay rent as they advance in life to a point where they will be able to buy their own house. People should be comfortable renting.

5. Is the debate a clear indication that the mortgage market as well as other home ownership plans are not working for the majority?

Most home ownership plans are not working. Mortgage interest rates are high and the prices are not fluctuating. There is a lot of speculation in the market, the cost of land and building materials is high while demand for housing continues to grow.

Currently, most houses being marketed are not even getting customers because they are highly priced.

6. But we are seeing high-end apartments being constructed in huge numbers and selling almost daily. Isn’t that an indication that something is definitely working?

The high-end of the market is well serviced with modern and high quality houses that are higher than the demand. But remember, it is the middle and lower ends where the demand is highest. The housing here is not affordable.

7. Would you say that is the biggest challenge the market is currently facing?

It is one of the many challenges the market is facing. You see, most modern apartments are built with the high-income earners in mind, yet the truth is that this segment does not need so many houses. That is why most of the apartments and stand-alone house built five years ago are sold out but those built recently are still vacant.

Apart from serving a very small segment, some of these properties are over-priced and not well marketed and that is why they are vacant. We need houses constructed for the majority, who are the middle- to lower-income earners. This segment is comfortable even with high density developments.

8. Would you say all the stakeholders are doing enough to address different challenges in the real estate industry?

Yes they are. The Government is really active in looking for solutions but at the end of the day, it has to be complemented by the private sector.

Financial institutions are all about profits but when nothing is being sold, they are also not making much so in the end, they have to toe the line and seek customers. Things will change with time if the right solutions are found.

9. Shelter Afrique has been around for 32 years. What lesson has the organisation learnt from Kenya’s real estate market over the years?

The market is successful and more advanced than others on the continent. There is a lot of awareness in nearly all segments; the infrastructure is better and advancing with time.

The fact that we have our head office here is a statement that the market is better and stronger.

10.You got into a joint venture for the construction of Everest Park Apartments in Athi River. Is that a new line of financing that Shelter Afrique is moving towards?

We were making a statement as a firm that joint ventures do work when well planned. It is our first joint venture since Shelter Afrique came into existence. The 380 apartments were built with the middle- and lower-income earners in mind. It was a successful experiment as all the units are currently occupied.