The most common theme in American politics is the ‘American Dream’ and how politics revolves around making this dream come true.
Every politician tells how he will help empower his constituents achieve the American Dream. Central to this vision is the idea that every American family should own a home; a house that they own and can call home.
The Singaporeans were the next to implement this idea. Their visionary leader, Lee Kuan Yew, made home ownership a key priority for his people and over the next few decades he made this happen. Uhuru Kenyatta also shared this vision when he came up with the Big Four agenda and housing was a central component to this dream.
Kenyans have not yet understood the implications of home ownership. Every father wants to leave a legacy and a security to his family. We all know that rent becomes due every month end – and month end comes without fail, and too fast for our liking.
Rent is the biggest stress for most Kenyan families. We also know that if worse comes to worst, finding money to put food on the table is not an impossible task. A couple hundred shillings will buy that package of unga and Sukuma to put ugali on the table. But rent, that’s another story.
Many Kenyans fear taking a mortgage, worrying that the house will be sold if they cannot pay. They are not taking any extra risk because they will still be thrown out anyway if they don’t pay rent.
It is a risk either way. However, if you took a mortgage then the bank automatically takes an insurance on your loan (which is mandatory) and you dropped dead, the mortgage insurance immediately settles the outstanding loan and your family inherits a mortgage-free home, thus removing their biggest risk – a roof over their head. Perhaps you are worth more dead than alive!
The challenge of buying that house revolves around the mortgage payment. With interest rates so high, the mortgage payment becomes too high.
The government has come up with the Kenya Mortgage Refinance Company (KMRC), which was supposed to bring down rates to 9 per cent.
Fantastic idea, but few banks can offer this at present. Another great idea entangled to death by bureaucracy.
If we cannot reduce the monthly mortgage payments, then the idea of homeownership is dead.
Second was the idea of reducing the cost of production of the houses and therefore making the houses more affordable by reducing the VAT and other taxes that contractors must pay.
These tax concessions are still stuck, and the Kenya Revenue Authority seems unwilling to let go. Unless this gridlock is removed, we are slowly drifting away from the Kenyan Dream.
Morocco is the most successful country in Africa in rolling out affordable housing. In fact, the cheapest houses are sold there. They successfully removed most of the barriers mentioned above and encouraged more developers.
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With increased competition, prices came down very fast and Moroccans have the highest level of ownership in the affordable housing sector. Let’s learn from them.
It is time we educate Kenyans on the value of home ownership and reduce the fears that they have.
Government must remove these obstacles and make homes affordable. Only then will we achieve the Kenyan Dream.
-Mr Shahbal is Chairman of Gulf Group of [email protected]