From hostels to low deposits: What Kenyans want in the housing levy

Real Estate
By Graham Kajilwa | Feb 22, 2024
President William Ruto lays a foundation stone for Kanduyi Affordable Housing projects as National Assembly Speaker Moses Wetangula, Bungoma Governor Kenneth Lusaka and Principal Secretary Housing Charles HInga look on. [PCS]

The government will include institutional housing in the affordable housing programme. These are some of the changes that a parliamentary committee yielded during public participation in the housing contested levy.

The Report on Consideration of the Affordable Housing Bill, 2023 also details why the National Housing Corporation (NHC) would not be handling the fund despite the argument that it has the necessary structures to do so.

The report prepared by the Departmental Committee on Finance and National Planning and the Departmental Committee on Housing, Urban Planning and Public Works, also documents the desire for Kenyans to own the homes but the 10 per cent deposit requirement might be prohibitive.

The report before the National Assembly for debate covered 20 counties among them Nairobi, Narok, Machakos, Kirinyaga, Vihiga, Nakuru, Baringo, Wajir, Uasin Gishu, Nyandarua and Kiambu.

A prominent feature in the proposals fronted by stakeholders is the desire to have the 10 per cent deposit reduced. This also involved details on how the housing unit can be ring-fenced so that the owner does not lose it in case of default.

 Some residents even proposed monthly payments of as ="">low as Sh1,500, arguing that it is< more reasonable for the majority of low-income earners.

 A major proposal, however from education stakeholders involved the desire for the Bill to include affordable student accommodation.

Financial burden

This recommendation first came from the Deputy Vice-Chancellor of Tom Mboya University, who asked for the scope of affordable housing to be expanded to include student hostels. It was argued that this would alleviate the financial burden students undergo.

 This approach, it was argued, not only supports students’ well-being but also contributes to the overall growth and vibrancy of the university community.

 “The committee noted the stakeholder’s concerns and recommended that the Bill be amended to include institutional housing as part of affordable housing programme,” the report reads.

The University of Embu Deputy Vice-Chancellor had the same proposal. He argued that currently, only six per cent of the 13,000 students in the university have accommodation. The report did not indicate the name and section.

The affordable housing programme was fronted as a solution with the ability to offer accommodation at the rate of Sh12,000 annually.

 “This move is not just seen as a means to ease congestion in existing hostels but is also anticipated to enhance overall student performance by providing a dignified living environment conducive to academic success,” he said.

It was the same proposal put across by the Vice Chancellor of Kaimosi University Prof Nandi Ogodo, who stated that the issue of accommodation is a security challenge for students.  “Currently, students face challenges with landlords having the discretion to increase rent at any time m as the existing accommodation infrastructure in university does not align proportionately with the increasing student enrolment,” he said.

 ="">There was an almost< similar recommendation from representatives of the Ministry of Education that proposed to have the construction of schools integrated into the programme. This should also extend to teachers’ accommodation.

 “The committee noted the stakeholders’ concerns. However, the committee resolved to allow the board to allocate resources on a demand basis which may also include institutional houses,” the report reads.

When a section of Community-based organisations, Jua Kali Contractors Federation of Kenya and slum residents among others picketed in support of the Housing levy along Harambee Avenue Nairobi on December 28, 2023. [Elvis Ogina, Standard]

While the Turkana Professionals Association asked for the government to seek an alternative way to raise the funds instead of imposing the tax on overburdened civil servants, Homabay residents asked for fairness and a mechanism for the informal sector to contribute to the kitty.

The committee noted that the informal sector will be catered for under the Tax Procedures Act 2015. The residents also asked for the 10 per cent deposit required for one to be allocated a unit to be relooked terming it excessively high. They asked for a lower deposit of 1.5 per cent.

 “The committee noted the stakeholders’ concerns and agreed to delete the amount of 10 per cent as a deposit and further recommended that the deposit amount be prescribed in the regulations,” the report says.

 The 10 per cent deposit setback was also raised by Bomet County residents who asked for lower monthly payments of Sh1,500 even as the Narok Jua Kali sector asked for a 0.1 per cent deposit and either monthly or even daily deposits.

 “Additionally, while (Bomet) residents recognised the significance of full payment for the housing units, they also stressed the importance of setting a reasonable cap on the payment period to ensure feasibility without placing excessive financial burden on low-income earners,” the report says.

Homabay Council of Elders asked that a provision be made so that Kenyans can also rent the units. They argued that this should address the varying needs and circumstances of individuals who may prefer renting to ownership. However, ="">the committee noted< that the draft law proposes to encourage home ownership.

 A proposal by Joshua Nyamori, a board member of the NHC to have the fund managed by the State corporation did not go through with the committee.

 Mr Nyamori questioned the rationale behind other entities administering the fund when essentially it is a tax from Kenyans.

“Mr Nyamori proposed that NHC, with its independent board, could effectively oversee both the Affordable Housing Board and the fund without the need for additional entities, ensuring transparency and accountability,” the report states.

The committee, while noting the raised concerns, was of the view that as currently crafted, NHC’s objective is to provide loans and grants of public money for construction dwellings.

“On the other hand, the objective of the Affordable Housing Bill is to provide a legal framework and a funding mode for the provision of affordable housing to Kenyans,” the report says.

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