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Millions of Kenyan’s eagerness for a break from the threat of a lifelong rent burden have a reason to be optimistic following the inclusion of affordable housing as one of the government’s 4 priorities. President Uhuru Kenyatta’s affordable housing program seeks to ensure that 1 million Kenyan families become homeowners.

There is already a backlog of two million houses countrywide and that deficit increases by 150,000 units every year. Annual construction remains a mere 50,000 units against a targeted provision of 250,000 units.

Owning a home has remained a pipe dream for many. Housing costs have risen dramatically due to the exorbitant cost of land, construction materials, and labor. As urban populations increase rapidly, developers continue to target a few upper-middle and high-income families because they generate more profit. Lack of available land for affordable housing projects and preference for large housing units has also exacerbated the crisis.

Due to the shortage of affordable housing, many people are forced to live in poor conditions in informal units while overcrowding has lead to the degradation of utilities and services including energy, water, education, healthcare, and transportation. The affordable housing plan is therefore timely and necessary.

Affordable housing is a complex matter and to increase the chances of success, it is important to draw lessons from the successes and failures of the numerous affordable housing projects around the globe. Be it in Asia, America, Europe or African countries like Egypt, similar projects that achieved a measure of success adopted joint approaches to financing, regulatory reform, incentives and the use of innovative planning and construction techniques.

Inadequate financing remains the key challenge to housing projects because housing is a capital-intensive sector. The Central Bank of Kenya reported that mortgage uptake has been on the decline with only 28,000 mortgages taken up in 2018. The drop was mostly due to high-interest rates, tight credit standards and liquidity issues including the long-term 18-month mortgage interest rates.

The establishment of the proposed Kenya Mortgage Refinance Company (KMRC) is anticipated to bridge the financing gap. KMRC will operate as a private sector-driven company and provide secure long-term funding to mortgage lenders. With joint shareholding, the government, pension, and insurance firms, banks and venture capitalists can increase the affordability and availability of mortgage loans.

Pension firms, for example, can upscale the use of pension savings as collateral to provide members with low-interest loans against their retirement savings while at the same time increasing the share value of their social security savings.

It is critical for the government, through national and county government grants, to enroll multiple external financiers who can provide credit rates as low as 5-6%. Private sector players will be able to draw the funds and offer developers and prospective home-owners longer-term mortgages at lower interest rates.

A structured governance regime is necessary to ensure that all the primary actors in affordable housing–county and national government agencies, county assemblies, planners, private developers, banks, professional and worker associations, pension and insurance firms-work closely on specific local projects rather than generic countrywide programs. This will ensure a feasible public-private sector relationship capable of making decisions and providing interventions most suited to specific localities.

Joint partnerships ensure that construction costs are kept low through efficient planning, effective site development, and building procedures. Since housing involves all levels of government, it is also important for the national and county governments to remove prohibitive regulations and by-laws and incentivize development for example through subsidies.

Architects should focus on resource efficient alternatives and models for building materials maximizing the use of local resources and labor. Planners need to support the best demographic distribution and resource-efficient planning for affordable housing.

Through joint planning, the entire ecosystem is therefore catered for including the adoption of local or cutting-edge technologies, low-cost materials, labor and the development of proper infrastructure including quality roads, water, sewer lines, lighting, security, and social amenities.

Since affordable housing has had its fair share of controversy in the past, a constant flow of information is necessary to build public confidence in the project. Sensitization campaigns are also necessary for attitude change especially acceptance of low-cost interlocking blocks or prefabricated material.

Ultimately the uptake of completed houses depends on the financial arrangements between the buyer and seller. President Kenyatta’s commitment to creating housing that benefits low-income households need to be cascaded to all players to guarantee that unit prices will not go beyond the reach of low income groups at the whims of market forces.

Property registration and titling need to be simplified while underwriting, documentation, and servicing needs to be standardized to make the home acquisition process a pleasant and worthwhile experience.

The Writer is the Group Managing Director of CPF – a group of companies offering a dynamic pool of services in Retirement Benefits, ICT and Property Management.

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