Kenya’s real estate sector has weathered the impact of COVID-19 pandemic and can only ride on the resilience to grow the sector post-pandemic.
Among key factors that have helped the sector to stay afloat are all government led efforts to cut down cost of home-loans and ensure that Kenyans gain access to the growth funds to help fix the huge housing deficit in the country.
Set up of Kenya Mortgage Refinance Company, that has significantly lowered interest rates on home loans to a single digit and introduction of laws allowing Kenyans to draw out a significant portion of their savings on pension schemes. The Retirement Benefits (Mortgage Loans) Act, Regulations Amendment 2020 now allows members of pension schemes to utilise up to 40 per cent of their accrued pension benefits as down-payment to buy a home.
The sweetest part of this law is that individuals can also make joint applications with their spouse to access a higher amount that makes it easier for them to reach their goals towards a dream home.
These together with positive sentiments that ‘home’ was critical frontline defense against the deadly virus helped to view home-ownership positively. This growth can be accelerated even as the country prepares to usher in a new government later in August this year.
However, the current spike in cost of living partly attributed to failing rains and Russia-Ukraine conflict stand in the way of this progress- developers have started feeling the heat on significant rise in prices of construction materials, some upto 100 percent rise- especially on metal bars, iron sheets and cement. All these could potentially erode gains that have been made over the last two years to make home-ownership affordable.
Therefore we call on the current government to consider a downward review on VAT on these building materials or introduce a stimulus package for developers, or a waiver on construction taxes and levies to offer us some form of buffer to absorb the current high cost of living. This would play a significant role in ensuring that we do not pass on additional costs to Kenyans who are already feeling a strain on their pockets.
Similarly, we are calling on current leaders seeking elective positions to include affordable housing as part of their manifesto- to take care of the basic welfare of their constituents. When these leaders align housing with their agenda, it would be easy for them to introduce pro-affordable housing legislation that can spur growth of industry, push more Kenyans into homeownership and significantly bridge the housing deficit.