How the Government is Making Affordable Housing Accessible
Staff Writer  |  Jan 21, 2020  | 
Real Estate
Staff Writer  |  Jan 21, 2020  |  Real Estate

The affordable housing initiative is part of the Government's Big 4 Agenda, which is intended to bring about economic development in the country. Currently, the annual housing deficit in the country is two million units. If the initiative is successful, this gap will be reduced drastically. Being the Government's brainchild, various policies and strategies have been implemented to support developers and first-time homebuyers. These include: 

For Home Buyers:

First time home buyers can access a 15% tax relief up to a maximum of Kshs 108,000 p.a. This is expected to encourage more people to purchase homes since their tax burden is reduced. Anyone who joins a Home Ownership Savings Plan (HOSP) is eligible for this tax exemption. First time buyers are also exempt from from having to pay stamp duty.

In addition, individuals can now make savings for the purchase of a home through Collective Investment Schemes, through the expansion of approved institutions that can hold savings towards HOSP to include Fund Managers and Investment Banks registered under the Capital Markets Act. The funds from such schemes can only be used for the intended purpose. This will help Kenyans to accumulate the capital necessary to buy homes.

For Developers:

Developers can now enjoy a 50% corporate tax break subject to certain conditions. Instead of the normal 30%, investors who put up one hundred or more affordable housing units only have to remit 15%. Furthermore, goods supplied through import or purchase for the direct and exclusive use in the construction of affordable houses by licensed Special Economic Zones (SEZ) are exempt from Value Added Tax (VAT). Lastly, the Import Declaration Fee (IDF) on inputs for the construction of houses under the affordable housing scheme was lowered from 2% to 1.5%. On top of this, the NEEMA and NCA levies, which used to be 0.1% and 0.05% of the cost of construction, have been scrapped. All these are designed to encourage more developers to undertake affordable housing projects. 


Activities in the affordable housing sphere will continue to expand, and this will be fueled by continued government focus to achieve the target of developing 500,000 housing units by 2022. Aside from creating favourable conditions for homebuyers and developers, the government has allocated Kshs 10.5 bn to housing in the 2019/2020 budget. In 2020, the affordable housing initiative will continue to gain traction with several potential home buyers registering for the housing units provided by the Government. There will also be further implementation of several projects in the pipeline, among them being; 1,142 units in Park Road Phase 2, a 3,500 unit project in Starehe, 5,300 units in Shauri Moyo and 2,720 units River Estate in Ngara.