Kenyans in pension schemes to withdraw 40pc to buy houses
Housing and Urban Development PS Charles Hinga (left), Nairobi Deputy Governor Anne Kananu and Tecnofin Executive Director Robert Muchoki inspect Pangani affordable housing project in Nairobi on June 16, 2021. PS Hinga said that pensioners will be allowed to withdraw 40 per cent of their savings towards owning their own houses.
Kenyans contributing to pension schemes will be allowed to withdraw up to 40 per cent of the pension to fund buying of a house, the government has said.
Housing Principal Secretary Charles Hinga said the new plan will start in September after the government changed the pension law to allow the withdrawal.
Previously, an employee could only withdraw their employer’s contributions when they had reached the official retirement age, which is specified in the pension scheme rules or employers’ human resources policies for employees in the private sector.
The mandatory retirement age for public servants is 60, but this varies with the profession. Pension coverage in Kenya is about 20 per cent of the country’s current working population, which is estimated to be about 23 million.
Withdraw cash
According to the plan, once a pension contributor has identified a completed house, they will be allowed to dip into their savings to buy it.
“If you have a pension, from September this year, you will be able to withdraw cash from your pension scheme of up to 40 per cent of what you have saved, towards purchasing a house,” said Mr Hinga.
The PS pointed out that the new development is aimed at paving the way for Kenyans to own houses early in life, and not necessarily after retirement.
“There is no point in owning a house when you are already in retirement. We want you to own a home when you are still young and have the benefit of the asset appreciating so that even if you sell it, you are able to get a better unit or when in retirement you can rent it out and make more money,” he said.
Mr Hinga was speaking on Thursday during a joint inspection of the affordable housing project in Pangani, Nairobi.
He said that the Pangani Housing project aims to put up 1,562 housing units where 60 per cent of the units or 1,042 houses, are within the affordable housing bracket and will cost between Sh1 and Sh3 million while the remaining 40 per cent are duplex apartments which are market priced.
Infrastructure services
“The houses are designed to promote sustainable neighbourhoods with a mix of affordable and market priced housing. Infrastructure services like water have adequately been addressed with sufficient water supply storage being factored in two-level basements, basement parking in the courtyard with playgrounds on top,” he said.
Nairobi Metropolitan Services (NMS) Deputy Director General Kangethe Thuku said the 1,042 units will be ready by December, while the rest will be completed by May.
“A total of 205 units will be allocated to the Nairobi County government, out of which 48 will be reserved for the tenants who were moved from the project site. The balance of 157 units will be shared between rental units and sale to county staff under the staff housing scheme,” he said.
Nairobi Deputy Governor Ann Kananu said tenants of Nairobi County estates will be given priority to buy the new affordable houses.
She added that City Hall had waived all planning approval fees for affordable housing projects, with the national government assisting the city county government to secure waivers of stamp duty when transferring land to the special purpose vehicles executing the projects.
“This project of Pangani should serve as confirmation that the old tenants will not be displaced when the new houses are built. All the 48 original tenants have been allocated homes and are only waiting to move in as soon as construction is complete,” said Ms Kananu.
