PS Hinga reveals the ‘fine print’ in proposed housing levy

Housing PS Charles Hinga and State House spokesperson Hussein Mohamed

Housing PS Charles Hinga addresses a press briefing on the housing levy at State House, Nairobi flanked by State House spokesperson Hussein Mohamed.

Photo credit: Francis Nderitu | Nation Media Group

Kenyans who falter on payment of the proposed affordable housing units along the 20 to 30-year repayment journey will be thrown out of the houses.

At the same time, one will need to pay at least 10 percent of the value of the house before setting foot inside.

This is according to the latest update by the government on the proposed programme, which also shows that should the houses lack interested buyers, the fall back plan is to have civil servants across the country made to pay for them.

In a media address at State House, Nairobi, Wednesday, Housing Principal Secretary (PS) Charles Hinga and State House Spokesperson Hussein Mohamed indicated that the government chose the programme- which proposes to force people in the formal workforce to contribute 3 percent of their basic pay (capped at Sh2,500) to the Fund- to solve Kenya’s housing market that they termed broken.

The officials revealed that there would be more expenses for homeowners who qualify to participate in the programme, which Kenyans have not been aware of.

“The criteria for allocation is ‘first past the gate’, you must have raised a 10 percent deposit for that unit and you must register at ‘Boma Yangu’,” PS Hinga said.

More to pay for

And for prospective homeowners who may have expected to pay the Sh2,500 that has been publicised as the monthly payment as the only cost, the PS revealed there will be more to pay for.

“You will pay service charge because that is your house. The conversation is owners versus renting, you need to take care of that house,” he said, indicating that estates would have to organise themselves to determine service charges that are to take care of maintenance costs.

The government also says that people who opt to exit the Fund after the set seven years would only receive their contributions, while employers’ contributions on the employees’ accounts at the Fund will be held for a further seven years.

Only by death or retiring will one access their total dues in the Fund, Mr Hinga said.

“You get back your money at the earlier of retiring, death or seven years, whichever comes first. If you want to get it out, you will get out your portion, the employer portion stays in because it protects the capital of the fund. After 14 years, you can now exit your employer portion as well,” he said.

During the address at State House, PS Hinga also said the affordable housing programme is the only way of eradicating slums in Kenya.

Housing units

But even as PS Hinga advocated for the adoption of the housing fund levy, it has also emerged that the government has no plans of policing to ensure that the housing units are occupied by those who bought the units.

“As the government, the only policy that we are going to have in place is the one national ID, one house unit. We cannot follow up with the individual to ensure that they are the ones occupying that house. Once you have paid the 10 percent deposit, you will be required to pay a certain amount per month and that is it,” he said.

This has been a big problem for other housing projects undertaken by the government such as the Park Road affordable housing programme and the slum upgrading problem in Kibera.

In the slum upgrading programme in Kibera, most of the slum dwellers who were meant to be the beneficiaries of the housing units opted to rent them out while others ‘sold’ their identification documents, which were used by outsiders to secure the units.

Unscrupulous state officials were also accused of taking advantage of the vulnerable households and buying the units from the slum dwellers at a much lower price.

The units are later rented out at a price that is almost thrice of what the housing unit owner pays to the government in the rent-to own agreement.

Some of the slum dwellers have also opted to remain in the slums while renting out their housing units. 

Third pillar in its manifesto

Mr Mohamed said the consideration that Housing is Kenya Kwanza Government’s third pillar in its manifesto led to the decision to introduce the mandatory contribution, putting Kenya’s housing deficit at two million units.

“To achieve all these objectives, deliberate actions were necessary for the President and for the government, including provisions in legislation for affordable and stable financing to support large scale projects. This is why the three per cent contribution to the Housing Fund was developed,” Mr Mohamed says.

The State House’s data, however, differs with Kenya National Bureau of Statistics (LNBS), which puts housing deficit in the country at 8.8 million units, according to the Housing Survey released last year.