What you need to know:
- President Uhuru Kenyatta’s affordable housing programme, one of the pillars of the “Big Four” agenda, aims to ensure that at least 1 million Kenyan families become homeowners.
- The first phase of the government’s national housing project will be launched in Park Road, Nairobi, next month.
So far, the National Housing Corporation has built only 60,000, which constitute only 10 per cent of the houses on the market, leaving 90 per cent in the hands of the private sector.
Owning a house remains a distant dream for most middle- and low-income Kenyans. A look at the classified advertisements in the newspapers leaves the average, employed middle-class Kenyan discouraged.
For instance, a three-bedroom house in Kilimani costs anything from Sh11.8 million to 12.8 million, with a two-bedroom flat in Spring Valley going for upwards of Sh25 million. Prices in Eastlands are no better, with a four-bedroom house in Fedha Estate in Embakasi going for around Sh30 million.
But President Uhuru Kenyatta’s affordable housing programme, one of the pillars of the “Big Four” agenda, aims to ensure that at least 1 million Kenyan families become homeowners.
The first phase of the government’s national housing project will be launched in Park Road, Nairobi, next month.
“We are confident of meeting our target of building 1 million housing units. It’s a national project and the money will come from Kenyan investors, whom we will support in order to realise this plan,” Housing CS James Macharia said last week during the Nation Leadership Forum at the University of Nairobi themed “Building Kenyans’ Dreams”.
During the event attended by NMG and other private sector heads, Mr Macharia oozed confidence regarding the viability of the housing project.
“We have the money and the capacity to complete the project since it is in the hands of Kenyans. Some individuals can afford houses and plots of land worth Sh500 million. It is such individuals and other investors in the private sector that we will rely on to construct the housing units with support from the government he said.
The project, originally scheduled to begin in June, was delayed by what the CS attributed to complex planning and logistics arrangements.
So far, the National Housing Corporation has built only 60,000, which constitute only 10 per cent of the houses on the market, leaving 90 per cent in the hands of the private sector. The country’s current housing deficit is estimated at 2 million units.
Among the areas to be covered by the programme in Nairobi are Park Road, Shauri Moyo, Bachelors’ Quarters, Suna Road/Toi Market, Pangani and Mukuru Kwa Njenga.
Mr Macharia revealed that 36 governors had already signed agreements with the national government for the extension of the project in their regions.
“The devolved units will provide us with the land while we will provide infrastructure. We will provide them with power, water and roads. They will also be able to access the $30 million funding provided by the World Bank to boost their bid to complete the programme,” said the CS. This will “halve costs for investors” he noted.
In the 2018/2019 budget, the National Treasury allocated Sh6 billion to the programme, which requires Sh2.3 trillion to complete.
He said the government had abolished some levies in the sector to reduce the cost of doing business.
A one-bedroom house in the capital will cost Sh1 million, while a bedsitter will go for Sh600,000.
Mr Macharia said the government will provide land for private investors to build the houses, but insisted that there will be a condition.
“For every 100,000 units we allow investors to build, there shall be a condition for them to provide at least 20,000 for the low-income segment of the market,” he said.
“We have called the scheme ‘mixed-use development’, as it will cater for informal settlement dwellers whose incomes fall within the Sh0 to Sh15,000 per month, considered the lowest bracket,” he said.
The CS attributed the proliferation of slums in the city to insufficient planning, which had led to the mushrooming of settlements facing challenges like poor sanitation, water and power supply.
“Had we addressed this challenge 30 or 40 years ago, the problem would not exist today. As the housing sector players built up the affluent areas, they neglected the neighbouring low-income areas. We built Karen but forgot about Kibera, built Muthaiga but forgot Kibagare, among others,” he noted.
Real estate developer Lee Karuru said real estate investors have shied away from investing in low-cost housing due to the risk associated with getting returns on their investment but acknowledged that the government programme had unlocked new opportunities for them.
“Like any other investors, real estate developers are driven primarily by the profit motive. Previously, we have not been very keen on investing in the low-cost income segment but now that there are guaranteed returns thanks to the government’s commitment, we are -happy to commit our resources to the project.”
Meanwhile, Nairobi County Lands CEC Charles Kerich said the project will begin with the pilot phase in Nairobi.
“We are going to break ground for our first project in Park Road. Our target is 30,000 units in the first phase in Nairobi. This could see us account for around 30 per cent of the current housing market,” he said.
The county land boss, said the project’s roll-out had been hampered by lack of documentation and historical disputes.
“We have known the land is ours but for many years the government had not obtained the title deeds. Some of this land was encroached on by individuals,” he said.
“We have thousands of acres of land that cannot be released for development due to historical disputes, for instance, the Embakasi Ranching Company and Kiambu-Dandora, which is sometimes patrolled by machete-wielding individuals. Some people own the land, while other people live on it, meaning such disputes can be resolved only by the government,” he said.
Mr Kerich said the government should issue title deeds for such land to clearly indicate ownership. He gave the example of the expansive Mukuru kwa Njenga slum, which was originally been allocated to industrial investors.
“When the investors failed to develop the land, it reverted to the State, and then some individuals bought the land. After the purchase, other individuals we will call structure owners built structures on the land, which they rented out to the current slum dwellers, meaning there are four layers in the whole issue that must be addressed before we begin construction on the land,” he said.
Threats to the programme’s success
The ambitious government housing project, to be launched next month, must overcome a number of challenges, if it is to succeed. First is the cost of land. A recent report by property firm Knight Frank showed that land values in Karen, Nairobi, have risen by more than 3,200 per cent in 20 years. This means an average increase from Sh2 million per acre in 1998 to the current Sh65.
In its price index published on April 19, 2018, property consultant HassConsult reported an improvement in asking sales and rents across all properties for the first quarter of 2018.
They reported that overall, asking sales prices increased by 2.4 per cent during the first quarter of 2018, boosted by a strong showing in the house sales market that recorded a 2.7 per cent increase.
The trend means that the market is slowly returning to normal after a tumultuous electioneering period. However, prices could still rise, driven by the increase in building costs and overheads due to the tax on petroleum products.
Land: Kenyans are moving to the outskirts of the city and satellite towns like Thika, Ongata Rongai, Kitengela and Athi River, where land is cheaper. But this has seen land prices in those areas skyrocket.
Addressing this issue, Kenya Urban Roads Authority (Kura) Director and Nairobi university lecturer Hellen Nzainga said, “We must also be alive to the danger of financially stronger Kenyans buying houses meant for middle-income Kenyans, which is called gentrification, as well as urban sprawl, caused by city dwellers buying land adjacent to the city.” she said.
Ms Nzainga stressed the need to cultivate a saving culture.
She asked the government to tread carefully when issuing title deeds and reclaiming land on which private developers have encroached.
“Some of the land now considered government property has been inhabited by families, some having lived there for three generations. We need to approach the issuing of titles and reclamation of such land with care, bearing this in mind,” said Ms Nzainga.
Materials: The cost of construction material costs are also rising, given that Kenyans prefer the traditional stone and mortar to model technology. Not only are these materials expensive because they are in high demand, but they also slow down construction time, further inflating the cost.
This is in sharp contrast with the West, where advances in technology have seen the industry adapt modern construction methods, including prefabricated houses, expandable polystyrene panels (EPS).
Dimensions Architect boss and Home Afrika real estate developer Lee Karuri said the new technology has been introduced in the country, and that it will greatly contribute to the rapid development large-scale housing.
Costs: Construction costs also remain high, partly due to the outdated Building Code, which regulates the materials to be used to build, and the levies imposed by the different construction regulatory bodies like the National Construction Authority.
Ms Nzainga said Kenya should emulate Singapore’s housing scheme, which she termed “a model of successful provision of housing for the people”. She said the regulatory framework governing the sector needs to be greatly simplified to facilitate doing business.
Taxes: Taxation of building materials was identified as another constraint. Mr Harry Njagi, group head of marketing at Mabati Rolling Mills (MRM), said: “Affordable housing goes beyond finding finances for cheaper housing. If the government can reduce the levies charged on building materials, we will be happy to sell them cheaper, so that ordinary Kenyans can afford them. We should apply the same model of incentives we gave the boda boda industry, which made them cheaper, if we want to solve the cost dilemma in housing,” he said.
Approach: Architectural Association of Kenya President Emma Miloyo emphasised the need for a holistic approach.
“Sixty per cent of Nairobians live in slums while 86 per cent rent houses. We cannot just look at it (the programme) in terms of the number of houses but also need to include the number of schools, hospitals, markets and other utilities that will need to be built. This cannot just be a ministry (of Housing) job,” she said.
She said the association’s six-point plan titled “The Kenya we Want” released last year was incorporated into the State’s housing development pillar, adding that the project will have a lasting impact on the sector.
“We are happy that the government not only took our proposal seriously, but incorporated it into the “Big Four” housing pillar. This marks the beginning of interesting times for the construction industry as the project will not only have a disruptive effect, but also spur growth in the sector,” she said.
However, she warned that the project risked going of the Kibera Slum Upgrading Project way, where slum dwellers who had benefited from modern houses rented them out and moved back to their shanties.
“We need to ensure that the cost of living for the beneficiaries does not exceed their current expenditure levels, forcing them to cater for new expenses like power and extra water bills. This could force them to opt for their former residences, where life is more affordable, she said.
Corruption: The architect said corruption in the issuing of title deeds and the difficulties in doing of business in the country remain big impediments to housing. “Kenyans need their confidence boosted and affirmed by the government such that, if they put their money in a property project, it will not be lost later due to demolitions or repossession over improper titles or other irregularities,” she said.