Law on housing eagerly awaited

Wednesday June 20 2012

By DN2 CORRESPONDENT

The passing of the Housing Bill will greatly facilitate the development of affordable housing in the country, according to a number of industry players.

Speaking during the ground-breaking ceremony of Housing Finance’s first project after a 13-year hiatus from the housing supply business, managing director Frank Ireri said the implementation of the Housing Bill would see the establishment of the National Housing Fund to facilitate the development of housing through access to affordable funds.

“The National Housing Development Fund will act as an additional source of funding for housing development in the country,” he said.

The Bill, whose formulation started in 2005, seeks to introduce a raft of measures expected to catalyse the development of houses in the country and help reduce the huge shortage.

Whereas the Bill recognises the private sector as the “engine” and the government as a “key enabler, catalyst and partner” in housing development, it proposes the establishment of a Kenya Housing Authority, a one-stop shop on all matters housing.

Apart from monitoring and evaluating the performance of the housing sector, the authority will also be charged with mobilising resources and allocating funds to various housing implementing agencies.

It will also be charged with prescribing and setting standards for housing development, estate management and maintenance, promoting research on housing, building materials and technology, collecting and disseminating data on housing, and obtaining funds for land acquisition, infrastructure development, housing provision, and end-user financing.

Social housing

But what is making many real estate players, particularly developers, look forward to the Bill is its proposal to establish the National Housing Development Fund.

The Bill proposes that five per cent of the annual budget be allocated to housing. The money will be spent on providing basic infrastructure and planning and social housing, and will be drawn from the Consolidated Fund for the first 10 years from the date the fund becomes operational.

All employers who do not have a running housing scheme for all their staff will be required to contribute to the National Housing Development Fund. Employees are also expected to contribute.

“The thinking behind the fund is that actors will be able to borrow money for housing development from the fund for as low as five per cent interest.

“It will not be free money, but the interest will be manageable. This will enable private developers to put up low-cost housing,” says Ms Esther Kodhek, the programme director at the Centre on Housing Rights and Eviction (COHRE).

“Right now, low-cost houses are costing Sh16 million or so because of high interest rates.”

Ms Kodhek, who was in the team that came up with the draft Housing Bill, said the fund would help revolutionise the country’s housing market by facilitating the provision of low-end houses “of reasonable standards”.

“Currently, the private sector is unwilling to put up low-cost housing because the cost of finance is high. That is why we currently have high demand, limited supply, and high prices.

“If managed well, I think the fund can solve our housing problem in a short time,” she said, noting that a similar model has worked in Singapore and Nigeria.

According to the Bill, the Kenya Housing Authority shall, in consultation with the relevant Cabinet secretary, prescribe the criteria for eligibility to the fund — lending limits, repayment terms, applicable interest rates, and grants. The authority will also be charged with prescribing the application procedure for funds from the fund.

Ms Kodhek said the fund stresses provision of adequate housing, “which I think can turn around this country”. Adequate housing, according to the Bill, refers to housing that guarantees security of tenure and availability of basic services, materials, facilities, and infrastructure essential for health, security, comfort, and nutrition.

This means that everyone should live in a house that gives access to natural and common resources, safe drinking water, energy for cooking, heating and lighting, sanitation and washing facilities, means of food storage, refuse disposal, site drainage, and emergency services.

The Bill also stresses accessibility, especially with regard to disadvantaged groups, which it says must be accorded “full and sustainable access” to adequate resources.

The houses should also be located in a place that allows access to employment options, health care services, schools, child care centres, and other social facilities.

An uphill task? Maybe, but Ms Kodhek thinks that there are no two ways about it: “Provision of adequate housing is now a human right enshrined in our Constitution. We must provide shelter for our people.”