The Ministry of Lands and Housing has defended the proposed Housing Fund, saying it was meant to help the majority of Kenyans own homes.
Lands Cabinet Secretary Zachariah Njeru Saturday told a Senate Standing Committee that it is common knowledge that the majority of Kenyans were shunned by the traditional home financing institutions because they lacked the requisite financial muscle.
The CS, who was addressing the Senate Standing Committee on Roads, Transportation and Housing, said the “mandatory deductions are aimed at creating a long-term financing mechanism for the housing fund”.
Mr Njeru, who was accompanied by Principal Secretary Charles Hinga and other senior staff, stressed that the deductions will not cause any loss to employees.
“The deductions will be made at the rate of 3 per cent of the employee’s salary, which will then be matched with another 3 per cent from the employer,” Mr Njeru said in a statement released by his office regarding the meeting with the Senate team in Naivasha.
He said Kenyans who will contribute to the fund are expected to buy houses through the affordable housing programme (AHP).
The CS said the fund has an opt-out provision for those nearing retirement and those ineligible for affordable housing, and that there is room for those wanting to build their own homes to access cheap financing.
“Moreover, the contributions to the housing fund will attract a return based on the performance of the fund on an annual basis so that on its exit, those who opt out get a return on their savings,” he said.
He also pointed out that those saving for home ownership will also get a tax relief.
“To ease the burden of saving and balancing monthly household needs, we provided for an affordable housing relief that allows a tax relief of Sh8,000 per month as homebuyers save towards a home,” said the CS.
The committee sought clarification on the housing policy, the concept of the affordable housing programme, the National Housing Fund, and the long-term housing finance scheme.
CS Njeru further explained that the housing policy has been in place since the 1990s, with the goal of providing housing to the poor, promoting slum upgrading, researching low-cost building materials and establishing a housing development fund through budgetary allocations and support from development partners.
“I am happy to report that to date, the portal has registered 300,000 members who have voluntarily saved over Sh2 billion,” the CS said.
So far, the AHP land bank has 524 sites across the 47 counties, covering over 700 acres.
The government has also introduced AHP at a local level with the 200 affordable housing units per constituency initiative, which will be funded by the National Assembly and county governments to stimulate local economic growth.
The CS told the committee that for home buyers in lower income segments, the housing fund will provide cheaper and accessible finance through a National Tenant Purchase Scheme or a rent-to-own plan.
“The housing fund will seek to offer participants with tenures of between 20 and 30 years, targeting interest rates of between three and seven per cent,” He added.
Currently, 9,935 affordable housing units are being constructed in Pangani, Nakuru County, and Buxton Point in Mombasa.
Thirty one thousand units are project-contracted and ready for launching, 30,000 forMakongeni and 1,000 for Thika.
During Labour Day celebrations on May 1, there was an uproar when President William Ruto said civil servants should contribute three per cent of their monthly pay to the housing fund.
Labour Principal Secretary Geoffrey Kaituko told civil servants that the government is doing everything in its power to improve their welfare.
Leave a Reply