NHC in Sh5b housing bond

September 17, 2008
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, NAIROBI, September 17 – The National Housing Corporation (NHC) is in the final process of getting approval to launch a Sh5 billion bond to finance housing projects across the country.

The chairman of the corporation Bosire Ogero told Capital Business in an interview that the NHC was facing challenges with financing new projects and had devised three ways to bridge the deficit, with the corporate bond expected within a few months.

“Now that we have approval from the Ministry of Finance, we are putting the process in motion that will enable us provide the requirements of the Capital Markets Authority so we can get approval to launch the bond.  We are at a very advanced stage and should complete it soon rather than later,” he said.

Ogero added that apart from the bond, the NHC wanted to sustain financing housing through partnerships with developers, who would finance the projects while the corporation provided the land and technical know-how in designing the houses.

“We have also approached the government and it has agreed to capitalise the NHC through the injection of more funds.   This financial year for example, the government has allocated Sh0.5 billion for housing but we hope that this amount will increase in the coming years,” Ogero noted.

He said that the corporation had embarked on an ambitious programme to provide housing in 90 towns in Kenya, in phases, to meet a sharp demand in urban and rural areas.

The chairman explained that the type of houses would include tenant purchase – which is the most popular – where interested parties pay a deposit of 10 percent, while the balance would be paid as rent to the NHC over a period of years.

“The second category of housing is outright sale.  Here we develop the houses and the purchaser comes in and pays us cash.  The purchasers are able to get mortgages from housing finance institutions.  When we get the payment, we roll the funds onto other projects.”

He pointed out that corporation was also providing a ‘site and service’ scheme where the NHC provided the land, serviced it and sold the plots to people who then put up houses using their own plans.

Ogero said that even though the programme is ambitious, the NHC was capable of meeting rising demand.  He also disclosed that there was a scheme that targets rural areas where people get loans to improve their existing homes.

“In rural areas the demand is for better quality housing.  People tend to have houses but they are of poor quality.  What we as a corporation then do is come in and give rural housing loans at very reasonable rates.  I am urging all Kenyans who want to improve their houses to contact the corporation and they will be provided with financing.”

He revealed that there were several housing projects that had been completed in Nairobi while some are ongoing or in the planning stage.  They include the Langata phase I, II and III.  There is also another project in the leafy Kileleshwa suburb.

“We have done phase I (in Langata) which is already sold out and people are already living in the over 200 units.  Phase II with 310 units is almost complete but the houses are all sold out.  Then we have Langata phase III which is now in planning stage.  It will comprise 110 units,” he said.

 The tender for the phase III was awarded recently and is already sold out.  It is expected to be complete by the end of 2009. Construction of the Kileleshwa project with 300 units is also expected to start early next year and should be complete within 12 months.

“We also have a partnership project with our parent ministry.  This will be mainly for civil servants in Shauri Moyo comprising 2,000 units.  We are at the initial stage of planning and design so we hope we can go to construction soon,” Ogero said.

He stated that unlike in other markets across the globe, Kenya’s property market was experiencing a boom thus pushing up prices.  He however said he expected the situation to stabilise after a few years when more housing is made available.

He also said he expected better enforcement of planning rules to ensure developers meet basic requirements for amenities when putting up housing.

In a recent interview with Capital Business at a building site in east London where the 2012 Olympics will be held, the Chief Executive of the UK-based Networking for Professionals Lawrence Mbugua said local authorities there placed strict requirements for developers.

“When a developer puts up a housing project, they are required by the government to make some contribution to transport, infrastructure, and the local community.  If for instance, the developer is putting up 200 units, there will be need for schools.  They also have to make a contribution to the local hospital and the arts,” he said.

Another requirement placed on developers in London’s boroughs is that developers must ensure that 20 to 50 per cent of their housing units are affordable to low income earners.

“I think in Kenya, we need to be stricter on planning to make sure that developments are controlled.   Every development should have sufficient roads, electricity and other utilities,” Mbugua said.

He suggested that it was incumbent on the government through local authorities to enforce planning standards with the input of developers and professional institutions for architects, surveyors and engineers.

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