NAIROBI, Kenya, Nov 9 – The Ministry of Housing is working on a policy to increase the repayment period for mortgages.
The move is set make housing more affordable for people in the low-income bracket that have had a major challenge with housing.
Minister Soita Shitanda said on Tuesday that housing development in the country tended to focus on the high and middle-income earners, which had created pressure at the bottom of the pyramid.
“We think that if mortgage repayments are spread over 50 years then we will see a situation where the repayment premiums will drop from highs of Sh25,000 to Sh30,000 to about Sh4,000 to Sh5,000 a month which is more affordable, Mr Shitanda said.
Mortgages in Kenya usually carry a maximum repayment period of 20 years, which has proved challenging for many.
House supply is estimated at 30,000 units against a demand of 150,000 units annually. This has seen real estate developers taking advantage marking up house prices by close to 50 percent, increasing pressure on the government’s ability to provide housing to the low-income earners.
At the same time, Mr Shitanda appealed to the Treasury to increase its budgetary allocation to accelerate its slum upgrading projects.
The minister wants the allocation increased from Sh1 billion to Sh10 billion.
“It’s not adequate… to eradicate all slums in Kenya you need Sh885 billion. So you can see the kind of challenge we are facing,” he said.
He also challenged the private sector to take up an active role by collaborating with the government to carry out such upgrading projects.
He was speaking on the sidelines of the Kenya Building Materials Expo organised by the Turkel Fair Organisation. The exhibition is aimed at providing better investment and business opportunities for the local and international business communities.
The expo has attracted a high delegation from the international community with more than 60 exhibitors from Turkey, Egypt, Italy, South Africa, Japan, United Arab Emirates as well as Kenya who will showcase various products and services in the building and construction industry.
The exhibitors will also offer a platform for ideal networking opportunities with key industry players from East African business community, exporters, real estate investors, provincial investment agencies, manufacturing associations, academics, chambers of commerce and industry, and high profile industry decision makers.