NAIROBI, Kenya, Oct 19 – Kenya’s mortgage cost is six times higher than paying rent compared to South Africa where the ratio is one to one, making it one of the factors contributing to Kenya’s low homeownership rates.
To address the high mortgage interest rates, Housing Principal Secretary Hinga Maina said Kenya Mortgage Re-financing fund will raise Sh6 billion a month translating Sh55 billion a year, unlocking the supply side as the government aims to create 500,000 affordable homes in 5 years.
“The fund will give the guaranteed offtake. If you build the houses in accordance with the development framework, we will buy the houses on behalf of Kenyans, then we will settle Kenyans. If you are in social housing we will give you a house at 3 percent interest for at least 25 years,” Maina said.
Speaking at the Urban Development Program organised by the World Bank, Hinga says the government aims to address the cost of land by setting up land banks within counties.
“We need to crowd in investment by ensuring we are producing enough housing for most Kenyans. This will require sacrifice from everybody. This will attract more investors into the sector,” Hinga said.
His sentiments come at a time when Cabinet has approved a raft of affordable housing guidelines addressing aspects of financing, costing and design of the houses.
The guidelines are aimed at ensuring quality and affordability of the half a million houses planned over five years as well as establishing a level playing field for both public and private sector investors.