Homeownership has long been a challenge for most Kenyans due to the high cost of housing and interest rates. To address this issue, the Kenyan government launched the Affordable Housing Programme (AHP) at the end of 2022, with the ambitious goal of building 20,000 affordable houses annually and 500,000 homes within five years.
The AHP provides incentives to encourage developers and investors to build affordable homes and offers flexible low-interest rate mortgages and payment options to potential buyers and renters. Developers who partner with the government and commit to delivering more than 100 units are eligible for free land from the government for construction. The cost of building materials is zero-rated, and the corporate tax of the property developer is reduced from 30% to 15%. Approved projects under the AHP also receive priority for bulk infrastructure development such as roads, sewer lines, and electricity, which can reduce construction costs by up to 25%.
For buyers, the Housing Ministry created Boma Yangu, a database where Kenyan citizens can register and choose how to contribute towards buying a home either as a single contributor or jointly with a spouse. The portal provides information on housing projects that potential buyers qualify for and how to apply for house allocation.
Through the Kenya Mortgage Refinance Company and private investors, banks and Saccos pledged to offer affordable fixed mortgages proposed at 9%, as opposed to the current 13.5% on the minimum. First-time home buyers under the affordable housing scheme are no longer required to pay stamp duty.
These measures have attracted developers seeking a piece of the AHP pie, as they are optimistic that the initiative will reduce construction costs and offer a ready clientele through the Boma Yangu database. Many Kenyans have already registered on the portal and are actively contributing towards homeownership.
The Affordable Housing Programme in Kenya is a promising development that could potentially increase homeownership rates in the country. The incentives offered by the government to developers and the measures put in place to make financing more accessible to buyers are positive steps. However, the effectiveness of these proposals in delivering significant increases in affordable housing options for Kenyans remains to be seen.
