Over the last 12 months, the Government has shown adequate support to the real estate sector by bringing in policy reforms and a host of relief measures to support construction and uptake of more affordable houses in line with its aspirations on the Big 4 Agenda.
The National Treasury, through the Kenya Mortgage Refinance Company (KMRC) lowered annual interest rates on home loans by nearly half the prevailing market rates to seven per cent. This has given the much-needed boost, especially for Kenyans earning below Sh 150,000 every month.
The government has also made it easier for Kenyan’s to withdraw up to Sh 7Million or 40 per cent of their pension savings to purchase affordable housing units to boost sector activities. We see this helping to resolve liquidity issues in the real estate sector by off-setting COVID-19 related disruptions.
Over the pandemic period, we have seen a shift in customer preferences on designs, with many first time home buyers looking for responsive homes and units that can help them to flexible navigate emerging challenges like the pandemic and allow them to continue operating and live healthily. Housing has become the first point of defence against COVID-19 because it has helped in curbing the spread of the virus and has allowed a bigger population to continue powering the economy while at home.
This fiscal year (2021-2022) should consider these dynamics as part of long-term preparation for unseen future pandemics and come up with housing policy reforms that advocate and support the development of housing for the future.
To further improve affordability, the government should also come up with ways of freeing up public land to private developers at subsidised cost or payable in a flexible long-term period. This will significantly reduce the cost of construction with the benefits set to trickle down to Kenyans the prospective homeowners.
Similarly, on reducing construction costs, the government should review VAT on construction materials. Since its introduction earlier in the year, the cost of key building materials have risen significantly and stand in the way of delivering affordable houses. A downward review of the VAT or revoking it entirely is welcome.
George Mburu is the Chief Executive Officer for Mizizi Africa Homes
