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Why Affordable Housing for Poor Kenyans Could be Affected by Recent Tax Laws

Author 2 years ago
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By Moses Adongo

President Uhuru Kenyatta’s promise to deliver 1 million affordable housing units over the next five years of his term came in the backdrop of a statistics that predicted a looming poor housing system if the government didn’t act.

According to statistics from the National Housing Corporation, Kenya has an accumulative housing deficit of 2 million units which continues to grow annually by 200,000 units. This situation is brought about by rapid population and urbanization growth which stands at 2.6% and 4.4 % per annum respectively.

The government has, however, been able to provide 50,000 units every year with 83% of this supply being in the high and middle-end segment.

The statistics further revealed a worrying state of affairs perhaps giving a reason to the excitement the country witnessed when the President included Housing in his Big Four agenda.

In this plan, the government intends to supply housing for the low-income earners unlike before when it focused on middle- and high-income earners.

However, after revealing that the housing agenda will be achieved with the incorporation of private developers, suspicion has been growing as to whether the housing will be affordable for the poor.

This is in regards to the recent enactment of the Financial Bill 2018 that hiked prices of commodities like fuel which are essential in construction.  The act also introduced a 20 percent storage levy for imported goods.

The recent developments will, according to Institution of Surveyors of Kenya (ISK) chairman Abraham Samoei, force developers to increase the prices of materials and services.

“Developers including saccos, pension funds, and private individuals will have to factor costs of transport and construction material in the final price for each house thereby making the units expensive beyond the reach of low-income earners,” Abraham said.

He advises the government to waiver levies on numerous construction materials for first time home buyers if it cared for the low-income earners.

On his part, the chairman of realtor Homes Universal Daniel Ojijo noted that the government and industry players need to introduce alternative construction financing as bank loans were costly and unaffordable to over 90 percent of Kenyans.

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