Kenya’s Affordable Housing Regulations: A closer look at the draft provisions

  • 21 Apr 2024
  • 3 Mins Read
  • 〜 by Brian Otieno

As a bold testament to the government’s unwavering dedication to achieving affordable housing for all Kenyans, the State Department of Housing and Urban Development has swiftly unveiled the Affordable Housing Regulations, 2024, hot on the heels of the Affordable Housing Act’s enactment.

In this comprehensive overview, we delve into the draft regulations, highlighting key provisions that are central to the affordable housing initiative.

The key highlights are as follows:

  • Administration Fee for Sharia Compliance Purposes:

To seal possible concerns from the Muslim community, the draft regulations provide for administration fees to be charged by financing institutions and mortgage service providers in place of loan interest.

  • Exemptions:

As anticipated in the Act, the Regulations have become clear regarding exemptions. A person exempted from the imposition of taxes under an international agreement or a host country agreement to which Kenya is a party will be exempt from the payment of the levy.

Similarly, the following classes of income are exempt:

  • Income derived from pension or gratuity paid to a person upon termination of a contract.
  • Reimbursement of medical expenses or travel and accommodation expenses for work-related activity.
  • Income derived from insurance compensation. 
  • Exemptions from levy or income tax under an Act of Parliament.

An application for exemption shall be made to the Cabinet Secretary (CS) responsible for Housing, detailing the reasons for exemption and accompanied by a valid tax clearance certificate.

In exercising due diligence, the CS may seek input from relevant agencies before engaging the National Treasury CS  to publish or reject such application.

The notice shall detail the timelines for exemption, and the Treasury CS may withdraw such exemption anytime on several grounds, including non-material disclosure.

  • Deposit

The Regulations have pegged the deposit payable by a person who is eligible for allocation of an affordable housing unit at ten percent (10%) of the sale price.

An eligible applicant unable to raise the deposit fee may apply to the Affordable Housing Board for deposit assistance. An application for deposit assistance shall be made in writing to the Board but is hinged on the following conditions:

  1. The applicant’s monthly income is below Ksh. 20,000.
  2. The applicant demonstrates that the affordable housing unit to be purchased shall be their primary residence and
  3. The estimated monthly repayment for the purchase of the affordable housing unit is less than 30 percent of the applicant’s monthly income.
  1. 4. Change of a Unit

Change in an affordable housing unit is mirrored both before and after taking possession of the unit.

Where one has not taken possession of a unit yet, the applicant shall make the application in writing and forfeit the assigned unit for possible re-allocation to another eligible applicant.

In the event one has possession already, such an applicant shall make the application in writing and ensure the unit is in habitable condition. The Board may recoup monies from the deposit to refurbish such units where there are defects.

  1. Default in Payment

The Regulations anticipate default in payments. In such a circumstance, the Board will notify the unit holder to regularise their payments. Where the unit holder is unable to regularise their payments for four months running, the Board:

  1. a)     shall take possession of the unit.
  2. b)     may reallocate the unit to another eligible person.
  3. c)     may change the person’s affordable housing unit to a lower-value unit, or
  4. d)     may enter into a restructuring arrangement with the person in default.
  5. Associated Physical and Social Infrastructure

The government has been keen on having gas reticulation as a key component of the housing project design in the country. True to its objectives, liquefied petroleum gas (LPG) reticulation services have been listed as part of the physical infrastructure that shall be part of an affordable housing unit.

  1. Disposal of a Unit

A unit holder shall not sell their affordable housing unit until eight years after completion of payment of the agreed price has lapsed. An applicant will seek consent from the Board and state reasons for the disposal.

In conclusion, these regulations portray the government’s resolute commitment to realising accessible housing for all Kenyans. The regulations are currently up for public participation, and it is essential that stakeholders input into the form and substance.