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By Steve Umidha
Stakeholders in the built environment are frankly ashamed at how the affordable housing programme (AHP) by the government has been handled, four years on.
President Uhuru Kenyatta on December 12, 2017 in his Jamhuri Day celebrations speech at Kasarani Stadium, promised to make each Kenyan a home owner by the end of his second term – but that promise is unlikely to be met according to industry players who termed it “a long shot.”
Instead, experts want the concept modified and rechristened ‘social housing’ if it is to meet its intended purpose.
“Ideally the focus should be on social housing rather than affordable housing because most Kenyans who need these houses are likely to miss out from the programme. Equally, most of these housing units’ designs do not conform to current social needs for the target market,” says Florence Nyole, an architect and President of East Africa Institute of Architects.
The government had intended to construct over 500,000 affordable houses by 2022 and nearly five years on less than 1,000 of such units are ready for occupation thus far.
Available statistics show that the first lot of Park Road Affordable Housing Project comprising of 488 units have been put up for sale with the State Department of Housing and Urban Development indicating that one-bedroom units would go for Sh1 million, two bedrooms for Sh2 million and three-bedroom units for Sh3 million with willing occupants expected to deposit 12.5 percent of the amount based on the unit of choice.
The project, upon completion is the first development promoted by Government under the Affordable Housing Program will be integrated into a human settlement project comprising 1,370 units whose aim according to the government is meant to reduce mortgage costs as well as lower construction costs among low and middle income earners.
Under the project, the proposed deliverables include 3000 housing units to be contained in blocks of 12 floors consisting of one and two bedroom houses as well as one roomed housing units or bedsitters with shared shower and a kitchenette.
These units according to Nickson Otieno, the Chief executive of Niko Green – a tech-based company that involved in macroclimate and sustainable solutions, says that the units are not ‘ideal’ for social living based on their designs and that the government should instead engage local developers and stakeholders in modifying some of the models proposed.
“Engagements and collaboration in terms of designs and other areas like costs of building materials are necessary if this dream is to be met,” says Mr. Otieno.
Affordable housing is units that are reasonably priced for individuals with median household income and does not cost so much that a household is unlikely to meet other basic needs on a sustainable basis.
But that reality has not been met according to experts who believe the concept is disproportionately sane.
The Kenya National Bureau of Statistics (KNBS) data on income shows that distribution in the formal sector, affordable housing would be units that can be afforded by individuals who earn Sh50, 000 and below per month, which is a total of 74.4 percent of persons employed in the formal sector in Kenya.
To gauge the price of a house affordable by these income levels, assuming a 20-year mortgage, at a 13.5 percent interest rate, with a 10.0 per cent deposit and using the rule of the thumb of a maximum of 40 per cent of their income being used to pay monthly instalments, then the median income individual can afford a maximum of Sh 1.8million for a house.
The very best case scenario would be to assume twice the monthly income where a household has 2 income-earners, then the median income household can afford a maximum of Sh 3.6 million for a house.
As a result, estimations by real estate and venture firm, Cytonn Investments show that, at prevailing market conditions, an affordable house would be of Sh 3.6 million and below – which is way below the target market meant to occupy such units put up by the State.
They were speaking at a forum by the Architectural Association of Kenya during the launch of the Status of the Built Environment report for July to December 2020. AAK produces this report twice a year and presents highlights in the real estate sector, tracking developments in land, financing, infrastructure, policy, and legislation.