What it Takes to Achieve Affordable Housing
Annette Wambui Muriuki
University of Nairobi
Bachelors Real Estate
The constitution clearly outlines in article 43 of chapter four that ‘every person has a right to accessible and adequate housing and to treasonable standards of sanitation.’ But we can say this is the case in our Kenyan cities, particularly Nairobi?
We continue to struggle with a huge housing deficit, especially affordable housing. This has left us to wonder: How did we find ourselves in this crisis? Who and how will we solve this crisis? Is it another great chance to blame the government? Is it time for collective responsibility to slay this giant?
“Affordable housing is where essential jobs go to sleep at night,” explained David Smith, CEO of Affordable Housing Institute at ASLA 2017 annual meeting. As the world continues to urbanize, particularly in the developing world, meeting the housing needs of the rapidly growing populations has become increasingly difficult, Said smith. He continues to explain that every fast-growing city in the world has an affordable housing crisis reflected by the fact that every fast-growing city in the world has a slum.
Having established that we are indeed having an affordable housing challenge, let’s look at what we can explore to solve this crisis.
Incentivize small builders to enter the market: This can best be achieved by providing an enabling environment. This environment would be to ensure they get cheap finance to enable them undertake the development.
Being careful on VAT: This is especially for new builds targeting low income houses, which motivate many to invest in affordable housing.
Intervention by the Government to control land costs: The escalated land costs have rendered housing unaffordable to many. The price of land in Nairobi is beyond the reach of many, especially small builders who may want to invest in affordable housing.
Intervention by the Government to prevent land hording in anticipation of high prices: This, we land economists, commonly refer to it as the greater fools’ theory – buying land in the hope that it will appreciate eventually, and you can reap from it.
Availing public land for development: The Government holds large public lands that would be used to provided as serviced land for massive housing projects not just by the Government itself but also private developers and government agencies.
Introduction of vacant home taxes: This would ensure that no housing stock is left idle. The tax system will seek to double up the tax on property left unused for two years based on the value of the property. The problem with this empty house tax system is that the Government has no actual data on how many vacant houses there are, especially from the private sector. This would mean we would require a system that keeps this number regularly updated.
Mortgage finance: The private sector could set up mortgage refinance companies to provide a cheap long-term funding to mortgage leaders from the capital market. This will enable the mortgage leaders to offer cheap mortgages payable over a long period of time.
Employees’ Housing: Employers to provide housing for their employees. I mean its time they picked up their responsibility.
Zoning: Zoning is defined as how the Government controls physical development of land and the kind of property that may be put up. This would ensure that various areas are zoned only for affordable houses. This would lead to the reduction of land prices due to reduced demand. The UK, Canada and Australia are a success example of this.
Encouraging private public partnerships: This would be especially because we have regulation in place. This law provides a variety of options to explore to achieve the housing agenda of housing. The options include: Build, operate and transfer; finance, build operate transfer; and many other strategic choices the Government and private sector can explore.
Putting in order the institutions required to give licenses and approvals for new builds. This will reduce the investors’ hustle running around and the cost to get these approvals. In the long run, it will reduce the bureaucracy.
Title deeds: Titling land will give investors the security of tenure. This will give them the courage to invest.
Provision of infrastructure: We know that infrastructure accounts to 60 per cent of the construction costs. If this is cheaply provided for by the Government, then it would be easier for the investors to provide cheap houses.
Taxing foreign landowners: It is quite disappointing that whites are coming back to claim land, which was not originally theirs, just because they find Kenya to be a hot bed for real estate investment. The Government should tax them more and use the money to develop affordable housing for the common mwananchi.
Encouraging innovative ideas that create unseen materials for building: I recently saw young men building a house using plastic bottles. They would fill the plastic bottles with wet sand and leave it to dry. Afterwards, they use the bottles as stones to make a wall. They would hold the bottles together with mortar and afterwards plaster it to give a final look. This was very creative. One, it reduced the cost by a huge percentage and it helped clean the environment by reusing waste bottles.
It is a very good and noble idea for President Uhuru Kenyatta to make affordable housing one of his Big Four Agenda. I can agree that this is not just for his legacy, but it is to save the low-income earners from the unbearable rents in Nairobi. It will not take just him to solve this; it will take collaborative efforts from both the Government, private sector and the citizens whose role is to be innovative and come up with creative ways to see this dream of enough affordable houses come true.
Indeed, affordable housing is where essential jobs go to sleep at night and that’s why this is a big agenda!