Politics and policy
By KIARIE NJOROGE, gkiarie@ke.nationmedia.com
In Summary
- In the National Construction Authority (NCA) regulations dated June 3, Mrs Ngilu imposed a 0.5 per cent levy on developments valued above Sh5 million.
- The levy is payable to the NCA before works commence.
- This is expected to push up the cost of owning homes for the middle class.
Nairobi Governor Evans Kidero has faulted Lands
secretary Charity Ngilu for issuing regulations that imposed a levy on
construction projects without consulting City Hall.
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Mrs Ngilu, through a legal notice dated June 3, said that
developers whose projects exceed Sh5 million will pay a construction
levy of 0.5 per cent of the value of the contract to the National
Construction Authority (NCA).
But Monday, Dr Kidero said the regulations were
prepared without consultations and called on the national government to
revoke the notice on fears that it could reduce activities in the
property market.
“This levy affects the housing sector that falls
within the jurisdiction of the county governments and it should have
been prepared with our participation and concurrence,” he said in a
statement.
“This levy is bound to impact heavily on housing as
well as pushes the cost of providing urban technical services, which
would in turn impact negatively on the ability of the county government
to expand infrastructure services for socio-economic development.”
The governor has also petitioned Abu Chiaba, the
chair of the Senate Energy, Roads and Transport committee, as well as
his National Assembly counterpart, Maina Kamanda.
Dr Kidero warns that the levy will hit large-scale
developers hard. At the entry level figure of Sh5 million, a contractor
has to pay an additional Sh25,000 or fall foul of the law.
“The authority may suspend, cancel or revoke the
registration of a contractor who commences construction work for which
the owner has not paid the amount of the construction levy as provided
in this regulation,” reads the regulations.
This is yet another cost in the property market
which has recently witnessed increased activity as investors pump in
billions of shillings to cash in on rising home prices and rental
income.
The National Environment Management Authority
(Nema) imposes a minimum charge of Sh10,000 or 0.1 per cent of project
cost for environmental impact assessment.
Last September, the Mining ministry started
collecting a two per cent royalty on construction materials – increasing
the cost of quarry stones, concrete blocks, hardcore, ballast and sand.
The bulk of the real estate activity is happening
within Nairobi, which accounted for 78 per cent of registered projects
in the country last year.
Official data indicates that City Hall approved
building plans valued at Sh190.6 billion last year out of the Sh243.1
billion registered across the country.
Dr Kidero said that the NCA levy could discourage investors keen a multi-billion-shilling housing deal with City Hall.
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