Banks seeking to offer low-interest mortgages under the tenant
purchase scheme (TPS) intended to spur uptake of the planned 500,000
housing units are set to get incentives to charge as low as five per
cent on home loans.
Transport, Infrastructure and Urban
development secretary James Macharia said participating lenders would
receive government funds raised for the housing project, which they will
charge an interest rate of between five to seven per cent.
“We
shall provide the land and fund construction of the houses through the
National Housing Development Fund. Banks will then create demand among
Kenyans by charging friendly interest rates,” he said.
Speaking
when he met bank representatives in Nairobi, Mr Macharia said the
government and development partners had set aside Sh30 billion for the
housing projects but needed to engage local banks to administer the
funds on its behalf.
“Fifty-nine projects are planned for execution across Kenya
where developers hired by the government will develop mini-cities
comprising of high-value and low-value houses, retail areas as well as
schools and be paid upon completion,” he said.
Participating
banks will also get land — normally accounting for 30 per cent of the
house value — to put up high-value houses for sale to recoup the
investment, in return for taking up management of the low-cost housing
units developed on the remaining parcel of land.
Kenya
has about active 24,000 mortgages which is far too low, largely blamed
on stringent conditions and high charges imposed by banks. The situation
has also been worsened by interest rate capping at 13.5 per cent that
saw most banks shun disbursement of long-term loans to people considered
as a high risk.
To reduce the cost of houses to
between Sh1 million-Sh1.5 million, the minister said the government
would facilitate the provision of essential infrastructure such as
roads, water and electricity.
Mavoko sub-county has
been identified as home to the first mass housing project that will
accommodate 8,000 low-cost houses on a 55-acre piece of land.
No comments :
Post a Comment