A housing estate in Mlolongo, Machakos. FILE PHOTO | NMG
Summary
- The TPS is a lease agreement where a portion of the monthly rent covers the buying price of the asset.
- Experts say flexible home buying plans key to bridging deficit.
- Under President Uhuru Kenyatta’s Big Four agenda, the government has indicated intention to use TPS model to deliver 800,000 affordable housing units by 2023 at a cost of Sh2.6 trillion.
Experts are rooting for tenant purchase schemes (TPS) as Kenya
moves to bridge a huge housing deficit estimated by the World Bank at
over 250,000 units every year.
The TPS is a lease agreement where a portion of the monthly rent covers the buying price of the asset.
Experts
say the TPS offers a flexible payment plan to Kenyans where a portion
of the tenant’s monthly rent payments is applied toward the purchase
price of the house.
“With risk-averse banks scaling
down on loans and mortgages due to the interest capping law, TPS is the
way to go,” said MMC Africa Law partner and expert in banking and
finance Isaak Mungai.
“Otherwise, millions of potential buyers have been turned away
due to ten-fold rise in house prices and exorbitant bank mortgage
interest rates. Saccos around the country now have a huge role to play
in fostering the growth of TPS by structuring the members’ savings to
purchase homes,” said Mr Mungai.
Under
President Uhuru Kenyatta’s Big Four agenda, the government has also
indicated intention to use TPS model to deliver 800,000 affordable
housing units by 2023 at a cost of Sh2.6 trillion.
The
plan to be rolled out in partnership with saccos will see some 158,200
units being made available in Mavoko, 150,000 homes at Portland 1 as
well as 8,400 units for Kibera Soweto zones. Others are 2,700 in
Maruguini and 5,000 in Kiambu.
Last September, the
Africa Tenancy Initiative — under which saccos pool resources to roll
out affordable mortgages to members — was launched in Kenya.
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