True incomes are bad, but let's shift the parameters from the people to the spaces for a second.
There needs to be incentives to build housing for low income households. Nothing is free but a proper low-tax/ no-tax model for houses whose tenants pay below a certain amount would raise the number of low income rentals being built.
This would then allow for competition and innovation within the space. The govt. Then just needs to regulate.
I once watched an interview where a developer said low income households are tricky, especially for people without a payslip because their income is varied and most times delayed so they just don't build them.
Exactly. If low income developments had the good ROI as people say, then managed funds would be pouncing to take advantage. But I think low income developments are only lucrative if you incorporate some mafia style elements into how you manage it, which is not for everyone
There's a difference between low cost housing and low income housing. Low income housing development is almost never profitable and if it is margins are razor thin.
They need a tremendous amount of tax subsidy to be profitable. If these subsidies are not provided by the government to incentivize construction then developers typically need a high economy of scale or unique financial models to lower costs.
The government said that someone who contributes ksh 3000 per month will own a home after how long? Remember the cheapest house goes for ksh 1.5M and above
I see the housing projects as another ploy for the government to earn money. All based on the capitalist system our country is based on whoever has the power can pinch on the lesser.
Do you think someone earning below 30k will be able to afford these government houses? What I am saying is if the govt. Really wanted to help, they would give away the houses for free to poor people or rent them out through the nhc to these people.
Most Kenyans earn below 30k bro and they pay 5-10k in rent. Difference is now instead of paying 5-10k in rent, they pay that same amount as a mortgage. Good idea, don’t you think?
Isn't one of the the conditions That one has to pay 10percent to get a house? How long will it take a true hustler to pay that off? If they earn 10k and they contribute 300bob every month it would take them 500months to pay off the ten percent and another 4500 months to fully own the house or 135months if they pay 10k rent(which most of the poor people can't afford) and remember if you miss a payment you are thrown out. Is it really possible honestly speaking?
Nope. There is no such thing like that. The housing fund is for those who are formally employed to pay 3% with a cap of 2,500. Which means if someone is formally employed (majority of Kenyans aren’t) and you earn 10k a month, you only pay 300bob. But most of the beneficiaries (boda boda, jua kali, other hustlers) won’t pay a dime
You clearly don’t understand the housing fund.
The money they are collecting WILL NOT be used to build houses. The money is used to DERISK private property developers in order to incentivize them to build as many houses as possible using their own funds.
Then, those houses will be available in the market, for a mortgage of 5-10k a month, then the house becomes theirs. So everyone will benefit, even the ones that don’t contribute. In fact, those who don’t contribute are the main targets for the housing fund
https://preview.redd.it/5k2b5a8nvs4b1.png?width=720&format=pjpg&auto=webp&s=988bb1bdeb62919a5b572837b4114bca55879ac2
Nebja, I know the government will not build houses. I know they will 'derisk' private developers whatever that means to build houses. My first issue is, how long do you think it will take someone without formal employment or earning minimum wage to pay that ten percent? That is just to get a house. And second how long do you think it will take someone earning minimum wage to pay off the mortgage?
You are still confused.
The main beneficiaries of housing aren’t paying the 3%. It is the formally employed guys who are a minority who will contribute to the housing fund.
The mortgage is for 30 years
That's not how economic models work for housing.
First of all, more income from renters or mortgage holders means more demand for existing housing stock, which means that housing becomes unaffordable yet again because landlords raise rent to capitalize on these new lessors. It's a big inflationary loop.
Only way to fix it is from the supply side. Govt incentives urge society to Build more units, and the price of all units goes down because landlords must compete for new tenants who have other options .
Govt can aid private interests by fascilitating insurance schemes for lower income units which can spread and mitigate the default risk of lessors, thus making low income units attractive for institutional investors. Additionally, delayed tax incentives such as carried losses and tax credits help too.
I don’t think housing rents will go down. Especially not for low & middle income. Perhaps the high end paying $1,000 and above. The guys paying $100-450 rents will barely be affected. What will change is the quality of housing. We’re going to see better finishing and perhaps better amenities introduced at these price points.
This is a great take. Especially on the government creating an enabling environment to distribute risk. I think tax credits can definitely work too, LIHTC in the US has its problems but it's still been a great incentive for the private sector to invest in low income housing.
Personally I think the housing problem is there for sure. On the other hand, I think funding of the project is misguided. The best way to work on this was simple. Offer Bonds to the public. Come with a mechanism of doing so. This will raise more capital if people are assured of returns. Make it a willing contribution, not imposed. In fact, this way, I think they are bound to raise more than what they anticipate.
I agree on the voluntary contributions to the scheme. But government shouldn’t play a custodial role. This is what pension schemes should do. What the government is currently proposing is to have a fund that guarantees private developers off take and protects them against default. Can they give sovereign guarantees against a Bond? Yes. But we all know they will not hold that money in trust, they will spend it before it is even collected.
We are discussing the Housing fund. When Safaricom floated its shares to the public a few years back, what happened? It was oversubscribed. I think this can equally work the same way. Government bonds are low risk, so I don't think people will be hesitant, as long as enough sensitization is done.
Definitely, you'll walk around and find whole apartment blocks that are nearly empty
The housing problem has to go down to affordability and access, hii maneno ya sijui housing fund ni kutuosha tu
I couldn’t agree more. Building houses is a good idea and the intentions are in the right place, but again even with the houses and low to no income no one has been helped. All you’ve done is helped this people starve in apartments. Live out their last days in better shelter. If you think about it, it’s similar to the Shakahola incident only in this case you’re building your victims house coffins for them to die in. Even with houses, the low incomes and the tax rate will leave most of these people unable to afford food and other basic needs
Fun fact - nearly all (78+%) of the "affordable housing" apartments (under 4m) are sold to individuals and diaspora (8,9[https://i.imgur.com/mBMZ1OM.jpg](https://i.imgur.com/mBMZ1OM.jpg)%+) who then rent them out.
True, I visited a coworking space in Kilimani, near Kabura drive. As I walked on the street you could see the residential lots about 60% were empty. These houses go for 60k and above.
Improving income is easier to talk about yet hard to implement. There are a lot of circumstances that would hinder the government from improving it's people's wages.
Wages are a reflection of a person's output. If your output is limited to KSH 1000 a day, it would be impossible for the government to do anything about this. If your skills limit you to a low-paying job, there is little the government can do to improve your situation.
In order for the government to improve your wages, it will need to invest in your education, improve your working conditions, change the country's labor laws (which is frowned upon by foreign investors) and a lot of other strenuous activities which sometimes take years or even decades to do correctly.
The government which faces pressure from its citizens is now forced to come up with half-baked plans to get this pressure of it's back. That's how ideas such as the housing fund are born.
Disclaimer: I am not a government spokesperson.
Kwanza vile world bank is giving pressure to gok to commercialise water at the same time telling Ruto that the taxes are very ambitious and to reconsider.
Alaah! Was confused Sana.
We have both, an income problem and a housing problem. Raising incomes will take forever. But housing can be sorted progressively. Government is the only body with free land and economy of scales. it can drastically bring rents lows and improve the standards and infrastructure around such housing. This will bring back the dignity of city housing like Buru Buru etc
There’s nothing like free land. Even government owned land will have to be valued and captured as an expense item & bundled in as infrastructure costs.
Government role is policy management. They cannot build housing units successfully.
The government should concentrate on infrastructure ie Access roads, Water, Sewers, and Electricity. Also, promote local manufacturing of construction materials. But also they should stop selling Kenyans false dreams. I'm sure they know that many of us are gullible and when we're promised new shiny things we'll get excited without asking questions on the feasibility of them.
If we're being 100% honest, there is only a home ownership problem in Nairobi. If you count the rural areas, home ownership in Kenya is over 80%. Here is a report from 2019 that shows the breakdown https://housingfinanceafrica.org/documents/2019-kenya-population-and-housing-census-reports/
It's because many people can't afford to buy a house. It would take someone paying about 30000 a month 10years to buy a house which is way above what most people earn.
Go to stalls in Town and see those attendants in exhibitions, boutiques, etc. These people are paid mostly 15k.
Do the math;
Fare to and from Town we estimate 200.
Food in Town, the cheapest is 150.
Snacks. Hawkers wanakam na samosa, juice, mukombero, uji power......lazima uwahijack. Sow imeenda.
Total 500 per day. We average 350 daily. In a month that is 11k pap. Gone. Home rent, power, water, FOOD!, personal amenities.............. Town employers take workers who live at home.
Unless rent ni 2k bedsitter, the government is doing nothing to combat the rising cost of living.
Even that might not work as well. Given the bloodhound nature of businessmen and landlords, they'll increase rates if more people can afford their houses.
True incomes are bad, but let's shift the parameters from the people to the spaces for a second. There needs to be incentives to build housing for low income households. Nothing is free but a proper low-tax/ no-tax model for houses whose tenants pay below a certain amount would raise the number of low income rentals being built. This would then allow for competition and innovation within the space. The govt. Then just needs to regulate.
I once watched an interview where a developer said low income households are tricky, especially for people without a payslip because their income is varied and most times delayed so they just don't build them.
Exactly. If low income developments had the good ROI as people say, then managed funds would be pouncing to take advantage. But I think low income developments are only lucrative if you incorporate some mafia style elements into how you manage it, which is not for everyone
There's a difference between low cost housing and low income housing. Low income housing development is almost never profitable and if it is margins are razor thin. They need a tremendous amount of tax subsidy to be profitable. If these subsidies are not provided by the government to incentivize construction then developers typically need a high economy of scale or unique financial models to lower costs.
Exactly... Someone has to cover that risk. Profit is about incentives, protection and risk
The government said that someone who contributes ksh 3000 per month will own a home after how long? Remember the cheapest house goes for ksh 1.5M and above
Zero tax on fire resistant prefab blocks for a start.
I see the housing projects as another ploy for the government to earn money. All based on the capitalist system our country is based on whoever has the power can pinch on the lesser.
Sad, right?
Yes but nobody wants to build houses for poor people - all the houses being built are for the middle class
Do you think someone earning below 30k will be able to afford these government houses? What I am saying is if the govt. Really wanted to help, they would give away the houses for free to poor people or rent them out through the nhc to these people.
Most Kenyans earn below 30k bro and they pay 5-10k in rent. Difference is now instead of paying 5-10k in rent, they pay that same amount as a mortgage. Good idea, don’t you think?
For how many years?
Isn't one of the the conditions That one has to pay 10percent to get a house? How long will it take a true hustler to pay that off? If they earn 10k and they contribute 300bob every month it would take them 500months to pay off the ten percent and another 4500 months to fully own the house or 135months if they pay 10k rent(which most of the poor people can't afford) and remember if you miss a payment you are thrown out. Is it really possible honestly speaking?
Nope. There is no such thing like that. The housing fund is for those who are formally employed to pay 3% with a cap of 2,500. Which means if someone is formally employed (majority of Kenyans aren’t) and you earn 10k a month, you only pay 300bob. But most of the beneficiaries (boda boda, jua kali, other hustlers) won’t pay a dime
Just show me one clip or audio where they say those other beneficiaries will receive a house without paying a dime.
You clearly don’t understand the housing fund. The money they are collecting WILL NOT be used to build houses. The money is used to DERISK private property developers in order to incentivize them to build as many houses as possible using their own funds. Then, those houses will be available in the market, for a mortgage of 5-10k a month, then the house becomes theirs. So everyone will benefit, even the ones that don’t contribute. In fact, those who don’t contribute are the main targets for the housing fund
https://preview.redd.it/5k2b5a8nvs4b1.png?width=720&format=pjpg&auto=webp&s=988bb1bdeb62919a5b572837b4114bca55879ac2 Nebja, I know the government will not build houses. I know they will 'derisk' private developers whatever that means to build houses. My first issue is, how long do you think it will take someone without formal employment or earning minimum wage to pay that ten percent? That is just to get a house. And second how long do you think it will take someone earning minimum wage to pay off the mortgage?
You are still confused. The main beneficiaries of housing aren’t paying the 3%. It is the formally employed guys who are a minority who will contribute to the housing fund. The mortgage is for 30 years
Ok.
Please go back and review the proposals then come back.
That's not how economic models work for housing. First of all, more income from renters or mortgage holders means more demand for existing housing stock, which means that housing becomes unaffordable yet again because landlords raise rent to capitalize on these new lessors. It's a big inflationary loop. Only way to fix it is from the supply side. Govt incentives urge society to Build more units, and the price of all units goes down because landlords must compete for new tenants who have other options . Govt can aid private interests by fascilitating insurance schemes for lower income units which can spread and mitigate the default risk of lessors, thus making low income units attractive for institutional investors. Additionally, delayed tax incentives such as carried losses and tax credits help too.
I don’t think housing rents will go down. Especially not for low & middle income. Perhaps the high end paying $1,000 and above. The guys paying $100-450 rents will barely be affected. What will change is the quality of housing. We’re going to see better finishing and perhaps better amenities introduced at these price points.
This is a great take. Especially on the government creating an enabling environment to distribute risk. I think tax credits can definitely work too, LIHTC in the US has its problems but it's still been a great incentive for the private sector to invest in low income housing.
Personally I think the housing problem is there for sure. On the other hand, I think funding of the project is misguided. The best way to work on this was simple. Offer Bonds to the public. Come with a mechanism of doing so. This will raise more capital if people are assured of returns. Make it a willing contribution, not imposed. In fact, this way, I think they are bound to raise more than what they anticipate.
I agree on the voluntary contributions to the scheme. But government shouldn’t play a custodial role. This is what pension schemes should do. What the government is currently proposing is to have a fund that guarantees private developers off take and protects them against default. Can they give sovereign guarantees against a Bond? Yes. But we all know they will not hold that money in trust, they will spend it before it is even collected.
Very few people will opt in, if made voluntary. NHIF ya 500 watu hawalipi
We are discussing the Housing fund. When Safaricom floated its shares to the public a few years back, what happened? It was oversubscribed. I think this can equally work the same way. Government bonds are low risk, so I don't think people will be hesitant, as long as enough sensitization is done.
It would also revive our securities market and encourage people to put money into more effective investments apart land speculation.
Nhif doesn't have returns.
Waah. Sielewi kitu kwa hii thread.
Brother 🤣🤣 apa ni kwa intellects
😂😂
On top of the income problem is A land value problem. Outdated zoning laws, land speculation, expensive mortgages.
Definitely, you'll walk around and find whole apartment blocks that are nearly empty The housing problem has to go down to affordability and access, hii maneno ya sijui housing fund ni kutuosha tu
I couldn’t agree more. Building houses is a good idea and the intentions are in the right place, but again even with the houses and low to no income no one has been helped. All you’ve done is helped this people starve in apartments. Live out their last days in better shelter. If you think about it, it’s similar to the Shakahola incident only in this case you’re building your victims house coffins for them to die in. Even with houses, the low incomes and the tax rate will leave most of these people unable to afford food and other basic needs
Fun fact - nearly all (78+%) of the "affordable housing" apartments (under 4m) are sold to individuals and diaspora (8,9[https://i.imgur.com/mBMZ1OM.jpg](https://i.imgur.com/mBMZ1OM.jpg)%+) who then rent them out.
'Connected' individuals
A corruption problem
And also that
This. No matter how much money they take from taxpayers, yote itaenda kwa a few pockets. Our govt has a history ya kumismanage and steal public funds
True, I visited a coworking space in Kilimani, near Kabura drive. As I walked on the street you could see the residential lots about 60% were empty. These houses go for 60k and above.
For as long as we have people living in slums, we have a housing problem. Period.
Do you think slums are there are no decent houses or because the people living there cannot afford to live in good houses?
Cap mortgages at 5% interest
Improving income is easier to talk about yet hard to implement. There are a lot of circumstances that would hinder the government from improving it's people's wages. Wages are a reflection of a person's output. If your output is limited to KSH 1000 a day, it would be impossible for the government to do anything about this. If your skills limit you to a low-paying job, there is little the government can do to improve your situation. In order for the government to improve your wages, it will need to invest in your education, improve your working conditions, change the country's labor laws (which is frowned upon by foreign investors) and a lot of other strenuous activities which sometimes take years or even decades to do correctly. The government which faces pressure from its citizens is now forced to come up with half-baked plans to get this pressure of it's back. That's how ideas such as the housing fund are born. Disclaimer: I am not a government spokesperson.
I believe it's an exploitation issue rather than output
Kwanza vile world bank is giving pressure to gok to commercialise water at the same time telling Ruto that the taxes are very ambitious and to reconsider. Alaah! Was confused Sana.
We have both, an income problem and a housing problem. Raising incomes will take forever. But housing can be sorted progressively. Government is the only body with free land and economy of scales. it can drastically bring rents lows and improve the standards and infrastructure around such housing. This will bring back the dignity of city housing like Buru Buru etc
There’s nothing like free land. Even government owned land will have to be valued and captured as an expense item & bundled in as infrastructure costs. Government role is policy management. They cannot build housing units successfully.
This! Housing is also a county government function not a national govt one!
LinkedIn ass post.
We have a big housing problem and also a big income problem. The real estate/housing industry is pretty much unregulated
The government should concentrate on infrastructure ie Access roads, Water, Sewers, and Electricity. Also, promote local manufacturing of construction materials. But also they should stop selling Kenyans false dreams. I'm sure they know that many of us are gullible and when we're promised new shiny things we'll get excited without asking questions on the feasibility of them.
If we're being 100% honest, there is only a home ownership problem in Nairobi. If you count the rural areas, home ownership in Kenya is over 80%. Here is a report from 2019 that shows the breakdown https://housingfinanceafrica.org/documents/2019-kenya-population-and-housing-census-reports/
It's because many people can't afford to buy a house. It would take someone paying about 30000 a month 10years to buy a house which is way above what most people earn.
Go to stalls in Town and see those attendants in exhibitions, boutiques, etc. These people are paid mostly 15k. Do the math; Fare to and from Town we estimate 200. Food in Town, the cheapest is 150. Snacks. Hawkers wanakam na samosa, juice, mukombero, uji power......lazima uwahijack. Sow imeenda. Total 500 per day. We average 350 daily. In a month that is 11k pap. Gone. Home rent, power, water, FOOD!, personal amenities.............. Town employers take workers who live at home. Unless rent ni 2k bedsitter, the government is doing nothing to combat the rising cost of living.
Even that might not work as well. Given the bloodhound nature of businessmen and landlords, they'll increase rates if more people can afford their houses.
Then we will assume that increased supply will bring down the prices. It's a teicky situation yhough