The National Treasury has today launched the Kenya Mortgage Refinance Company (KMRC). KMRC which is basically a liquidity facility has been established with the purpose of addressing the financing challenges and also unlocking liquidity for affordable housing which is part of the government’s Big 4 agenda.
KMRC was incorporated in April 2018 as a Limited liability company under the Companies Act 2015. It will serve the purpose of providing secure long-term funding to primary mortgage lenders (Banks & Saccos) in order to increase availability and affordability of housing loans to Kenyans. The company will be regulated by the Central Bank of Kenya as a non-deposit taking financial institution, with the Capital Markets Authority (CMA) providing oversight over its bond issuance operations.
KMRC has been set up as a public private partnership arrangement whereby private sector owns 80% while the government owns 20%. This structure is expected to attract private sector funding to support affordable housing. The company recently closed a successful capital mobilization drive which resulted in eight (8) commercial banks, one (1) micro finance bank, and eleven (11) SACCO’s becoming shareholders of KMRC. In addition, two development finance institutions (Shelter Afrique & IFC) are keen to invest equity in KMRC and are currently finalizing their due diligence processes.
The company has already started to attract funding with the World Bank approving a $250 million International Bank for Reconstruction and Development (IBRD) credit to support the Government Affordable Housing program in April. On May 15, this year, the African Development Bank (AfDB) approved a further $100 million to support the program. These funds will be applied towards enhancing access to affordable housing finance, strengthening KMRC balance sheet, and providing requisite credit enhancements to support KMRC issuance of bonds.
KMRC is expected to extend long term loans at fixed rates to financial institutions secured against mortgages so that they can extend the maturity of their housing loans to their customers, hence increasing affordability. It will also enable Kenyans to access longer term housing loans and enjoy a wide choice of competitively priced mortgage offering in the market due to increased competition and product innovation amongst banks and other financial institutions. Eventually, this is expected to lead to an increase in home ownership and growth in household assets
Local developer Weston Homes has launched a £44m Watford Cross scheme.
Situated on St Albans Road, Watford Cross comprises 115 private one, two and three-bedroom apartments, with select plots providing private balconies and terraces.
The 108,164 sq ft development is set to offer a mixture of residential homes alongside commercial space.
Bob Weston, chairman at Weston Homes, said: “Residents at Watford Cross will have access to transport routes into London with over 140 trains a day reaching Euston in 16 minutes, whilst still benefitting from homes in the leafy suburbs of Hertfordshire.
“With the price of commuting a concern for most London based workers, residents at Watford Cross could be looking at a substantial saving.”
Comprising two multi-level buildings, named Meriden and Orchard, Watford Cross is set to provide homes with the likes of communal gardens.
Watford Cross is located in the heart of Watford, which has reportedly seen significant development of its high street with a £2m investment scheme. Residents will also be within close distance to intu Watford.
Kenya is considering putting in place tax incentives that will spur the real estate sector to boost the supply of affordable houses, an official said on Tuesday.
“We plan to put together an aggressive tax package in the finance bill later this year that will incentivize the construction of low-cost houses,” Charles Hinga, principal secretary in the Ministry of Transport, Infrastructure Housing, Urban Development and Public Works, told a housing conference in Nairobi.
Most of the houses built in Kenya are targeted at middle- and high-income segment of the population, Hinga said.
Under an affordable housing program (AHP), the east African nation plans to build 500,000 low-cost houses by 2022.
Hinga said the government will use private-sector funding to facilitate provision of affordable homes to Kenyans.
In its Budget Policy Statement presented to parliament last month, the national treasury allocated about 11 billion shillings (110 million U.S. dollars) to the AHP. Enditem
Commercial Bank of Africa (CBA) held its fifth Economic Forum to take stock of the Affordable Housing pillar amid persistent structural challenges in the housing sector. The Forum was graced by the Principal Secretary, State Department of Housing and Urban Development Charles Hinga who was also the keynote speaker.
Also in attendance was a panel of experts from the public and private sector, who provided deep insights and understanding on various housing sector issues.
The forum touched on development within the industry such as tenant purchase scheme (TPS), joint ventures, property purchase overseas, offshore funding for development, the housing bubble, and the taxation within the industry.
“Every Kenyan has a right to decent and adequate housing with access to minimum basic services. I think the conversation that people have run away from is how we were expected to fund those rights and freedoms.
There has got to be some collective responsibility as to how we are going to fund these rights and freedoms that we have given ourselves. And so, in that process we agonized about funding model because not only was the State Department given a very ambitious program to implement, we were also not given money,” said PS Charles Hinga.
Speaking at the event, CBA Kenya Chief Executive Officer Jeremy Ngunze said the bank is keen on sparking conversation and economic thoughts on important development agendas and financial matters in the country.
“We are indeed excited to gather here today to take stock of the journey so far for the affordable housing pillar. Housing is one of the largest household expenditures and a major financial burden for many low-income households. Its affordability, therefore, remains central to the welfare of many families and our society at large,” said Mr. Ngunze.
The National Government’s Affordable Housing Program (AHP) differs from other housing schemes in Kenya as it is the first comprehensive program in which the government of Kenya seeks to use private sector funding to facilitate the provision of homes to Kenyans in the lower and middle-income brackets.
In the National Treasury Kshs2.8 trillion 2019/2020, Budget Estimates presented to Parliament last month, in the Budget Policy Statement, Kshs10.5 billion is to be allocated towards the Affordable Housing Initiative.
This is a 61.5% increase from the Kshs6.5 billion allocated in the 2018/2019 financial year budget, which shows the national government’s commitment towards delivering affordable housing.
Mr. Ngunze added, “As CBA, we look forward to partnering with the government and the private sector on this journey. We are particularly excited about the opportunity to collaborate with the Kenya Mortgage Refinancing Company in bringing down the cost of mortgages.”
CBA Forum was launched in January 2018 and is held thrice a year with a specific topic each time moderated by a CBA staff. The forum held earlier this year focused on Achieving Growth amid fiscal imbalances: the real effects of Kenya’s debt trajectory. Other previous forums focused on Kenya’s tax structure agriculture and the manufacturing industry.
Today’s panelist included Mr. Andrew Saisi (Managing Director, National Housing Corporation), Mr. Gikonyo Gitonga (Board Director, Kenya Property Developers Association and Managing Director, Axis Real Estate Ltd), Ms. Mugure Njendu (President, Architectural Association of Kenya), Mr. Kwame Owino (CEO, Institute of Economic Affairs), Mr. Johnstone Ol’teita (Interim CEO, Kenya Mortgage Refinancing Company), and Mr. Oscar Sambo (Corporate Relationship Manager, CBA).
Family Homes Funds (FHF) and the Federal Mortgage Bank are two prominent bodies in the Nigerian housing development sector. They both carry out financial interventions in the provision of houses, but their roles are bordering on complementary but distinct areas.
The Family Homes Fund Limited which was inaugurated in 2018 is a partnership between the Federal Ministry of Finance and the Nigerian Sovereign Investment Authority to address the country’s housing deficit. It has a target of supporting the provision of at least 500, 000 houses targeted at people on low income by 2023.
The Federal Mortgage Bank (FMB) on the other hand was established in 1956, known then as the Nigerian Building Society (NBS), a joint venture of the Commonwealth Development Corporation and the Federal and Eastern Governments of Nigeria to supply the mortgage markets with sustainable liquidity for the advancement of home ownership among Nigerians anchored on mortgage financing.
One of the differences between Family Homes Funds and FMB is that Family Homes Funds has a narrower mandate when it comes to the kind of housing it can fund in comparison with the Federal Mortgage Bank.
While Family Homes Funds focus more on low income earners, the Federal Mortgage Bank handles low and medium cost housing for all categories.
The FMB has a broader mandate because Family Homes Funds is more of a social housing initiative with the objective to support and facilitate housing for people who are on the lower income. Family Homes Funds have defined the lower income to be people who are earning N100, 000 per month and below.
Another major distinction is the fact Family Homes Funds is a fund, which unlike FMB, enables them to finance more projects.
For example, construction financing is one of FHF major activities. For the FMB, it is outside of their purview. FMB are doing demand while FHF are doing supply. That is where the collaboration can come in.
Also, while the FMB is a permanently established institution, the FHF is a tenured fund initiative.
The institutions like FHF, FMBN, and NMRC are the drivers of the Nigeria Affordable Housing Sector working together as a team and must be supported by all.
Unemployment and high level poverty are two major obstacles to getting housing finance in Nigeria. Poverty level in the country is high despite the country’s apparent wealth from petro-dollar. This is made worse by rising unemployment figures in excess of 20 million.
Africa is regarded as a poor continent and, despite its relative large population size, the continent is economically underweight with an estimated €113 billion gross asset value of real estate which represents 1 percent of the world’s total value.
A World Bank report once estimated that only 3 percent of the African population, about 15 percent of the world’s 7.3 billion population has income viable enough to qualify them for a mortgage. This explains the need for initiatives that can lead to viable income to qualify people for mortgage.
That estimate simply underscores the level of poverty in the black continent where some households live below poverty line. Home ownership in most parts of Africa remains a luxury because houses are literally unavailable and where they are, they are inaccessible and unaffordable.
In Nigeria, the continent’s most populous nation and one touted as its largest economy, it is estimated that 70 percent of country’s over 180 million people lives below poverty line, which is the reason for the low home ownership level in the country that is a little above 10 percent.
It is also estimated that about 90 percent of houses in Nigeria are self-built with less than 5 percent of them in possession of formal title registration. Because of this, mortgage loans and advances in the country stand at 0.5 percent to GDP in contrast to 30-40 percent in emerging economies and 60-80 percent in advanced economies.
Adigwe Arinze of Homebase Mortgage Bank attributes this to hostile business environment and lack of structure which hitherto existed in the mortgage market now being addressed by the Uniform Underwriting Standard championed by the Nigerian Mortgage Refinance Company (NMRC).
There are other obstacles to mortgage finance that include dearth of long-term funds, absence of a viable secondary mortgage market, inadequate branch network of Primary Mortgage Banks (PMBs), among others which means that a lot still needs to be done to grow housing finance in the country.
The growth of housing finance in Nigeria, according to Guillaume Roux of Lafarge Africa Group, needs the support of the small microfinance institutions in their efforts to expand and diversify their offering, adding that the growth would also come from the large commercial banks which are becoming more and more attracted by the low to medium income segment of the housing market.
Roux’s argument is that both the microfinance institutions and commercial banks need support to develop housing products and build up projects which would positively affect the low income segment, urging organisations and institutions to help one another to achieve these goals.
Nigeria needs to grow housing finance through such initiatives as ‘Housing Microfinance Academy’ which Lafarge launched in 2014 in partnership with International Finance Corporation (IFC) and African Finance Development (AFD).
Training sessions need to be organised to promote housing microfinance and develop the capabilities of banks in that field. Roux sees governments as critical stakeholders required to create the regulatory framework that would make the housing market work for the low income segment, noting that the setting up of NMRC and the institutions for housing finance, including microfinance and mass housing financing, with the support of the World Bank, is a good example of a platform which would facilitate the growth of initiatives there.
“This will progressively enable a decrease in interest rates in the mortgage industry. However, more support from the government is needed to lower the interest rates for the funding of affordable housing and social housing projects. Today, they represent a cost of up to 30 to 40 percent of the construction, which is borne by the end user”, Roux said.
It needs to be stated that there is a need to improve affordability of construction itself in which case social housing projects should be setting the stage by showcasing new construction techniques that could improve quality, deliver faster and reduce the cost of construction.
African governments need to creatively innovate in order to improve the living standard of their people through the provision of affordable and mortgage-backed housing programmes. Also, the mortgage system has to be improved to make it not only accessible but also affordable.
In May 2017, Mayor Sadiq Khan launched London Living Rent, an affordable housing scheme to help middle-income Londoners onto the property ladder. But two years on, are any properties on the market?
Promising below-market rents and the chance to buy your rental home, London Living Rent is an optimistic project that aims to tackle rising house prices.
But you may have to wait a little longer to actually benefit. Currently, the Mayor of London’s ‘Homes for Londoners’ search portal – a hub for affordable housing in the city – has just one listing for properties available through London Living Rent: a yet-to-be-built development in Merton.
So, is London Living Rent a realistic option? And what are the alternatives for Londoners who can’t afford to buy in the expensive capital?
What is Rent to Buy?
London Living Rent shares many features with Rent to Buy – a government initiative aimed at helping renters become homeowners.
Rent to Buy schemes offer lower-than-market rents, and give tenants the chance to buy their rental home, or a share in it, at a later date.
The theory is that lower rental payments will help tenants save for a deposit, which many struggle with in the pricey London property market.
The scheme is run by local Help to Buy agents, which let users search for Rent to Buy properties in their region.
Through our own searches, we could only find a small number of property listings across England (where Rent to Buy operates). Most of them were in the North East and Yorkshire and the Humber.
London Living Rent: how it works
With skyrocketing rents and the most expensive property prices in the country, London Living Rent is a natural fit for the city.
To be eligible for the scheme, you must:
be currently renting in London
have a household income of £60,000 or under
be unable to buy a home (including through shared ownership) in your area.
Rents are set at one-third of each local authority’s average earnings, based on ONS data, adjusted for the number of bedrooms. According to City Hall, this is a ‘significant discount to the market level rent’ in most boroughs.
While many London renters in this income bracket will be able to buy shared ownership properties, London Living Rent gives a leg up to those who can’t afford them.
Yet while the scheme is currently active, the London Living Rent website predicts the majority of homes won’t be available until 2021.
According to the Mayor of London’s Homes for Londoners search portal, only one development in Merton is currently offering it. And this is listed as ‘coming soon’.
Wandle, the housing association behind the development, told Which? that the complex will include eight homes – seven of which would be available through London Living Rent (the other will be sold under shared ownership). They expect building work to be completed in June.
More London Living Rent homes are being built
Though scarce at the moment, the Mayor of London’s office assured Which? that more new-build London Living Rent homes are on the way.
This was backed up by a number of housing associations we spoke to.
A spokesperson for the Mayor of London told us: ‘London Living Rent is a new sort of affordable home that was introduced through the Mayor’s funding programme.
‘The first homes started to be built two years ago, and in that first year 569 new London Living Rent homes got underway. These new homes and those in following years take some time to be completed and let to tenants, and Sadiq has always been honest that making a difference will take time.’
While the new homes will no doubt make a difference, two housing associations who previously completed London Living Rent projects told Which? that demand far outstripped supply.
Lukman Ahmed, PRS and commercial director at L&Q, told us that 1,000 people applied for the 243 homes they currently let through the scheme. Ahmed also said that L&Q has around 300 more units earmarked for London Living Rent in the future.
David Gooch, executive director of development at Network Homes, told us it had over 2,000 applicants for the 23 London Living Rent properties it launched in Harrow in 2018, and that it is in the final stages of completing some more in Hounslow.
It seems then, that London Living Rent is still picking up steam. But far more homes will need to be completed to cater for everyone who applies.
If you think the scheme is for you, keep an eye on the Homes for Londoners search portal.
What are the alternatives for affordable housing in London?
Fortunately for those who can’t take advantage of London Living Rent homes right now, there are other options for affordable housing in the city.
London Help to Buy
London Help to Buy is a government scheme that lets homebuyers in Greater London apply for an equity loan of up to 40% of a property’s value.
It’s open to first-time buyers looking to move into a new-build property worth less than £600,000. You’ll need to save 5% of the deposit yourself.
The equity loan enables you to take out a mortgage at 55% of the property value, potentially enabling you to borrow more at a lower interest rate.
However, keep in mind that after five years, you’ll need to either pay back the equity loan, or start paying interest.
While London Living Rent homes may be few and far between, Homes for Londoners lists hundreds of properties available under shared ownership across the city.
With shared ownership, you buy between 25% and 75% of a property from a housing association and pay rent of up to 3% on the rest.
To buy your share, you can apply for a mortgage.
Currently, you can buy a 25% share in a one-bedroom apartment in Hackney for £107,500. If you took out a 95% mortgage to cover the rest, you’d need £5,375 in deposit.
In contrast, a 95% mortgage to cover the full price would require a deposit of £21,500.
That being said, it can be difficult to get a shared ownership mortgage. And you’ll have to make sure you can afford to pay the combined total of rent and monthly mortgage repayments, as well as any service charges
London Affordable Rent
Designed for low-income households, London Affordable Rent homes are let at no more than 80% of local market rents, with service charges included. The Greater London Authority (GLA) benchmarks the maximum level these rents can be.
The weekly rent maximums for this year can be found in this table:
Bedsit and one bedroom
Six or more bedrooms
Source: London Assembly
Since London Affordable Rent homes are a kind of social housing, you’ll have to apply through your local borough.
Social and council housing
If you’re unable to afford anywhere to live, you may qualify for social housing.
The mayor recently revealed that in 2018-19, City Hall started building the highest number of London council homes in 34 years, and more homes than ever before at social rent levels.
However, you’ll have to put your name on your local borough’s waiting list to apply. On top of this, many boroughs have strict eligibility criteria to decide how to allocate these homes.
After you’ve lived in the property for a number of years, you may become eligible for Right to Buy, allowing you to purchase your home.
Get personalised advice on saving for your first home
If you’re looking to buy an affordable property in London, or anywhere else in the country, an independent mortgage broker can help you get the best mortgage for your circumstances.
They will also be able to advise you while you’re saving, and point you in the direction of schemes that could help.
The world record holder in the 100 metres, 200 metres, 4 × 100 metres relay race and 3 times Olympic Usain Bolt is now a real estate investor!. The sports celebrity confirmed his association with a Half-Way Tree project on Instagram, saying it was one of several to come, but gave no more details.
Dressed in construction gear, Usain Bolt posted a picture of himself standing in front of the construction site.
“You heard it here first. First of many!! #NoLimits,” he cationed the photo.
It’s rumoured that the development, which is being managed by Gary Matalon’s and Richard Levee’s company, Neustone Limited, will be leased to business process outsourcing clients on completion, but that, too, is to be confirmed.
While Usain Bolt appears to be confirming that he is an investor in the property, it’s still unclear whether he is a majority or minority owner and what stake, if any, his development partners hold.
Usain Bolt and Gary Matalon are long-time business partners through KLE Group Limited, the listed company that oversees a casual-dining outfit to which Bolt has licensed his name Usain Bolt’s Tracks & Records, or UBTR, which currently has outlets in Jamaica and recently London.
The retired track star’s executive manager, Nugent Walker, declined to comment on the real estate project.
“Thanks for the interest in Usain,” he said on Thursday.
“Sorry. At this time, Usain is not officially commenting on this project. However, when he is, I will be sure to share with you all the information.”
Usain Bolt’s net worth is unknown, but the world’s fastest man is reported to be among the highest earning athletes of all time.
Family Homes Funds, a Federal Government housing initiative intended to support the development of up to 500,000 Homes targeted at people on low income over the next 5 years has stated that the fund will soon begin a 4,700 housing project in North-eastern state of Borno.
This was revealed by the Managing Director of Family Homes Funds (FHF), Mr. Femi Adewole while speaking exclusively with Housing News.
He said, ‘’In Borno state, we are just about to sign an agreement with the state. We have been there for a housing programme which is in two parts. There is 1700 homes that is targeted at civil servants, mostly middle and low income civil servants.
‘’A lot of those homes will be in Maiduguri and some of the principal cities. The state is providing the land and the bulk infrastructure to the site. That is already far advanced because all of the sites have been identified, surveyed and the drawings and bills have been prepared.’’
According to him, the Fund will get the board approval for the project sometime early in June 2019 and commence work before the end of same June.
The project which he said is a direct partnership with the state will include a second aspect focused on Internally Displaced Persons (IDPs).
‘’That will be 3000 units. They are small houses built in the outline areas, not necessarily in Maiduguri, but those villages that had been ravaged by the insurgents.
‘’But it is not new. The state has already produced quite a number but what most people are not aware of is the hundreds of thousands of Nigerians who have been displaced by Boko Haram who are still living in temporary refugee camps for 3 to 5 years. So the government has a programme of returning them back to their villages which have been liberated. The idea is that we will be joining the government efforts to finance those homes,’’ he added.