🇰🇪
Centre for Affordable Housing Finance in Africa
  • LEGAL, POLICY AND INSTITUTIONAL REVIEW OF THE AFFORDABLE HOUSING SECTOR IN KENYA
  • QUICK LINKS TO SEARCH FOR THE SOURCE REGULATORY DOCUMENTS
  • BILLS SCHEDULE
  • NEW DEVELOPMENTS
  • PLEASE SHARE YOUR COMMENTS & FEEDBACK
  • 1. SUMMARY of RECOMMENDATIONS
    • High Level Findings / Recommendations
    • Overall Policy & Regulatory Framework Recommendations
    • Land assembly, land acquisition, title, and registration of land tenure
    • Physical Planning
    • Construction and Maintenance
    • Financing (investment, rental, taxation)
  • 2. HOUSING VALUE CHAIN
    • i. Land assembly, Land Acquisition, Title and Registration of Land Tenure
    • ii. Physical Planning
    • iii. Construction and Maintenance
    • iv. Financing (investment, rental, taxation)
  • 3. INSTITUTIONS INVOLVED IN REGULATION OF HOUSING
    • i. Key National Government Ministries
    • ii. Secondary National Government Ministries
    • iii. County Governments
    • iv. Judiciary
    • v. Professional regulatory and advocacy bodies
  • 4. OVERARCHING POLICIES AND CONTEXT
  • 5. LAND ASSEMBLY, LAND ACQUISITION, TITLE AND REGISTRATION OF TENURE
  • 6. PHYSICAL PLANNING
  • 7. CONSTRUCTION AND MAINTENANCE
  • 8. HOUSING INVESTMENT, FINANCE & TAXATION
    • 8.1 Capital Markets and Wholesale Finance (Equity and Debt)
    • 8.2 Retail Finance
    • 8.3 Financial regulation of rental markets
    • 8.4 Taxation
  • ANNEX A: LAWS / POLICIES / REGULATIONS GOVERNING THE BREADTH OF THE HOUSING VALUE CHAIN
    • 1. Constitution of Kenya 2010
    • 2. Housing Act, 1953 Cap 117 (Revised in 2012)
    • 3. Housing Bill, 2021
    • 4. Sessional Paper No. 3 of 2016 on National Housing Policy
    • 5. Affordable Housing Act 2024
    • 6. Draft Affordable Housing Regulations, 2024
    • 7. The Economic and Social Rights Bill 2022
  • ANNEX B: LAWS / POLICIES / REGULATIONS GOVERNING LAND ASSEMBLY / ACQUISITION / TITLE / TENURE
    • 1. Land Act, No. 6 of 2012
    • 2. Land Registration Act, No. 3 of 2012
    • 3. Idle Land Taxation Policy 2018
    • 4. Community Land Act. No. 27 of 2016
    • 5. Sessional Paper No. 3 of 2009, the National Land Policy
    • 6. National Land Commission Act, No. 5 of 2012
    • 7. National Land Commission (Investigation of Historical Land Injustices) Regulations, 2017
    • 8. National Land Commission (Amendment) Bill, 2023
    • 9. Land Control Act (Cap 302), 1967
    • 10. Land Control Bill, 2023
    • 11. Environment and Land Court Act No. 19 of 2011
    • 12. Survey Act No. 25 of 1961 (Cap 299)
    • 13. Land Registration (General) Regulations, 2017
    • 14. Land Registration (Registration Units) Order, 2017
    • 15. Sectional Properties Act, No. 21 of 2020
    • 16. Land (Amendment) Bill 2022
  • ANNEX C: LAWS / POLICIES / REGULATIONS GOVERNING PHYSICAL PLANNING
    • 1. Sessional Paper No. 1 of 2017 on National Land Use Policy
    • 2. National Land Use Policy Implementation Monitoring and Oversight Tool 2022
    • 3. Kenya National Spatial Plan (2015-2045)
    • 4. Physical and Land Use Planning Act, No. 13 of 2019
    • 5. Physical and Land use Planning (Planning fees), Regulation 2021
    • 6. County Spatial Planning Guidelines, 2018
    • 7. Nairobi City Development Ordinances and Zones Guidelines 2004
    • 8. Nairobi Integrated Urban Development Master Plan (2014-2030)
    • 9. Physical Planning Handbook 2008
    • 10. Sessional Paper No. 10 of 2014 on The National Environment Policy
    • 11. Urban Areas and Cities Act, No. 13 of 2011
    • 12. Physical Planners Registration Act, No. 3 of 1996
    • 13. Export Processing Zones Act, 1990 (Cap 517)
    • 14. Investment Promotion Act, No. 6 of 2004
    • 15. Special Economic Zones Act, No. 16 of 2015
    • 16. Nairobi City County Regularization of Development Act No. 3 of 2015
    • 17. Nairobi City County Community and Neighbourhood Associations Engagement No. 4 of 2016
    • 18. Sectional Properties Regulations, 2021
    • 19. Nairobi City County Development Control Policy
  • ANNEX D: LAWS GOVERNING CONSTRUCTION AND MAINTENANCE
    • 1.Local Government (Adoptive ByLaws) Building Order, 1968 and The Local Government (Adoptive By-Laws
    • 2. National Building Code, 2024
    • 3. National Construction Authority Act, No. 41 of 2011
    • 4. National Construction Authority Regulations, 2014
    • 5. NCA Code of Conduct for the Construction Industry, 2020
    • 6. National Construction Authority (Defects Liability) Regulations, 2020
    • 7. Standards Act, 1974 (Cap 496)
    • 8. Buy Kenya-Build Kenya Strategy 2017
    • 9. Sessional Paper No. 1 of 2013 National Building Maintenance Policy for Kenya
    • 10. National Risk Disaster Management Bill 2023
    • 11. Kenya National Climate Change Response Strategy 2010
    • 12. Sustainable Waste Management Act 2022
    • 13. Forest Conservation and Management Act, No. 34 of 2016
    • 14. Forests (Harvesting) Rules, 2009
    • 15. Public Health Act, 1921 (Cap 242)
    • 16. Public Health (Drainage and Latrine) Rules, 1948
    • 17. Mining Act, No. 12 of 2016
    • 18. Persons with Disabilities Act, No. 14 of 2003
    • 19. The Climate Change (Amendment) Act, 2023
    • 20. Water Act No. 43 of 2016
    • 21. Environmental Management and Coordination Act, No. 8 of 1999
    • 22. Environmental (Impact Assessment and Audit) Regulations, 2003
    • 23. Environmental Management and Co-ordination (Water Quality) Regulations, 2006
    • 24. Environmental Management and Coordination (Noise and Excessive Vibration Pollution) (Control) Re
    • 25. Energy Act No. 1 of 2019
    • 26. Proposed Climate Change (Green & Resilient Buildings) Regulations 2023
    • 27. The National Construction Authority (Amendment) Bill 2022
    • 28. The Water (Amendment) Bill, 2023
    • 29. Persons with Disabilities Bill, 2023
    • Case Law
  • ANNEX E: LAWS AND POLICIES RELATING TO PROFESSIONALS IN HOUSING
    • 1. Architect and Quantity Surveyor Act, 1933 (Cap 525)
    • 2. Architects and Quantity Surveyors By-Laws, 1959
    • 3. Competition Act, No. 12 of 2010
    • 4. Engineers Act, No. 43 of 2011
    • 5. Engineering Rules, 2019
    • 6. Engineers (Scale of Fees for Professional Engineering Services) Rules, 2022
    • 7. Engineering Technology Act, No. 23 of 2016
    • 8. Valuers Act, 1985 (Cap 532)
    • 9. The Construction Project Managers and Construction Managers Bill 2023
    • 10. The Real Estate Management Bill 2023
    • 11. The Physical and Land Use Planning (Outsourcing of Professional Services) Regulations, 2021
    • 12. The Valuers Bill, 2022
  • ANNEX F: LAWS GOVERNING FINANCING / RENTAL / TAXATION
    • 1. Retirement Benefits Act, No. 3 of 1997
    • 2. Building Societies Act, 1956 (Cap 489)
    • 3. Banking Act, 1989 (Cap 488)
    • 4. Capital Markets (Real Estate Investment Trusts) (Collective Investment Schemes) Regulations, 2013
    • 5. Central Bank of Kenya Act 1966 (Cap 491)
    • 6. Estate Agents Act, 1984 (Cap 533)
    • 7. Sacco Societies Act, No. 14 of 2008
    • 8. Sacco Societies (Deposit-Taking Sacco Business) Regulations 2010
    • 9. Sacco Societies (Non-Deposit Taking Business) Regulations 2020
    • 10. Sacco Societies (Amendment) Act, 2022
    • 11. Sacco Societies (Specified Non-Deposit Taking Business) (Levy) Order, 2023
    • 12. Cooperative Societies Act, No. 12 of 1997
    • 13. Employment Act, No. 11 of 2007
    • 14. Guarantee (House Purchase) Act, 1967 (Cap 462)
    • 15. Civil Servants (Housing Scheme Fund) Regulations, 2004
    • 16. Housing Scheme Fund Regulations, 2018 (Legal Notice No. 238 of 2018)
    • 17. Income Tax Act (Cap 470)
    • 18. Finance Act, No. 22 of 2022
    • 19. Public Finance Management Act, No. 18 of 2012
    • 20. Unclaimed Financial Assets Act, No. 40 of 2011
    • 21. Proceeds of Crime and Anti-Money Laundering Act, No. 9 of 2009
    • 22. Kenya Deposit Insurance Act, No. 10 of 2012
    • 23. Mortgages (Special Provisions) Act, 1968 (Cap 304)
    • 24. Auctioneers Act No. 5 of 1996
    • 25. Auctioneers Practice Rules 2009
    • 26. Auctioneer Rules, 1997
    • 27. Rent Restriction Act, 1959 (Cap 296)
    • 28. Stamp Duty Act, 1958 (Cap 480)
    • 29. Stamp Duty (Valuation of Immovable Property) Regulations 2020
    • 30. Value Added Tax Act, No. 35 of 2013
    • 31. Public Private Partnerships Act, No. 14 of 2021
    • 32. County Governments Act, No. 17 of 2012
    • 33. National Rating Act, 2024
    • 34. Distress for Rent Act, 1938 (Cap 293)
    • 35. Landlord and Tenant Bill, No. 3 of 2021
    • 36. The Cooperatives Bill, 2024
    • 37. The Central Bank of Kenya (Mortgage Refinance Companies) Regulations, 2019
    • 38. Finance Act No. 4 of 2023
    • 39. Tax Laws (Amendment) Act 2024
    • 40. Tax Procedures (Amendment) Act 2024
  • ANNEX G: OFF-PLAN HOUSING DEVELOPMENTS
  • ANNEX H: IN-DEPTH ANALYSIS ON HANGING REGULATIONS
    • 1. Housing Bill, 2021
    • 2. Landlord and Tenant Bill, No. 3 of 2021
    • 3. Retirement Benefits (Mortgage Loans) (Amendments) Regulations, 2020
    • 4. Housing Scheme Fund Regulations, 2018 (Legal Notice No. 238 of 2018)
    • 5. Housing Scheme Fund Regulations, 2018 (Legal Notice No. 238 of 2018)
    • 6. National Construction Authority (Defects Liability) Regulations, 2020
    • 7. The Finance Bill, 2024
    • 8. The Valuers Bill, 2022
  • The Basics
    • Spaces
    • Collections
    • The GitBook editor
    • Live edit and locked edits
    • Change requests
  • Publishing
    • Publishing your content
  • Tips and tricks
    • Speed up with quick find
  • Next steps
    • What next?
Powered by GitBook
On this page
  • Enact New / Draft Legislation
  • Review of Existing Legislation / Processes
  • Develop Regulations for Existing Legislation
  • Support Implementation of Existing Legislation
  • Other non-legislative recommendations

Was this helpful?

Export as PDF
  1. 1. SUMMARY of RECOMMENDATIONS

Financing (investment, rental, taxation)

PreviousConstruction and MaintenanceNext2. HOUSING VALUE CHAIN

Last updated 2 months ago

Was this helpful?

Enact New / Draft Legislation

  • - Consider the reintroduction of the bill into parliament and to fast-track its enactment. Furthermore, rethink the overall theme of rent control as a regulatory tool.

Review of Existing Legislation / Processes

  • Demand and supply-side tax incentives- Simplify access to the various tax incentives provided in law and guidelines

  • – Fast track adoption of the same.

  • Review the Retirement Benefits (Mortgage Loans) (Amendment) Regulations, 2020 - Noting that these Regulations were quashed by the High Court in (Judgement) due to a flawed legislation process characterised by lack of public participation; the impugned legislations should be re-introduced in parliament and the laid down legislative process followed including sufficient public participation and stakeholder engagement. Simplify processes for amending Trust Deeds and applications for transfer

  • Review / (Legal Notice No. 238 of 2018)- Promote an equitable regulation that encourages savings for housing

  • Reintroduce incentives for home ownership savings plans

  • Stamp Duty – Reintroduction of the stamp duty exemption for REITs on property purchases.

Develop Regulations for Existing Legislation

  • - Push for publication of regulations that will formally exempt subsidiaries of real estate investment trusts (REITs) from income tax to accord with section 20(1)(c) of the Income Tax Act.

  • Develop and apply standards for credit assessments of informal workers who are not salaried and have irregular income.

  • - Development of regulations to capture some gaps in the law governing the Guarantee Fund such as: documents needed by a member to lodge a claim; whether the compensation paid from the fund will take into account inflation arising as a result of protracted disputes before settlement/compensation; a gap on how to manage the funds in the Fund; create awareness on the Fund once established.

  • Adoption of the Affordable Housing Regulations 2024 to give effect to the Affordable Housing Act.

Support Implementation of Existing Legislation

  • Support greater refinancing of mortgages by KMRC by studying the blockages currently faced, and collecting and disseminating data on demand served and type of supply to understand market dynamics and affordability

  • Support implementation of tenant purchase schemes as an alternative to mortgages

Other non-legislative recommendations

  1. Adopt a holistic approach to the macroeconomic environment in dealing with public policy issues such as public debt/borrowing. For instance, the lack of construction financing from local banks is partly due to poor offtake and the ease of investing in government paper at attractive and lower-risk returns compared to lending to housing;

  2. Work to implement the various demand and supply side tax incentives provided for in law including but not limited to stamp duty exemption for 1st time home buyers, VAT exemption on construction inputs and corporate tax reduction for developers

  3. Implement the National Tax Policy 2023 to deal with the unpredictable and uncoordinated taxation environment;

  4. Create ring-fenced pools of funds from revenue sources like construction approval levies; the Unclaimed Financial Assets Authority funds etc. to invest into the housing value chain;

  5. Adopt mechanisms for alternative credit scoring to provide access to credit for the very large informal sector in Kenya;

  6. Provide incentives for investing in large portfolios of green and truly affordable rental housing as most of urban Kenya rents and in conjunction rethink or consider the place of laws which seek to impose rent controls as they may have the perverse and unintended effect of serving implicit subsidies randomly rather than to deserving tenants;

  7. Promote the use of pension assets as collateral that increases access to mortgages by pension members (adoption of 2009 amendments), reconsider taxation on the transfer of pension assets into housing and provide guidelines for allowing a mortgage to simultaneously withdraw pension funds into housing (to enable 2020 amendments); simplify processes for applying for usage;

  8. Support sharing of insights from portfolios of mortgages refinanced to KMRC, to enhance understanding of formal demand and supply;

  9. Provide indexation (inflation adjustment) and predictability of rates applied in Capital Gains Tax on real assets, to encourage investment in affordable housing;

  10. Provide incentives and legal recognition to small and local property developers who cannot deliver many housing units to enable them to scale or build capacity;

  11. Consider doing away with the setting of minimum professional fees (scale) for relevant professionals such as lawyers, architects and engineers, which is arguably anti-competitive and increases house prices;

  12. Prepare and publish enforcement regulations to enable subsidiaries of Real Estate Investment Trusts (REITS) to benefit from tax exemption in the Income Tax Act; consider allowing structuring of REITS as companies or partnerships;

  13. Operationalize the SACCO’s Deposit Guarantee Fund and deal with the lack of specificity in the Sacco Societies Act (and no regulations) on documents needed to lodge a compensation claim; whether inflation is factored in compensation; and management of money/funds in the Fund as well as non-operationalization of the Central Liquidity Fund for the SACCO sub-sector.

  14. Fast-tracking the implementation of the Risk Sharing Facility currently being explored by KMRC. The Risk Sharing Facility is a partial mortgage guarantee providing partial credit default loss protection to primary lenders allowing them to offer home loans to individuals with irregular income.

  15. With respect to REITs, the Capital Markets Authority should consider the review of the minimum threshold for assets at Kshs 300 million and Kshs 100million for I-REITs and D-REITs respectively to increase participation of SMEs and start-ups in REITS.

  16. Simplification of the approval process for registration of a REIT. This will improve efficiency and incentivise investment in REITs.

- Support the implementation and sharing of earnings

- Set up the Central Liquidity Fund in the Sacco subsector to promote inter-borrowing among Saccos, deal with potential illiquidity challenges and become part of the national payment system.

(Amended through Finance Act 2022) - Promote utilisation of penalty waiver to increase surrendering of unclaimed assets to the Authority. Promote reunification of assets with the beneficiaries by creating awareness and reducing the complexities.

- Understand low disbursement (1,321 loans over more than 15 years) and demand segmentation

Landlord and Tenant Bill 2021
Draft Affordable Housing Regulations 2024
Republic v National Assembly & 2 Others; Okoiti (Exparte); Retirement Benefits Authority (RBA) & 2 others (Interested Parties) (Judicial Review) (23 November 2022)
Housing Act 1953
Housing Scheme Fund Regulations, 2018
Income Tax Act
Sacco Societies Act
Public Private Partnerships Act 2021
Sacco Societies Act
Unclaimed Financial Assets Act 2011
Civil Servants (Housing Scheme Fund) Regulations, 2004