Headlines

Top 8 Things You Must Know About The Affordable Housing Regulations Of 2024

BY Soko Directory Team · April 22, 2024 10:04 am

The Affordable Housing Regulations, 2024 were published for public participation by the State Department for Housing and Urban Development under the framework of the Affordable Housing Act, 2024 outlining crucial guidelines for the development, allocation, and management of affordable housing units.

These regulations aim to provide guidance and establish procedures for the implementation of affordable housing initiatives in Kenya.

Key highlights from the regulations include:

Exemption regulations

Individuals or income classes can be exempted from the Levy under specific conditions like pension income, medical reimbursements, insurance compensation, or income tax exemptions under an Act of Parliament.

Exemption requests must be made in writing to the Cabinet Secretary with reasons specified and accompanied by a tax clearance certificate. An exemption issued is valid for the period and extent specified in the notice.

The Cabinet Secretary may recommend the revocation of an exemption if certain conditions are met, such as disqualification or omission of material information during the application process.

Allocation regulations

A person eligible for allocation must be a Kenyan citizen, above 18 years, and not previously allocated an affordable housing unit.

An application for allocation must be made as per the Affordable Housing Board’s specified manner and accompanied by required documents like proof of identification, income, deposit, passport-size photo, and list of beneficiaries of the applicant.

The deposit payable by an eligible person for an affordable housing unit allocation is set at 10.0% of the sale price. Individuals unable to raise the required deposit can apply for deposit assistance if their monthly income is below Kshs 20,000 and the estimated monthly repayment is less than 30.0% of their income.

Any funds provided as deposit aid will be reimbursed without incurring any interest or administrative charges. Upon receipt of an application, the Board will decide and notify the applicant of its decision within a specified timeframe.

Changing or Reallocation of a Unit

A person can apply for a change of an affordable housing unit if they meet specified allocation criteria, surrender the current unit in good condition, and have paid all service charges and levies.

The Board will decide upon receiving the application and notify the applicant of its decision. If the application is approved, the Board will allocate an appropriate affordable housing unit to the applicant and transfer all payments made to the new unit’s account.

If a person fails to pay for four consecutive months, the Board can take possession of the unit, reallocate it to another eligible person, change the unit to a lower value one, or enter a restructuring arrangement with the defaulter.

The Board may change a unit to a lower value one if the defaulter meets the criteria for the lower value unit and the payments made would cover the purchase price of the lower value unit. The interest rate for a loan issued under the Act should not exceed 0% per annum on a reducing balance basis.

Developing Institutional Housing

A public institution can develop institutional housing if it proves the need for it, has available land, and has management systems in place. The institution must apply in writing to the Board for approval, accompanied by necessary decisions or resolutions.

The Board will review the application, decide, and notify the applicant of its decision. If approved, the Board will include the housing in its annual investment program and agree with the institution. In case of rejection, the Board will inform the applicant of reasons for the decision.

The Board will engage an implementing agency listed in the First Schedule of the Act for the design, development, and maintenance of approved institutional housing units,

Financing Regulations

An institution or mortgage scheme must apply in writing to the Board for approval to provide financing for off-take. The application should include various documents like a copy of the certificate of incorporation, valid license, and tax compliance certificates.

The interest rate or administration fee charged by an approved institution or mortgage scheme for financing should not exceed 9.0% per annum. This rate or fee is determined based on the typology and dimensions of the affordable housing units relative to the incomes of the individual applicants.

Institutions or mortgage schemes eligible to enter into financing agreements must satisfy creditworthiness, tax compliance, and other conditions set by the Board. The Board decides on applications within fourteen days and notifies the applicant of its decision.

Public Participation Guidelines

When conducting public participation, the Board must issue a notice at least 14 days in advance to the public and interested parties. The notice should specify the period, date, time, and purpose of the participation.

The Board is required to publish the notice in two newspapers of nationwide circulation and also on a radio station with wide coverage within the County. This ensures transparency and broad dissemination of information regarding the public participation process.

Rural Affordable Housing Units

An application for a rural affordable housing unit must be made in writing to the Board. The applicant needs to have an operational voluntary savings account with the Fund to be considered. The amount applied for must not exceed Kshs 4.0 mn. The applicant must prove their ability to repay the amount applied for.

Voluntary savings can be withdrawn from a voluntary savings account upon verification, where the administrator of the Fund refunds the savings and any accrued interest to the person and closes their savings account. This process is in accordance with section 52(4)(a) of the Act.

Disposal and Sale of Affordable Housing Unit

The purchaser cannot sell the affordable housing unit until 8 years after completing payment of the agreed price. This restriction does not apply if the unit was purchased through a mortgage. If the owner wants to sell the unit after meeting the 8-year requirement, they must seek consent from the Board and follow the Act’s guidelines.

About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory