Housing plan to drive further pay squeeze
Workers across Kenya are set to see a further cut on their take home when the government strengthens Housing Fund in a move fashioned to aid more people to own homes. Employers will also be expected to contribute to the fund with an amount equal to what the employee is paying.
President William Ruto has said Kenyans should prepare to start contributing three percent of their income to kick-start their journey of owning a house. His statement, however, was short on the details on how the thousands of workers making the contributions will access the houses.
“Every employee who contributes three percent, their employer will also contribute three percent to the Housing kitty,” he explained during official opening of Friends Church (Quakers) Donholm, Nairobi.
Plan to effect Housing Fund contributions by all employees and their employers come just two months after employers were required to immediately rollout enhanced contributions to the National Social Security Fund in line with NSSF Act 2013.
“In just two months we have doubled the amount of money that we are saving as a country,” the President said in reference to the enhanced NSSF scheme.
The Act, which was effected after a seven-year wait, pushed up salaried employees’ monthly savings to Kes600 from Kes200 for the lowest earner and from Kes320 to Kes1,080 for top earners under a graduated scale.
Dr Ruto said government will lead by example and ensure civil servants benefit from the housing programme even as the Kenya Kwanza administration accelerates the development of houses across the country.
At the moment, Kenya is grappling with an annual housing demand of 250,000 units yet the industry is only supplying 50,000 units, leaving a deficit of 200,000 houses.
A number of challenges including costly land, high cost of construction, high cost of stamp duty, legal fees as well as graft practices under veneer of government bureacracy leaves properties out of reach of many buyers.
Potential home buyers have to deal with limited access to long-term affordable finance due to high interest rates making owning a house the luxury of just a few.
