NAIROBI, Aug. 8 (Xinhua) -- Kenya is considering introducing tax incentives for property developers to reduce the housing deficit, the construction regulator said Wednesday.
Maurice Akech, acting executive director of the National Construction Authority (NCA), told a construction forum in Nairobi that the country currently has a deficit of 2 million housing units leading to the development of informal settlements.
"The government is considering amending tax laws so as to reduce corporate tax from 30 percent for property developers who construct large quantity of houses for low-income segment in order to address the growing housing deficit," Akech said.
He said the housing deficit has been increasing every year as the real estate sector is facing hurdles in the construction of houses.
He identified the high cost of land and limited access to credit for property developers as some of the challenges facing the sector.
NCA said the most ideal way for Kenyans to improve access to decent housing is through a robust mortgage industry as only few individuals are able to pay for houses without using credit.
According to the Central Bank of Kenya, the country has approximately 25,000 mortgages.
He noted that the interest rate cap that was put in place in 2016 has also reduced the availability of long-term finance instruments such as mortgages to consumers.
In order to increase the supply of finance for purchasing houses, the government is establishing the Kenya Mortgage Refinance Corporation.
The construction regulator said that only 25 percent of urban residents reside in their own houses, as the cost of houses is beyond reach of most of the population.
Charles Hinga Mwaura, Principal Secretary in the Ministry of Transport, Housing and Urban Development, said the government is rolling out a number of initiatives to boost the housing sector.
Mwaura said the National Housing Development Fund will be the bulk housing aggregator and off taker of houses built under the affordable housing scheme.
"The fund will provide incentives for the real estate sector to construct low cost housing units by ensuring there is a guaranteed market for houses built," he added.
He revealed that the government is also developing an online housing demand portal which will mitigate developer market risk and significantly boost the supply of housing units at scale, eventually lowering developer costs.
