Employees to contribute to Govt housing fund
The National Treasury has announced plans to set up a fund to raise capital to finance the construction of social housing units across the country.
The envisioned National Social Housing Development Fund will finance the construction of low cost houses, as the housing sector remains a key development pillar for the government.
Treasury cabinet secretary Henry Rotich said the move would ease pressure on the National Housing Corporation (NHC) to focus on mobilizing resources to fund other housing projects.
To finance the new body, the Treasury will make changes to the employment act, which will see employers and employees contribute monthly to the fund.
The Treasury plans to deduct a maximum of Ksh5,000 from an employee’s gross salary with employers also contributing a similar amount.
“I propose to amend the Employment Act to provide that an employer shall contribute to the National Housing Development Fund, in respect of each employee’ in his or her employment 0.5 percent of the employees gross monthly emolument subject to a maximum of five thousand shillings while the employee will contribute 0.5 percent of their monthly gross earnings,” Mr Rotich said.
The government has also created the Kenya Mortgage Refinance Company (KMRC) to create a public private partnership avenue to raise funds for developers.
KMRC will extend long term loans to financial institutions secured against mortgages and will be jointly owned by the government and financial institutions.
“We have also developed a comprehensive housing package that will incentivize the private sector in the construction of low cost housing. This includes reduction of corporate tax rates to 15 percent for developers who construct at least 100 units per year,” the Treasury CS said.
Through the PPP model, the government has announced plans to service both county and national land to attract developers to construct houses.
Mr Rotich said Ksh18.4 billion has been set aside for the imitative.
“We will restructure the Kenya Urban Support Program, Kisumu Urban Project and Nairobi Metropolitan Services Improvement Project, to provide Ksh18.4 billion to support the servicing of land in various towns in the country to bring in private developers into the affordable housing program,” he said.
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