Property developers back the stay of interest caps

Property developers have raised the alarm on the recent High Court ruling on interest caps to warn of reduced real estate uptake should expensive loans make a return in the economy

According to Urithi Housing Cooperative Society chairman Samuel Maina, the move is likely to affect and slow down the uptake of property in the market since most investors will find it expensive and unattainable.

“In order to help most ordinary Kenyans to achieve their dream of owning homes the interest rate capping suspension should be lifted, otherwise to many it will be just but a dream” said Mr. Maina.

‘The move is likely to assert more pressure on Sacco’s that will be the alternative avenue to source for financial facilities for development,” he added.

The Kenyan mortgage industry has only done close to 50,000 units alone and it is not sufficient to attain the dream of availing Affordable housing to the population.

The government through its Big Four agenda has listed Affordable housing as one of the four components of the pillars and has a projection of constructing low cost housing 500,000 units annually.

‘’I will not tire to emphasis that the government’s goal to provide affordable housing can only be achieved and or complimented by Cooperatives that already have structures and members. It will also be supported by providing necessary incentives and putting right policies in place,” said Maina.

Maina who was addressing potential investors at  Birmingham woodland project open day in Mang’u Thika urged investors to understand the Social-Economic model being employed by the Cooperative in provision of Houses and land.

”We pool resources from members and for any project to take off to completion solely depend at the speed at which members contribute and once this is understood there will be less anxiety and misconception by investors,” he said.

The Consumer Federation of Kenya (COFEK) has since filed an application in court, objecting last week’s High Court directive to scrap off holds on interest earnings from commercial bank lending.

COFEK Secretary General Stephen Mutoro says the ruling raises serious integrity questions and sees the petitioner—Bonfas Oduor as party to CBK and KBA interest to suspect a back-door attempt at reigning in a return to expensive loans.

Interest caps to commercial lending by banks have been in place since September 2016 and have had an effect to wipe out credit flows to the private sector with banks changing tact to prefer investments in fixed-income instruments such as treasury bills and bonds.