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House Finance Welcomes Government’s Property Budget Incentives

Incentives expected to unlock potential of the mortgage industry
14 June 2010 …. Housing Finance has welcomed the amendments to the banking act to allow mortgage finance companies to operate current accounts so as to attract lower cost customer deposits.

Speaking on the budget proposal, Housing Finance, Managing Director, Mr Frank Ireri said the move will unlock the potential of the firm by enabling it increase mortgage lending capacity, expand its operations and potentially reduce the interest rates on mortgages.“We will soon be launching new products to take advantage of the incentives introduced in the budget,” said Mr Ireri.

Mr. Ireri said there exists huge potential in the property market which is characterized by a demand that far surpasses supply particularly in urban areas. He said the reduction of stamp duty fees on mortgages, charges and debentures from 0.2 to 0.1 percent will encourage borrowing against owned property.

Official figures indicate that 150,000 new and additional housing units are required in the urban areas every year yet only an estimated 35,000 are currently produced annually. This shortage in housing is manifested by overcrowding, proliferation of informal settlements in urban areas and poor quality housing in rural areas. “An unfortunate legacy of Kenyan society is that the majority of people cannot afford a home of their own and they have restricted access to adequate and affordable housing” added Mr. Ireri

Housing Finance has also welcomed a proposal to amend the Banking Act so as to raise the threshold of core capital that banks are allowed to invest in mortgage finance from 25 percent to 40 percent. As government continues to introduce incentives to spur growth of the Housing sector, Mr. Ireri said there is need for more interventions in terms of deliberate policies and incentives to meet current and future housing needs.“As an industry we would like to see more incentives geared towards: Savings mobilization, Developers incentives especially for low cost housing and the reduction or removal of the 4% stamp duty on property transfers for 1st time home owners.

Housing Finance, he said, will continue to seek more solutions that encourage individuals to not only save but also start working towards buying their first home.