The National Housing Corporation (NHC) is stuck with hundreds of houses valued close to Sh1.3 billion it has been unable to sell, even as the government pumps more through its affordable housing programme.
Latest details reveal that by June last year, the corporation had a stock of unsold houses across different parts of the country, some of which were completed years ago but have not attracted buyers.
“The statement of financial position reflects an inventories balance of Sh1,305,018,402 which includes an amount of Sh1,275,730,014 relating to stock of unsold houses held by the Corporation. As previously reported, despite some of the projects having been completed several years ago, the houses have remained unsold and hence they continue to be reported as inventories,” Auditor-General Nancy Gathungu notes in a report.
NHC housing units sell at between Sh1.58million and Sh8.75million, depending on the size and location. For instance, a studio apartment under the affordable housing scheme retails at Sh1.58 million while the most expensive three-bedroom master ensuite unit goes for Sh8.75 million. Although the auditor-general does not specify the number of unsold units, projections show that they are in their hundreds going by the Sh1.3 billion total value.
This raises questions on how the State will market the thousands of houses it has lined up with billions of shillings already being pumped into the programme.
President William Ruto continues to insist on the importance of the affordable housing project in the creation of jobs for youth but the government has been silent on how it will ensure the units are sold after completion, with the majority of targeted beneficiaries being low-income earners.
Formally employed Kenyans have since July last year been deducted 1.5 percent of their salaries towards the Housing Levy Tax, with the amounts being channelled to the Housing Fund.
But the auditor-general now reveals that with the “stock of unsold houses" constructed over the years continuing to pile, NHC is now having to approach individuals and institutions to buy them, to no success.
“Management explained that it has scaled up engagement with County Governments, Saccos, Kenyans in the diaspora, and other relevant institutions to market the unsold houses,” Ms Gathungu says in her report on NHC.
Unable to offload the houses to the market, NHC has been forced to rent out houses worth Sh843 million, but Sh433 million houses remain idle.
On its website, the NHC lists at least 10 projects where it has residential houses it is selling. They include Kisumu Kanyakwar, Phase Three where it has 100 houses, and Stoni in Athi River where it has 160 unsold affordable houses and 110 unsold affordable houses in Homa Bay.
“In the circumstances, the Corporation may not have obtained value for money for the schemes implemented at Sh1,275,730,014 included under inventories,” the audit notes.
In its expression of commitment to Housing, the government budgeted Sh92.1 billion to the sector for the fiscal year starting July, including Sh67.4 billion that will go to affordable and social housing.
This is more than thrice the Sh28 billion budget the government allocated to Housing in the 2023/24 fiscal year, though only Sh5.45 billion had been spent by the end of May.
“The Government’s commitment is to turn the housing challenge into an economic opportunity to create quality jobs for the youth directly in the construction sector and indirectly through the production of building products,” Treasury Cabinet Secretary Njuguna Ndung’u said while delivering the 2024/25 budget.
The government’s plan- which has not been achieved so far- is to construct 200,000 houses every year.
MPs recently blocked a plan by the Treasury to open up affordable houses for open sale in the market, amid objection by Kenyans who sensed a plot to let non-deserving rich people end up being beneficiaries of the houses meant for low-earners.
Treasury had in the Finance Bill, 2024, proposed to amend the Affordable Housing Act to remove a requirement that owners of affordable houses seek approval from the affordable housing board prior to sale of their houses.
This risked leaving the houses free-for-all and selling at market prices, despite having been built on the back of taxpayers’ money so that they can specifically benefit low-earners.
“The Committee noted that the current provision in the Affordable Housing Act limits the right to property as enshrined in the Constitution and would be subject to abuse and therefore recommended deletion of the clause,” the National Assembly’s Finance and Planning Committee stated.
Section 54 of the Affordable Housing Act, 2024- which Treasury wanted to delete- states “Except with the prior written consent of the Board, a purchaser of an affordable housing unit under this Act shall not by contract, agreement or otherwise, sell or agree to sell his or her unit or any interest therein to any other person.”
Following the proposal by the Treasury, Kenyans petitioned parliament objecting to the move, arguing that it risked creating a loophole that would be exploited by rich, non-deserving persons to own the houses.
“Repealing the section that prohibits buyers from selling affordable houses will lead to speculative purchases by the wealthy and well-connected, thereby excluding the citizens who are intended to be the primary and sole beneficiaries of the programme,” a petitioner Kevin Wanambisi said.
Another petitioner Elizabeth Nyangara asked the committee to block the proposal by the Treasury “because selling the units incentivizes corrupt individuals to take up units built with taxpayer money, sell the same, pocket the difference, and jump the queue again to do it all over again.”
