In Kenya, homeownership remains a distant dream for many, primarily due to economic constraints and high property costs.
As at 2022, only about 372,000 formally employed Kenyans earned over Sh100,000 monthly, highlighting that the majority of workers earn less than this amount. This significant disparity presents challenges for those aiming to buy a home on a modest salary.
The financial landscape in Kenya poses several hurdles for potential homeowners. The high cost of land and construction, coupled with inflation and limited access to affordable mortgages, exacerbates these difficulties.
Challenges potential homeowners face in Kenya
For individuals earning less than Sh100,000 monthly, the path to homeownership is fraught with challenges:
- High Property Prices. The cost of buying a home is often prohibitive, particularly in urban areas where real estate prices are steep.
- Insufficient Financing. Limited access to affordable mortgage options and high-interest rates make it difficult for lower-income individuals to secure loans.
- High Down Payments. The substantial down payments required for home purchases are out of reach for many.
- Economic Instability. Fluctuating economic conditions can affect job security and income stability, impacting one's ability to commit to long-term financial obligations.
READ: From 2018 to 2024: A look at Kenya’s Affordable Housing agenda
How to be a homeowner with an income of less than Sh100,000
In response to these challenges, the Kenyan government launched the Affordable Housing Programme (AHP).
The AHP aims to provide 250,000 housing units annually, with a focus on making homeownership accessible to low- and middle-income earners.
The program offers various housing categories to cater to different income brackets, each with tailored pricing and financing options.
Homeownership with an income of less than 20,000
For households with an income of less than 20,000 the government has launched social housing.
These houses offer basic living conditions at accessible prices.
A one-room house costs Sh840,000, with a deposit of Sh84,000 and monthly payments of Sh3,200.
A three-room house costs Sh1.68 million, with a deposit of Sh168,000 and monthly payments of Sh6,400.
Homeownership with an income of between Sh20,000 to Sh150,000
For those with monthly incomes ranging from Sh20,000 to Sh149,000, there is a range of housing options including studios and two to three-bedroom apartments.
A studio apartment costs Sh960,000, with monthly payments starting at Sh5,200.
A two-bedroom apartment costs around Sh2 million, with monthly payments of Sh10,400.
A three-bedroom unit costs just over Sh3 million, with payments of about Sh15,600.
Homeownership with an income of more than Sh150,000
Catering to individuals earning over Sh150,000 per month, these units offer higher-end options.
A two-bedroom unit costs Sh4.32 million, with monthly payments of Sh31,300.
A three-bedroom unit costs up to Sh5.76 million, with payments ranging from Sh41,000.
How easy is it for ordinary Kenyans to own homes in the AHP?
The process of owning affordable homes is through the Boma Yangu platform. As per Sections 48 and 49 of the Affordable Housing Act 2024, Kenyans interested in owning an affordable housing unit need to have attained 18 years and have valid IDs or passports.
They then register on Boma Yangu, select a preferred unit, and then start saving for their home through MPesa Paybill 222222 with the account being BOMA [IDNUMBER].
Once they have attained the minimum 10% deposit for allocation, they shall be eligible for allocation which shall be done automatically at set times.
Successful applicants shall then be notified once allocation is made so that they can sign offer letters to finalize payments for their units, either through cash, mortgage, or Tenant Purchase Scheme (TPS).
Social housing units are allocated to eligible Kenyans who have attained 18 years and have all requisite documents including ID/Passport, as per Sections 48 and 49 of the Affordable Housing Act 2024.
In addition, to get a social housing unit, a Kenyan must be in the income bracket as per Section 2 of the Affordable Housing Act 2024.
In conclusion, while owning a home in Kenya with a salary of less than Sh100,000 presents significant challenges, the Affordable Housing Programme offers promising solutions.
By making housing more affordable and accessible, the AHP aims to bridge the gap between housing demand and supply, ultimately providing more Kenyans with the opportunity to own their homes.
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