Justus Ondari
7 May 2008
Nairobi — Serving civil servants will soon be able to access mortgage facilities of up to Sh5 million at highly subsidised interest rates.
This follows the government's signing of an agreement Tuesday with Savings and Loan (S&L), the Kenya Commercial Bank (KCB) group's mortgage arm to effect the deal.
Under the agreement, all civil servants under the Public Service Commission (PSC) will get loans - up to 90 per cent of the value of the property - to purchase or develop residential houses at a fixed interest rate of 5 per cent on a reducing balance. The loans, under the Sh600 million mortgage management service agreement, will be repaid over a period of 18 years or before attainment of 60 years, whichever comes earlier. "The processing of the housing loan facilities will start immediately and the size of the mortgage will depend on one's capacity to repay," said Mr Soita Shitanda, the Minister for Housing. Based on another scheme involving housing units along the city's Jogoo Road, the civil servants will pay between Sh8,000 and Sh15,000 per month for a two-bedroom unit.
The ministry, through the Civil Servants Housing Scheme Fund (CSHSF), got S&L to manage the Sh600 million scheme hence the low interest rates charged compared to the 12-15 per cent charged at market rates. "We have also waived most of the internal costs, such as traditional banking charges, to make the facility as attractive to civil servants as possible," said Mr Martin Oduor-Otieno, the KCB Group chief executive.
Increase reach
To increase the scheme's reach, the applicant or spouse will benefit only once. Mr Shitanda said his ministry, in partnership with the National Housing Corporation and an international investor, is at the final stages of negotiations for construction of 1,500 housing units at Shauri Moyo Estate, Nairobi. The construction of 22 units will also commence soon at Kileleshwa.
"The houses will be for low and medium-income civil servants," he announced during the signing ceremony held at his Ardhi House office in Nairobi.
Draft Bill
Mr Shitanda said CSHSF, which has sold 1,409 housing units since it was created on September 15, 2004 through a Legal Notice, is developing 526 units at Ngara Phase II for sale to the civil servants.
The draft National Housing Bill currently before the Attorney General, Mr Shitanda said, will be tabled in Parliament later this year. "Once enacted, the Bill will streamline coordination and facilitation of the housing planning, development and delivery process," he said.
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