Tenant purchase schemes to reduce housing deficit

Tenant purchase schemes to reduce housing deficit

Kenya requires over 250,000 housing units annually to accommodate its growing population according to a World Bank report which indicates that the deficit will continue to grow in the future.

However, the current housing projects being developed by both public and private entities in the country are still beyond the reach of most Kenyans, even as the government through its “Big Four Agenda” aims to build up to 500,000 social housing units and 800,000 affordable units by 2023 at a cost of Sh2.6 trillion.

Experts in the real estate industry however claim that tenant purchase schemes such as Sacco’s will help reduce this deficit.

According to Muriu Mungai and Company Advocates (MMC Africa) lawyer Isaac Mungai, to tackle this anomaly, parastatals and private developers, should utilized the tenant purchase scheme (“TPS”) concept to provide an affordable avenue of home ownership for Kenyans.

“Tenant purchase schemes present an opportunity to cut down the country’s housing deficit by making it easier for the middle and lower class Kenyans to own homes. This is basically a traditional lease agreement that also gives the tenant an option to purchase the rental property sometime after the beginning of the tenancy,” said Mr. Mungai.

Mr. Mungai also added that the other benefit of Tenant Purchase Scheme is the tenant can immediately occupy the house, as opposed to mortgages where occupation can only happen after completion of the purchase.

“The scheme is an alternative payment method for property acquisition whereby the home buyer makes a down payment and is able to access the house unit before fully paying for it within an extended period of time. A portion of the tenant’s monthly rent payments is applied toward the purchase price of the house.  Essentially, the buyer owns the house by paying rent, “he added.

However, should the tenant opt out of buying off the house, there is an option to sell the house to a third party with just a consent from the developer being required, unlike mortgages, where the consent of the buyer and the registration of a discharge of the charge means a resale is not as straight forward.


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