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For the past 16 years, developers in Kenya have been majorly focusing on building housing units for high & upper middle income groups ignoring the lower middle & low income groups who form a sizeable part of the population. What is not so obvious is that a shortfall of supply in the mid-to-lower end of the residential market is putting upward pressure on pricing for such units, exacerbating already severe affordability issues. Superior profit potential has thus skewed recent housing production toward the luxury spectrum but the glut is steadily catching up. Is the dream of affordable housing becoming a reality?

By OTIATO GUGUYU Construction has been cushioned from rising costs after the Treasury waived levies demanded by the sector regulator and the environment watchdog. The National Environment Management Authority (Nema) had in September 2013 removed a flat rate charge and introduced a minimum assessment fee of Sh10,000 or 0.1 per cent of project cost, without an upper limit. The regulation removed the maximum limit of Sh1 million that existed previously, making it punitive for large- scale real estate developers. Nema requires projects such as mineral processing, oil drilling, infrastructure development, real estate and waste disposal to be licensed before their implementation. Developers whose projects exceed Sh5 million also pay a levy of 0.5 per cent of the value of the contract before they can start work to the National Construction Authority. County governments seeking a piece of the pie to grow revenue were also charging various rates for building approvals on the same development. “I intend to remove all other levies including levies charged by National Environmental Management Authority and National Construction Authority in order to reduce the cost of doing business,” Treasury secretary Henry Rotich said Wednesday. The 2013 review took place as Nema experienced financial shortfalls, partly because of reduced revenues from issuance of licences. Nema only received Sh1 million in the issuance of the environmental licence for the Sh2.5 trillion Lamu Port South Sudan-Ethiopia Transport project before the September 2013 fees. Source: Business Daily Africa

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