Being a homeowner at a young age has been simplified by the Kenyan Government.
Gone are the days where one was inclined to take a mortgage loan from pension schemes or commercial banks in order to buy a house in this country. In a bid to burst the growing real estate bubble in Kenya, the Government has allowed the purchase of residential homes using your retirement benefit scheme funds. This allows a salaried person to directly purchase his or her dream home using his retirement money.
While the Housing and Urban Development ministry vouched for release of up to 60 percent of individual’s savings for buying a house, the RBA regulations are expected to clear the air over the allowable limit as well as set out conditions for accessing the pension savings.
No scheme funds shall be invested contrary to any guidelines prescribed for that purpose or invested with a bank, non-banking financial institution, insurance company, building society or other similar institution with a view to securing loans, including mortgages, at a preferential rate of interest or for any other consideration to the sponsor, trustees, members or the manager of such scheme.
This amendment comes at a time when land and housing prices have depreciated due to the coronavirus pandemic. From the most expensive neighborhoods of Muthaiga and Kitusuru (Sh 80.2 million) to the least expensive Kitengela and Juja (Sh 11.1 million and Sh 8.8 million respectively).
This presents a good opportunity to investors eyeing the real estate market as it has recorded higher returns fueled by a growing middle class, with returns from real estate outpacing equities and government securities.
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