A typical human being starts, spends and ends his/her day in a house. A house is more than just a space for human habitation. It is a dwelling place for different activities from commercial, residential and industrial. Therefore, the term housing.

Research says that on average, human beings spend 80% of their time indoors, 10% moving from one ‘house’ to another and 10% outside. This is a clear indication that housing is a fundamental need and with the rising population and the changing times, its need continues to increase.

With the rise in demand, housing supply is on deficit worldwide. This, therefore, requires the governments of states to build more sustainable towns and cities that cater for the rising population and demand for housing. This leads towards the achievement of goal one of the SDG’s; (NO POVERTY) by providing and delivering adequate and affordable housing towards sustainable human settlement.

The Affordable Housing Initiative is part of Kenya’s Big Four Agenda, former President Uhuru Kenyatta’s development blueprint which are aligned with the United Nations Sustainable Development Goals. The initiative was geared towards providing 500,000 affordable home to the low income earners in partnership with the private sector, make mortgage more accessible to Kenyans, 50% reduction in interest rates for homeowners financing, 30% reduction in construction costs, 350,000 new job creations in the construction industry, 60% reduction of low income housing gap and 100% increase in construction contribution to the GDP.

President William Ruto’s goal under the Affordable Housing is to provide 250,000 homes every year for the low income earners and to create four million jobs in the construction industry. With this in mind, it is also clear that housing will forever be necessary. People will always buy and rent homes. There will always be a demand.

There are many stereotypes and misconceptions around affordable housing regarding their construction quality and costs, property value, supply chain and low profits. People tend to forget that lack of affordable housing in the country discourages growth of the local communities. Arguably, those against affordable housing have safe and stable houses and may not feel the true cost of poverty and lack of a decent home.

Investing in affordable housing is a way to provide housing for your community and can be advantageous in the long run when you decide to sell or rent it out to get passive income. It is likely to bring continuous cash flow. The real estate industry in Kenya in partnership with the government though the Affordable Housing Initiative, is working towards making affordable housing accessible to all citizens.

There are more reasons to invest in affordable housing this year and make the most of out of it as a home buyer and as investor looking to expand their portfolio and make profits. Either way the investor will be creating long term wealth.

Investing as a Home Buyer

Especially if you are buying a home for the first time, a unit/single-family space can be purchased considerably cheaper than a home. It is also recommended to purchase a unit when it first enters the property market because the market rates will keep rising.

Investing as a Home Buyer in Kenya

Being a home owner is everyone’s dream. However, certain constraints have rendered this dream tough to make a reality. Home ownership investments in Kenya have been targeting the high income earners who have surplus money to invest into houses and apartments whose prices do not apply to an average citizen.

Other factors affecting home ownership are the high mortgage interest rates hitting up to 15% as well as the short repayment periods. This may have you accruing debts and having your home eventually repossessed. This locks out a number of interested individuals forcing them to live in poor conditions or leaning towards paying high rent for better living conditions.

“If a buyer finds a property they would like to call home, they should not delay. You cannot time the market, and a home should be a long-term investment. In the end, higher mortgage rates will cost a buyer more monthly if they are financing.”

Stacey Froelich, a broker with Compass in New York City.

The Affordable Housing Initiative in Kenya focuses on providing quality and sustainable housing to low-medium income earners with Ksh. 30,000 – Ksh. 120,000 as their household average monthly income. The affordability comes in with flexible payment plans for home buyers.

Low mortgage interest rates of up to 9% with long repayment plans provided by microfinance banks such as SACCO’s enabled by Kenya Mortgage Refinance Company (KMRC) for lending services. Introduction of new financial lending solutions by financial organizations and investment banks licensed by Capital Markets Authority (CMA). This include the Tenant Purchase Scheme (TPS), popularly known as Rent to Own.

Tenant Purchase Scheme is simply a house-ownership plan which allows a tenant to purchase the flats/residence through monthly. Under the arrangement, the rent you pay goes towards repaying the purchase price and the house title is transferred to you as soon as you pay off the whole amount (Rent to Own). Through this method, construction of the units is financed through an end-user financing scheme that requires eligible persons to pay a percentage deposit as a commitment fee and the remaining amount financed by the lender of the service.

Rent to Own allows tenants to pay for the unit using the most common method and as the name suggests rent. Within a number of years of paying rent, one can gain ownership of the unit. The scheme is carefully curated by investment banks and financial organizations with factors such as income levels, market rates, repayment terms in mind to make the process less restrictive. It is quite an attractive home ownership method that interested parties should take into consideration.

Investing to Diversify your Portfolio and Grow your Wealth

“Affordable housing is included in the portfolios of many property investors largely because of the associated government tax credits.”


It is important to note that affordable housing is a long-term investment, one that can last for over decades and can be passed on from generation to generation. You can secure your future income with earnings from investing in affordable housing. Housing is essential and always in demand. An investor in affordable housing can decide to either buy a unit(s) to later sell or rent, or contribute towards development of the units through trust funds such as Real Estate Investment Trusts (REITS) and later earn profits from the return on investment.

Investing to diversify your portfolio and grow your wealth

With this said, an investor should put certain aspects into consideration before investing in affordable housing such as the median income of the area in order to know their return when they decide to invest, the developers, construction costs and quality, maintenance costs and finally, fully understand the initiative and what contribution they are making to the society when they decide to invest.