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"id": 241913,
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"type": "speech",
"speaker_name": "Mr. ole Metito",
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"speaker": {
"id": 199,
"legal_name": "Judah Katoo Ole-Metito",
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"content": "Thank you, Mr. Temporary Deputy Speaker, Sir, for giving me the opportunity to contribute to this debate. I rise to support the Motion, which addresses the issue of shortage of housing and high mortgage interest rates charged by financing institutions in the country. I would like to address myself to the issue of high mortgage interest rates. Mr. Temporary Deputy Speaker, Sir, shelter is a basic human right, and not a secondary human right. In order for an individual to acquire a house in this country he or she must be a high income earner. No wonder one-third of our population does not have access to decent and affordable housing. This is because 56 per cent of our population live below the poverty line. Poverty and lack of housing are not the same, but there is correlation between the two. We have three operational building societies in Kenya namely: The National Housing Finance Corporation, the East African Building Society and the Savings and Loan Mortgages. What is making it difficult for low income earners to access mortgage financing in this country is the lending criteria used by these institutions. All the three building societies operate in the same manner. Mr. Temporary Deputy Speaker, Sir, in order for one to be considered for a housing loan, one is required to maintain a mortgage-related savings account with the institution and maintain a certain minimum balance prescribed by that institution. This requirement only favours high income earners. Another hindrance to getting housing finance in this country is a requirement to have a legal charge drawn on an applicant's title deed in favour of the lending institution. The loan will only be released to a successful applicant only after such a charge has been registered. It is very difficult for low income earners to own land in this country, even after having a title deed charged in favour of a lending institution. Housing finance institutions also require that the loanee should have a particular minimum balance of money in his or her account in advance, in order to determine the borrower's ability to repay the loan. They insist that a loan should not exceed three times the annual disposable income of the borrower. This condition only favours people who earn a decent income. Mr. Temporary Deputy Speaker, Sir, other institutions like the East African Building Society only advance housing loans to persons with decent income. They also expect borrowers to pay Stamp Duty, legal fees and other consolidated fees, bringing the cost to about 5 per cent of the sum being borrowed. Sometimes you may be asked to make a down payment, which you may not be able to. The other requirement that makes housing finance inaccessible includes paying a deposit or contributing an equity of between 10 per cent and 30 per cent of the value of the property one intends to buy. If an applicant intends to use the loan to put up his own house, he must acquire the land and obtain a title deed. That makes the venture even more expensive. This means that more than 56 per cent of our people living below the poverty line cannot access decent housing. Mr. Temporary Deputy Speaker, Sir, in urban areas especially, housing poverty, as I said, has a correlation with income poverty, considering that rents and mortgage repayments are high if July 19, 2006 PARLIAMENTARY DEBATES 2177 related to income ratios. So, housing finance institutions in this country have failed to reach their target group in their effort to provide housing through low interest loans. Once we pass this Motion and, subsequently, enact the Bill into law, the micro-financing being envisaged will enable low income earners to access subsidised financing to put up or buy their own houses. The funding that will follow will also accelerate construction of houses being undertaken by middle level income earners, who are the majority. Mr. Temporary Deputy Speaker, Sir, existing housing finance institutions have innovations but they all need systematic scaling up. If that is done, it will be necessary to have a housing scheme that will make a real impact on availability of housing for low income earners in this country. Mr. Temporary Deputy Speaker, Sir, we should bring down, to an affordable level, the deposit required by existing housing finance institutions from someone who wants to purchase a house. We should also get rid of the fact that one has to prove that they have a dependable income, so as to qualify for a loan. Most of the people targeted by the housing financial companies have no income at all. The requirement of a satisfactory collateral, as proof of owning property when acquiring a mortgage, is not good because most people do not own pieces of land, let alone having title deeds. With those few remarks, I beg to support."
}