Ministry of Transport Draft Report by George Rabala

REPUBLIC OF KENYA MINISTRY OF TRANSPORT, INFRASTRUCRURE, HOUSING AND URBAN DEVELOPMENT

(STATE DEPARTMENT OF HOUSING & URBAN DEVELOPMENT)

THE CIVIL SERVANTS HOUSING SCHEME FUND

SURVEY REPORT

2015/2016 CSHSF SURVEY

ACKNOWLEDGEMENT

he successful completion of the Housing Needs Assessment Report for Civil Servants Housing Scheme Fund(CSHSF) was made possible by the joint efforts of various departments within the Ministry of Transport, Infrastructure, Housing and Urban Development and officers whose participation I would like to acknowledge with gratitude. First of all, I wish to acknowledge and appreciate the funding for the whole Survey process by the State Department for Housing and Urban Development and support provided by government officials at all levels right to the county level. A lot of thanks also go to the county commissioners, human resource officers in various ministries and county directors of housing who were critical for the successful implementation of the Survey. The carrying out of the Survey would not have been successful without the efforts and commitments made by Ministry staff at different stages of the process. In a special way, I would like to commend the Principal Secretary, Arch. Aidah Munano, HSC; Secretary, Housing Mr. Patrick Bucha, MBS; Director of Civil Servants Housing Scheme Fund, Mr. Joseph Ngayai; and Director of Housing, Mrs. Jane W. Mwangi, who worked tirelessly to make the survey a success. I would like to acknowledge the authors of the various chapters Mr. Moses Gatana, Mr. George Ndichu, Arch. Julius Wairagu, Mr. Christopher Khaoya, Mr. Ezekiel Chege, Ms Eunice Muli, Miss Ruth Wekesah, Ms. Bancy Kinuthia, Ms Josephine Mwongeli and Mr. Geoffrey Kamau. Finally, I wish to thank the Civil Servants Housing Needs Assessment Preparatory Committee, enumerators and survey respondents, who generously contributed their time to enable the survey teams gather crucial information for the country and the team that put in many man hours to compile the report as well as peer reviewers. May God bless you all.

James W. Macharia, EGH Cabinet Secretary Ministry of Transport, Infrastructure, Housing and Urban Development

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PREFACE

his Report presents findings from the Housing Needs Assessment for Civil Servants Housing Scheme Fund. The main objective of the Survey was to assess the extent to which the Civil Servants Housing Scheme Fund (CSHSF) products are accessible, suitable and affordable to all intended beneficiaries. This Survey targeted 71,482 civil servants working in the National Government in all the 47 counties. A sample size of 2,400 civil servants distributed in all job groups was identified. The interviews were carried out in all the 47 counties. In Nairobi City County, 800 civil servants were interviewed with the remaining 1600 equally distributed in the 46 counties. Nairobi City County had the highest number of respondents because all Ministries have their headquarters within it. In addition, it has a relatively high number (36.9%) of civil servants as compared to other counties. This Survey is the first to be carried out since the establishment of the CSHSF in 2004. The Report will be a useful source of information to the Government and relevant stakeholders. In addition, the findings of this Report will form a basis for formulation and periodic review of civil servants housing policies, regulations and procedures. One of the challenge faced during the Survey process was misgivings about the survey by some respondents. They could not see how the Survey results could help them benefit from the Fund. However, with effort and cooperation of all those involved, the challenges were addressed and the report presented reflects the views of the civil servants.

Arch. Aidah Munano, HSC Principal Secretary, State Department for Housing and Urban Development

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EXECUTIVE SUMMARY Housing is a crucial component of economic competitiveness. Well planned housing at affordable costs, when combined with essential services, affords dignity, security and privacy to the individual, the family and the community as a whole. The National Housing Policy of 2004 envisaged a situation where Kenya Government was to facilitate civil servants wishing to buy or construct houses for home ownership. To actualize this, CSHSF was established in 2004 with a clear mandate to provide loan facilities to civil servants for the purpose of either purchasing or constructing a residential house, develop housing units for sale and for rental by civil servants and, raise funds for the implementation of the two objectives. As at January 2016, the Fund had benefited 3,002 civil servants. Out of these, 1,861 had bought houses developed by the Scheme, 730 had secured mortgage loans and 411 had acquired rental houses. The main objective of this Survey was to assess the extent to which the CSHSF products are accessible, suitable and affordable to civil servants. To achieve this objective, a questionnaire was developed and administered to civil servants working in the National Government in all the 47 counties through a Paper and Pencil Interviewer (PAPI) technology. The main findings of the Survey are: - the median age group of civil servants is 40-44 years; despite the Government offering attractive package to home access and ownership, only 4.2 percent of civil servants have been facilitated; most civil servants prefer home ownership to renting; most civil servants (71.1%) would require up-to 3 months to raise the 10% deposit; most of the beneficiaries are in the higher job groups; most of the beneficiaries raise their 10% deposit from cooperative loan; majority of the civil servants are aware of the existence of the CSHSF but they required more information about the products; and majority of civil servants are willing to save through the Scheme to mobilize funds for home ownership and have a high preference for three bedroom houses. To address the above findings, the following were some of the recommendations: To review CSHSF regulations in order to facilitate accessibility to affordable mortgage loans to those in job groups A-J; the Scheme to allow civil servants to voluntarily save through the Fund for future facilitation towards home ownership; to review the repayment age limit from 60 years to 65 years with an option of committing part of lumpsum pension on retirement; examine and adopt some of the best practices from selected countries with similar schemes; and review the outsourcing of mortgage management service to enhance efficiency and effectiveness.

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TABLE OF CONTENTS ACKNOWLEDGMENT.............................................................................................................................. i PREFACE............................................................................................................................................. ii EXECUTIVE SUMMARY......................................................................................................................... iii LIST OF FIGURES..................................................................................................................................ix LIST OF TABLES.....................................................................................................................................x LIST OF ACRONYMS/ABBREVIATIONS......................................................................................................xi DEFINITION OF TERMS.........................................................................................................................xii CHAPTER ONE: INTRODUCTION................................................................................................................................... 1 1.1 Introduction....................................................................................................................................................1 1.2 Problem Statement.........................................................................................................................................2 1.3 Survey Objectives............................................................................................................................................3 1.3.1 Main Objective...................................................................................................................................3 1.3.2 Specific Objectives..............................................................................................................................3 1.4 Scope of the Housing Needs Assessment.........................................................................................................3 1.5 Field Survey Methodology and Data Capture...................................................................................................4 1.6 Justification of the Housing Needs Assessment...............................................................................................4 1.7 Housing Needs Assessment Limitations...........................................................................................................4 CHAPTER TWO CIVIL SERVANTS HOUSING SCHEME FUND SITUATIONAL ANALYSIS............................................................. 5 2.1 Situational Analysis.........................................................................................................................................5 2.1.1 Establishment of the Civil Servants Housing Scheme Fund (CSHSF)....................................................5 2.1.2 Objectives of the CSHSF......................................................................................................................5 2.1.3 Organization Structure and functions of the CSHSF............................................................................5 2.1.4 Terms and conditions of granting a mortgage loan............................................................................9 2.1.5 Key Procedures of the Fund..............................................................................................................11 2.1.6 Achievements of CSHSF....................................................................................................................13 2.1.7 Proposed and ongoing Projects........................................................................................................15 2.1.8 Challenges faced by the CSHSF.........................................................................................................16 2.2 Laws and Policies Relating to Civil Servants Housing Scheme Fund...............................................................18 2.2.1 Constitution of Kenya.......................................................................................................................18 2.2.2 International Conventions................................................................................................................18 2.2.3 The Kenya Vision 2030......................................................................................................................19 2.2.4 Sessional Paper No.3 of 2004 on National Housing Policy for Kenya.................................................19 2.2.5 Land Act, 2012.................................................................................................................................20 2.2.6 Land Registration Act, 2012.............................................................................................................20 2.2.7 Sectional Properties Act, 1987..........................................................................................................21

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2.2.8 Physical Planning Act, 286...............................................................................................................22 2.2.9 Public Health Act, 242......................................................................................................................22 2.2.10 Survey Act, 299................................................................................................................................23 2.2.11 County Government Act of 2012.......................................................................................................24 2.2.12 Urban Areas and Cities Act, 275........................................................................................................24 2.2.13 Environmental Management and Co-ordination Act, 387................................................................24 2.2.14 National Construction Authority, 2012.............................................................................................24 2.2.15 Persons with Disabilities Act, 133.....................................................................................................25 2.3 Case Studies on Mortgage Housing Schemes.................................................................................................25 2.3.1 Nigeria.............................................................................................................................................25 2.3.2 Ghana...............................................................................................................................................27 2.3.3 Malaysia...........................................................................................................................................28 2.3.4 Mexico..............................................................................................................................................31 CHAPTER THREE ANALYSIS AND FINDINGS.....................................................................................................................36 3.1 Introduction..................................................................................................................................................36 3.2 Background Information...............................................................................................................................36 3.2.1 Age of respondents..........................................................................................................................36 3.2.2 Age by Sex........................................................................................................................................36 3.2.3 Age by job group by disability..........................................................................................................37 3.2.4 Age by sex by job group....................................................................................................................37 3.2.5 Age by job group by years of employment.......................................................................................38 3.2.6 Age by job group by monthly estimated amount of other source of income ....................................40 3.3 Awareness of Civil Servants Housing Scheme Fund.......................................................................................40 3.3.1 Source of information.......................................................................................................................40 3.3.2 Job group by the level of awareness of the existence of Civil Servants Housing Scheme Fund.........41 3.3.3 County by awareness........................................................................................................................42 3.3.5 Awareness by application by success................................................................................................45 3.3.6 Job group by application by success.................................................................................................45 3.4 Information on Beneficiaries.........................................................................................................................45 3.4.1 Type of house by reasons for the choice............................................................................................46 3.4.2 Reasons for not occupying the house...............................................................................................46 3.4.3 Successful application by type of facility..........................................................................................47 3.4.4 Job group by years of employment by facility benefited from..........................................................47 3.4.5 Job group by facility of home ownership benefited from by reason for choice of facility..................47 3.4.6 Job group by facility benefited from by ways of raising the deposit.................................................48 3.4.7 Job group by facility benefited from by period of delay in occupation..............................................48 3.4.8 Job group by facility benefited from by percentage of gross salary used to service the facility.........49 3.4.9 Challenges in accessing the loan......................................................................................................49 3.4.10 Job group by years of employment by challenges in servicing the loan............................................49 3.4.11 Job group by years of employment by meeting of housing needs....................................................50

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3.5

3.4.12 Job group by years of employment by reason for meeting or not meeting the housing needs........50 Information on Non-beneficiaries..................................................................................................................50 3.5.1 Age by mode of house to benefit from.............................................................................................51 3.5.2 Job group by preferred product of house ownership........................................................................51 3.5.3 Job group by mode of house to benefit from by amount to spend on preferred house....................52 3.5.4 Preferred house type by job group by age........................................................................................53 3.5.5 Age by job group by preferred product to be facilitated with...........................................................54 3.5.6 Job group by preferred product by reasons for the preferred product...............................................55 3.5.7 Job group by mode of house to be facilitated with by preferred number of bedrooms....................56 3.5.8 Job Group by preferred house type by reason...................................................................................57 3.5.9 Job group by preferred facility by percentage of gross salary on mortgage......................................57 3.5.10 willing to spend on preferred house by percentage of gross salary willing to set aside....................58 3.5.11 Job group by percentage of gross salary on mortgage by reasons for the percentage......................59 3.5.12 Age by Job Group by means of raising 10 percent deposit................................................................60 3.5.13 Job group by period to mobilize 10% deposit...................................................................................61 3.5.14 Age by job group by saving towards construction/purchase of a house............................................61 3.5.15 Age by Job group by other initiatives towards owning a house........................................................61 3.5.16 Age by job group by other specific initiatives towards owning a house besides saving.....................62 3.5.17 Age by willingness to save through the Scheme...............................................................................62 3.5.18 Age by job group by willingness to commit part of lump sum pension towards access to a house...63 3.5.19 Age by job group by percentage of lump sum pension willing to commit........................................64 3.5.20 Age by job group by amount of lumpsum pension willing to commit..............................................64 3.5.21 Suggestions on how the Scheme can be improved to serve civil servants better..............................64

CHAPTER FOUR KEY FINDINGS, CONCLUSION AND RECOMMENDATIONS...........................................................................67

4.1 Introduction..................................................................................................................................................67 4.2 Key Findings..................................................................................................................................................67 4.3 Conclusion.....................................................................................................................................................69 4.4 Recommendations........................................................................................................................................70

LIST OF REFERENCES...........................................................................................................................72

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LIST OF TABLES Table 2.1:

Non-strategic government houses sold in Nairobi.............................................................................14

Table 2.2:

Constructed houses sold in Nairobi....................................................................................................14

Table 2.3: Houses rented to civil servants in Nairobi...........................................................................................15 Table 2.4: Proposed and ongoing projects.........................................................................................................15 Table 3.1: Percentage distribution of age by sex by job group............................................................................38 Table 3.2: Percentage distribution of age by job group by years of employment................................................39 Table 3.3: Percentage distribution of employer by source of information about civil

servants housing scheme Fund..........................................................................................................41

Table 3.4: Percentage distribution of awareness by county................................................................................43 Table 3.5:

Percentage distribution of job group by facility benefited from by ways of raising the deposit..........48

Table 3.6: Percentage distribution of age by mode of house to benefit from.....................................................51 Table 3.7: Percentage distribution of age by job group by preferred product to be facilitated with....................55 Table 3.8: Percentage distribution of job group by preferred product of home

ownership by reasons for the preferred product................................................................................56

Table 3.9: Percentage distribution of job group by mode of house to be facilitated

with by preferred house size..............................................................................................................57

Table 3.10: Percentage distribution of job group by means of raising 10% deposit by age.........................60

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LIST OF ACRONYMS/ABBREVIATIONS CBK CEDAW EAH EIA ERP FMBN GoK HF HLD ICT JPPH KCB KNBS KSHs NCA NHF NSSF PAPI PMI PPP PSC RDA RM SACCOs SMC SPA SRC VAT

Central Bank of Kenya Committee on the Elimination of Discrimination Against Women CSHSF Civil Servants Housing Scheme Fund Employer Assisted Housing Environmental Impact Assessment Enterprise Resource Planning Federal Mortgage Bank of Nigeria Government of Kenya Housing Finance Housing Loan Division Information Communication Technology Valuation and Property Service Department (Malaysia) Kenya Commercial Bank Kenya National Bureau of Statistics Kenya Shillings National Construction Authority National Housing Fund National Social Security Fund Paper and Pencil Interview Primary Mortgage Institute Public Private Partnership Public Service Commission Registration of Documents Act Malaysian Ringgit Savings and Credit Cooperatives Scheme Management Committee Sectional Properties Act Salaries and Remuneration Commission Value Added Tax

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DEFINITION OF TERMS Acceptable ownership documents Authentic title documents Accessibility Ability to enjoy adequate shelter as influenced by the environment Affordability Ability to meet the financial costs associated with housing without compromising satisfaction of other basic needs Beneficiary A civil servant who has benefitted from any of the Civil Servants Housing Scheme Fund (CSHSF) products Cabinet Secretary Cabinet Secretary in charge of housing Cedis Ghanian currency Civil Servant An employee in a ministry within the National Government CSHSF products/Facility Are products offered by the CSHSF which include: - mortgage to construct a house, mortgage to purchase a house and mortgage to buy a house developed by the Scheme and renting Committee Scheme Management Committee Cooperative SACCO County Government The county government provided for under Article 176 of the Constitution Employer Assisted Housing Initiatives where an employer facilitates employees to access housing Equity Release A loan that allows a house owner to access equity tied up in oneâ&#x20AC;&#x2122;s home for purposes of improving it or development of a residential property Fund The Civil Servants Housing Scheme Fund Fund Administrator Principal Secretary in charge of housing Intended beneficiary A civil servant who is eligible to benefit from CSHSF products Loanees Civil Servants who have benefited from mortgage loans from the Scheme Ministry Ministry in charge of housing Naira Nigerian currency National Government The Government of the Republic of Kenya as recognized by the Constitution Non beneficiary A Civil Servant who has not benefitted from any of the CSHSF products Pesos Mexican currency Principal Secretary Principal Secretary in charge of Housing Suitability Situation where a household is living in habitable accommodations with enough and right sized rooms and sanitation that meets all its expected housing needs.

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CHAPTER 1 INTRODUCTION 1.1 Introduction Shelter is one of the basic human needs in addition to food and clothing. Access to decent, affordable and adequate housing is a human right and an important component of the right to adequate standards of living. Housing is not only necessary for security and comfort, but also critical in fostering social cohesion and development of a nation. Beyond its socio-cultural elements, housing is also a critical driver of economic development as a result of its forward and backward linkages with other economic development processes. In recognition to this, the Constitution of Kenya provides that every person has the right to accessible and adequate housing, and to reasonable standards of sanitation [Article 43. (1) (b)]. Further, the Universal Declaration of 1948 recognizes the right to adequate housing as an important component of the right to adequate standards of living. It is estimated that the current production of new housing in the urban areas is about 50,000 units annually, against a demand of about 250,000 units. . With this huge demandsupply housing gap, provision of adequate and affordable housing remains a challenge. Based on this, one of the medium term goals of the Kenya Vision 2030 is to increase the annual production of housing units to over 200,000 so as to meet the shortfall. Since independence, the Government of Kenya has addressed this challenge through various initiatives. Among the initiatives is Employer Assisted Housing (EAH) where the Government encourages employers to facilitate provision of housing to their employees. EAH dates back to the colonial era when both the government and private employers provided housing to core employees. For instance, the Kenya Railways constructed its first housing project for its employees before independence. The initial EAH projects were driven by the need to house the employees close to their work place. Whereas EAH dates back to colonial period, the Civil Servants Housing Scheme Fund (CSHSF) got recognition in the Sessional Paper No.3 of 2004 on National Housing Policy for Kenya to facilitate civil servants to access housing. Generally, home ownership in Kenya is still low as evidenced by a slowly improving mortgage market. A Report on Central Bank of Kenya (CBK) bank supervision of 2014 revealed that the value of mortgage loan assets outstanding increased from Kshs.138.1 billion in December 2013 to Kshs.164 billion in December 2014. This represents a growth of Kshs.25.9 billion or 18.7 percent. In addition, there were 22,013 mortgage loans in the market in December 2014 up from 19,879 in December 2013 (CBK report 2014). The average mortgage loan size increased from Kshs.6.9 million in 2013 to Kshs.7.5 million in 2014. According to the Report, banks identified high cost of housing, high interest rates, high cost of incidental costs, low income levels and difficulties with property registration/titling as the major impediments to the growth of mortgage portfolios in Kenya.

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Although the CSHSF offers mortgage loans to its members at 5% interest rate on monthly reducing balance and also constructs houses that are relatively cheap as compared to the market rates; it still faces some of the impediments mentioned in the CBK Report.

1.2

Problem Statement

Housing is a crucial component of economic competitiveness. Well planned housing at affordable costs, when combined with essential services, affords dignity, security and privacy to the individual, the family and the community as a whole. The CBK Statistical Bulletin of June 2015 puts the average monthly income in Kenya at Kshs.46,164. The Report also notes that a low income earner is anybody earning less than Kshs.23,670 while middle income ranges from Kshs.23,670 to Kshs.120,000; any amount above Kshs.120,000 is considered high income. Additionally, a Report by Public Service Commission (PSC) (2010), notes that low income earners form 67% of civil servants in Kenya while 33% are middle and high income earners. This means that many of the housing projects need to be tailored for the low income groups who are presently limited by their income. The CSHSF has been in existence since 2004 when the regulations governing it were gazetted. In addition, the Salaries and Remuneration Commission (SRC), vide Circular Reference No. SRC/ADM/CIR/1/13 Vol. III (128) dated 17th December 2014, revised the mortgage thresholds for civil servants across all cadres to between Kshs.4 million and Kshs.20 million as per oneâ&#x20AC;&#x2122;s job group; as opposed to the previous mortgage loan which had a maximum amount of Kshs.5 million. The Circular also increased the repayment period from 18 years to 20 years. These coupled with an attractive interest rate of 5% on monthly reducing balance has not attracted many intended beneficiaries as originally envisaged. By January 2016, 3,002 out of 71,482 civil servants had benefitted from the Fund representing a 4.2 percent access. This housing needs assessment was therefore carried out to ascertain the accessibility, suitability and affordability of the CSHSF to the intended beneficiaries.

1.3

Survey Objectives

1.3.1

Main Objective

To assess the extent to which the CSHSF products are accessible, suitable and affordable to all intended beneficiaries. 1.3.2 i. ii.

Specific Objectives

To assess the level of satisfaction and preference of the CSHSF products To find out the level of acceptance of saving or committing pension funds towards home ownership iii. To make recommendations on how the CSHSF can be improved

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1.4

Scope of the Housing Needs Assessment

A population universe of 71,482 working in the National Government was considered. A sample size of 2,400 civil servants distributed across the country and in all job groups were interviewed. For every 3 respondents, at least one must have been from the opposite sex. The interviews were carried out in all the 47 counties. In Nairobi City County, 800 civil servants were interviewed with the remaining 1600 equally distributed in the 46 counties. Nairobi City County had the highest number of respondents because all Ministries have their headquarters within it. In addition, it has a relatively high number (36.9%) of civil servants as compared to other counties

1.5

Field Survey Methodology and Data Capture

Officers from the Directorate of Housing were trained as enumerators. Survey teams of four officers under one supervisor were formed. The survey was carried out in two phases with phase 1 covering 28 counties and phase two 19 counties. The questionnaire was divided into two parts, I and II. Part I covered background information of the respondents whereas Part II covered beneficiaries and non- beneficiaries. The questionnaires were administered through a Paper and Pencil Interviewer (PAPI) technology and data was captured on survey123 for ArcGIS online. This was done concurrently with data collection therefore guaranteeing faster detection and correction of errors/inconsistencies. A team was formed to carry out data weighting, cleaning, coding, editing and processing. Data was presented in various forms including but not limited to tables, charts and graphs.

1.6

Justification of the Housing Needs Assessment

The CSHSF has been in existence since 2004. However, the uptake of the Schemeâ&#x20AC;&#x2122;s products among the intended beneficiaries is too low at 4.2 percent as at January 2016. This necessitated the housing needs assessment whose outcome will enable updating of the existing data bank as a base for periodic review of administrative procedures, policies and regulations relating to the Civil Servants Housing Scheme Fund. This will lead to facilitation of more civil servants to access housing.

1.7

Housing Needs Assessment Limitations

Although the housing needs assessment attained its objectives, there were some unavoidable limitations that included:i. ii.

Inadequate number of respondents in job groups sampled especially in the counties Communication barrier where some respondents were not able to respond to the questions as presented iii. Fear of insecurity in some counties iv. Misgivings on the relevance of the housing needs assessment by some respondents v. Unequal representation in ministries in all the counties

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CHAPTER 2 CIVIL SERVANTS HOUSING SCHEME FUND SITUATIONAL ANALYSIS 2.1

Situational Analysis

2.1.1

Establishment of the Civil Servants Housing Scheme Fund (CSHSF)

The Government of Kenya has been developing rental housing units countrywide for occupation by civil servants. Apart from the uniformed officers who were housed in government institutional houses, the rest of the civil servants were paid house allowances to enable them seek residential accommodation on their own. Civil servants who were in occupation of the few government pool and institution houses had to forfeit their house allowances before July 2001. From July 2001, the Government changed from the policy of directly housing civil servants on rental basis with the exception of officers offering essential services like security and health. The Government started paying rental house allowances to civil servants to enable them to access houses for rental in the open market. The CSHSF was established vide Legal Notice No. 98 of 15th September 2004 under the Housing Act Cap 117. This was after the Cabinet approved the establishment of the Fund and the formulation of the rules and regulations to govern the operations of the Fund. The establishment of the CSHSF is in line with the National Housing Policy for Kenya 2004, where the government encouraged the employers to facilitate their employees to access housing. Civil Servants (Housing Scheme Fund) (Amendment) Regulations, 2015 were gazetted as Legal Notice No. 231 of 7th December 2015 to supplement the original regulations. 2.1.2

Objectives of the CSHSF

The objectives and purpose for which the Fund was introduced include to:a)

Provide housing loan facilities to civil servants for the purpose of either purchasing or constructing a residential house. b) Develop housing units for sale and for rental by civil servants and, c) Raise funds for the implementation of the above. 2.1.3

Organization Structure and functions of the CSHSF

The Fund is administered by the Scheme Management Committee which consist of: 1. 2.

The Officer administering the Fund who is the chairman of the Committee; The Principal Secretary responsible for The National Treasury;

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3. The Principal Secretary responsible for Labour, Social Security and Services; 4. The Principal Secretary responsible for Human Resource Management and Development; 5. The Principal Secretary responsible for Infrastructure; 6. The Principal Secretary responsible for Coordination of National Government; 7. The Attorney-General; and 8. The Officer in charge of the Fund Secretariat who is the Secretary to the Committee. The functions of the Committee are to: â&#x20AC;&#x201C; 1. 2. 3. 4.

Supervise and control the administration of the Fund; Determine and regulate interest payable by beneficiaries; Approve all housing development and financing proposals; Enter into agreement with persons or legal entities for the purposes of providing services to the Fund; 5. Develop criteria for the beneficiaries of the Fund; 6. Establish management guidelines and engage such staff as may be necessary to assist the Committee and the officer administering the Fund; and 7. Such other duty as may be directed by the Cabinet Secretary for the purposes of the proper management of the Fund. The functions of the CSHSF are as follows: 1. 2. 3. 4. 5. 6. 7. 8.

9. 10. 11. 12. 13. 14. 15. 16.

Organization, planning, control and coordination of housing development; Management of housing estates under the scheme; Formulation of civil servants housing policies, regulations and programmes; Establishment of a framework for housing development; Maintenance of a database on housing demand by civil servants; Securing of land for civil servants housing development; Resource mobilization; Liaison with stakeholders and statutory bodies such as National Environment and Management Authority, county governments, National Construction Authority, National Land Commission among others; Procurement of goods, services and works; Investment and accounting of Scheme funds; Monitoring and evaluation of projects; Facilitating approval of house loans and liaising with housing finance Institutions in the administration of housing loans; Sale of houses developed by the CSHSF; Facilitation of acquisition of leases and titles; Management of financial, human and other resources; Legal and insurance matters.

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These functions are carried out through the following sections: a) Estate Development: Deals with the management of housing development. b) Estate Management: Deals with the management of estates sold to civil servants and processing of mortgage loan applications. c) Finance and Administration: Handles administrative and financial matters of the CSHSF.

Figure 1.1: Organizational Structure of the CSHSF

Cabinet Secretary responsible for housing

Principal Secretary responsible for housing and Chairperson of SMC

Director, CSHSF and Secretary of SMC

Estate Development

Estate Management

Scheme Management Committee

Outsourced Services 1. Mortgage management 2. Building contracting 3. Construction consultancy 4. Insurance 5. Property management

Finance & Administration

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2.1.1 1. 2. 3. 4. 5.

Terms and conditions of granting a mortgage loan The purpose of mortgage loan are: -

Purchase of a residential house for the occupation of the applicant; Improvement of a residential house occupied by the applicant; Development of a residential house for the occupation of the applicant; Purchase of land and development of a residential house for occupation by the applicant; Equity release for improvement or development of a residential property.

The mortgage loan granted by the fund shall not be utilised for commercial purposes. The terms and conditions of granting a mortgage loan are as follows: 1. The applicant must be a serving civil servant. 2. A civil servant shall be eligible for two loans provided that the loans shall not run concurrently. Where one is applying for the second benefit or the spouse has benefited before, priority shall be given to those who have never benefited. The two loans shall not exceed the officerâ&#x20AC;&#x2122;s current entitlement at the time of the application. 3. Where a borrower leaves service and has served for more than 10 years in the service, the borrower shall continue to service the loan at the same terms and conditions as set out in the regulations, provided that where the borrower defaults for a period of four months in repayment, the interest shall be converted to prevailing commercial rates. 4. Where a borrower leaves service on disciplinary grounds or resigns before serving for a period of ten years, the Committee may grant the borrower a maximum period of four months to repay the full outstanding loan or permit the borrower to repay the outstanding loan at the prevailing market rate and on such other terms and conditions as the Committee may from time to time prescribe. 5. Where the commercial rates are applicable and the borrower is in default for a period of four months, the Fund may call in the loan and sell the charged property by public auction or private treaty. 6. The borrower will take and maintain a mandatory mortgage protection insurance policy and insurance policy against fire and related perils. 7. The applicant must demonstrate their ability to repay the loan. A balance of not less than a third of their basic salary should be retained by the applicant after the monthly loan repayment. 8. The plot or house being purchased should be in an urban area and not in the rural areas. 9. The title deed or certificate of lease of the property being purchased must be surrendered to the Scheme for charging and safe keeping until the loan is paid in full. 10. Provide an official search of the title to the property intended to be purchased or developed.

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11. Provide a certified copy of the sale agreement relating to the property being purchased. 12. Provide current valuation report on the property being purchased or plot being developed from a registered valuer. 13. For a development loan, the applicant must do the following:• Have a title deed to the plot being developed free of any encumbrances. • Ensure the remaining lease period for the identified property is not less than forty five (45) years. • Make an application to the officer administering the Fund which shall be accompanied by: i) Copies of the building plans of the proposed residential property duly approved by the relevant authority within whose area it is to be situated. ii) Priced Bills of Quantities in respect of the proposed development prepared by a registered Quantity Surveyor. • The development loan will be released to the applicant in a maximum of three (3) installments based on the levels of construction where a maximum of 25% of the cost of construction will be advanced as the first installment, a maximum of 50% as the second installment and the balance of 25% as the third and final installment. • Demonstrate willingness that the construction will be supervised at the cost of the applicant by relevant Professionals appointed by the Scheme or any other body authorized by the Scheme. • Allow access to CSHSF technical staff or their agents to verify the quality and level of construction. 14. The applicant will be required to pay 10% of the purchase price or provide evidence of 10% cost of construction for development loans. 15. The Scheme (CSHSF) will grant a loan up to a maximum of 90% of the purchase price or cost of construction. 2.1.2

Key Procedures of the Fund

The following are key procedures for mortgage loan, sale of houses and rental. a) Application procedure for mortgage loan i. ii. iii. iv. v. vi.

Interested civil servants to express their interest by applying for mortgage loan for purchase / construction of a house by registering with the Fund. Shortlisting of potential applicants. Applicants to apply by filling an application form for the loan through the Administrator of the Scheme. The Administrator of the Scheme will satisfy himself that the applicant is eligible. The list of eligible applicants will be forwarded with recommendations to the mortgage finance institutions. The applicant will formally apply for the loan with the mortgage finance institution.

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vii. The application will be subjected to the appraisal criteria among other normal lending requirements by the mortgage finance institution. viii. On approval of the application, the applicant will be informed accordingly as the funds are disbursed to him incase of construction loan and transmission of funds to the seller incase of purchase. ix. Rejected applications will be returned to the Administrator of the Scheme with reasons for their rejection. b) Sale process of houses developed by the CSHSF i. The CSHSF determines the sale price for the developed houses ii. Once the selling price has been assessed, advertisements are placed in the daily newspapers, Ministerial Circulars and website. iii. Application forms have to be bought by the applicants at a non-refundable fee of Kshs.1,000 and the duly filled forms returned with a 10% deposit within sixty (60) days from the date of the circular. iv. The CSHSF analyses the application forms based on a point system. v. The allocation is determined by the Scheme Management Committee (SMC), which manages the Fund. vi. Once the allocation is done, applicants are notified of the status of their applications. vii. Unsuccessful applicants are refunded the 10% deposit upon request. viii. The CSHSF gives letters of offer to the successful tenant and outright purchasers. ix. The successful applicants sign letters of acceptance. x. Sale agreements are signed between the purchasers and the Government and mortgage deductions begin upon hand over of the property. xi. The Ministry procures on behalf of the purchasers insurance covers for mortgage protection and against fire and other related perils that may occur. The purchasers reimburse the cost of the insurance to the Ministry. xii. Incase of fire or death, the affected family notifies the CSHSF which then notifies the insurance company about the loss. xiii. The insurer then settles the claim and the money posted to the purchaserâ&#x20AC;&#x2122;s account in the event of fire and other related perils. Incase of death, the outstanding mortgage balance is settled by the insurance company. c) Rental process i. ii. iii. iv. v.

The CSHSF carries out rental assessment by a government valuer for the properties Application by civil servants through prescribed forms The CSHSF prepares applicants waiting list Selection of tenants from the waiting list Signing of tenancy agreement between the Principal Secretary responsible for housing and tenants vi. Recovery of inclusive rent from the tenants vii. Administration of tenancy agreements between the parties

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2.1.3

Achievements of CSHSF

a) Sale of non-strategic government houses in Nairobi From September 2004 to April 2005, the Government sold a total number of 1,082 houses that were identified and classified as non-strategic. The houses were located in Nairobi West, Kileleshwa, Rubia, Kariakor, Nairobi South C/ South B and Kibera as presented in Table 2.1. Table 2.1: Non-strategic government houses sold in Nairobi S/No Estate

Number of units

Description

Kileleshwa

208

Maisonettes

Mugoya

144

Maisonettes

Nairobi West

Maisonettes

Rubia

280

Maisonettes

Kibera High Rise Flats

294

Flats

Mayfair (Kariokor)

Bungalows

Kongoni Flats (South ‘C’)

Flats

Sungura Road Flats (South ‘C’)

Flats

Kabras Road Flats (South ‘B’)

Flats

Mukenia Road Flats (South ‘B’)

Flats

Parklands

Bungalow

Total

1,082

b) Houses directly financed by the Fund • •

A total of 25 civil servants were financed by the CSHSF to purchase housing units sold by the National Housing Corporation (NHC) in Madaraka estate. A total of 7 civil servants were financed by the CSHSF to purchase housing units sold by the National Social Security Fund (NSSF) in Embakasi and Langata estates.

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Newly Constructed Houses in Nairobi

A total of 747 housing units were constructed and sold on outright and tenant purchase basis in Nairobi as presented in Table 2.2. Table 2.2: Constructed houses sold in Nairobi

S/No

Estate

Number of Units

Description

Ngara

559

Flats

Kilimani

Kileleshwa, Nyeri Road

Kileleshwa, Makueni Road

Kileleshwa, Gichugu Road

Jogoo Road, infill

TOTAL

747

d) Granting of Mortgage Loans to Civil Servants The fund has facilitated 730 civil servants with mortgage loans for construction and purchase amounting to Kshs.2.5 billion through Kenya Commercial Bank (KCB) and Housing Finance (HF) Group. e) Houses Constructed and Rented to Civil Servants A total of 411 housing units have been rented to civil servants in Nairobi as indicated in Table 2.3. Table 2.3: Houses rented to civil servants in Nairobi

S/No

Estate

Number of Units

Description Flats

Ngara Estate

Shauri Moyo

140

Jogoo Road

175

TOTAL

411

In total CSHSF has facilitated 3,002 civil servants to access housing.

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2.1.4

Proposed and ongoing Projects

The following are the proposed and ongoing projects by CSHSF as indicated in Table 2.4 Table 2.4: Proposed and ongoing projects S/NO

Name of Project

County

Number of Housing Units

Mode of Financing

Shauri Moyo Housing Project

Kisumu

250

GoK

Construction stage

Machakos Housing Project

Machakos

220

GoK

Design and preparation of tender documents for procurement of contractor

Kiambu Town Housing Project

Kiambu

300

GoK

Design and preparation of tender documents for procurement of contractor

Embu Housing Project

Embu

200

GoK

Design and preparation of tender documents for procurement of contractor

Park Road Housing Project

Nairobi

1,800

PPP

Negotiation with the private party.

Starehe Housing project

Nairobi

6,036

PPP

Negotiation with the private party.

Shauri Moyo Housing Project

Nairobi

1,500

PPP

Preparation of Request for Proposal (RFP) for issuance to prequalified bidders.

Muguga Green

Nairobi

Mixed use Preparation of shadow development designs.

Hobley Project

Mombasa

Mixed use Preparation of shadow development designs.

Status

The CSHSF also plans to develop housing units in the following counties: - Kakamega, Isiolo, Kilifi (Kilifi town & Malindi), Nyeri, Nakuru, Lamu, Kiambu (Thika & Ruiru), Kisii, Bungoma, Uasin Gishu (Eldoret Town), Laikipia (Nanyuki Town), Kajiado (Ngong Town), Meru and Garissa. 2.1.5 1.

Challenges faced by the CSHSF

Limited financial resources due to low exchequer allocations, that has led to limited available funds for disbursement to the civil servants and financing of new projects. Furthermore, internally generated funds from mortgage and rent recoveries are insufficient to meet the demand for the Scheme products.

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2. Inadequate human resource: - The Scheme does not have all the relevant professionals such as quantity surveyors and engineers to design and supervise construction projects. It has also experienced challenges when personnel such as accountants and ICT officers are transferred. This is mainly because the operations of the Fund are managed through the Enterprise Resource Planning (ERP) system which requires special training and takes a long time to train new staff to fully familiarize with it. 3. Irregular allocation of land meant for housing development to private individuals and institutions: - Land originally set aside for development of government housing was irregularly/un-procedurally allocated to private individuals and institutions. Recovery of this land through National Land Commission has been difficult and time consuming. The processing of ownership documents for land under pool houses which is meant for housing redevelopment by the Fund has not been finalized. 4.

Lack of acceptable ownership documents by the applicants due to long processes involved making the Scheme unable to effectively disburse mortgage loans to construct to the applicants.

5. Delay in processing lease certificates to beneficiaries who have cleared paying for their properties. 6.

Cost of housing development is high and continues to increase.

7. Low affordability status of civil servants due to other check off commitments, low remuneration especially for the lower cadres and those with few years to retirement. 8.

Requirement to pay 10% of the purchase price or provision of evidence of 10% cost of construction for development loans hinders civil servants from accessing the scheme products.

Delays in processing of mortgage loans as a result of high costs incurred by the loan applicant which include: - legal fees, valuation fees, relevant authorities approval fees, stamp duty, architectural fees, quantity surveyorâ&#x20AC;&#x2122;s fees, structural engineers fees, 16% VAT on all fees and project cost.

10. Delays in remittances of mortgage and rent deductions by ministries and county governments and other public institutions.

2.2 Laws and Policies Relating to Civil Servants Housing Scheme Fund This section contains the main legislative and policy frameworks and international conventions relating to housing: 2.2.1

Constitution of Kenya

Access to decent, affordable and adequate housing is a human right and an important component of the right to adequate standards of living. Housing is not only necessary for security and comfort, but also critical in fostering social cohesion and development of a nation. Beyond its socio-cultural elements, housing is also a critical driver of economic development as a result of its forward and backward linkages with other economic

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development processes. In recognition to this, the Constitution of Kenya provides that every person has the right to accessible and adequate housing, and to reasonable standards of sanitation [Article 43. (1) (b)]. 2.2.2

International Conventions

The right to housing is further affirmed by international instruments that Kenya is party to which includes the following declarations and/or commitments:i.

The Universal Declaration of Human Rights of 1948 which lays foundation for the right to adequate housing; ii. International Covenant on Economic, Social and Cultural Rights of 1966; iii. Committee on the Elimination of Discrimination Against Women (CEDAW) which lays emphasis on enjoinment of women to adequate living conditions, particularly in relation to housing, sanitation, electricity and water supply, transport and communication; iv. Istanbul Declaration and Habitat Agenda of 1996 and the Declaration on Cities and other Human Settlements in the New Millennium; v. The Sustainable Development Goals. Goal 11 generally seeks to make cities and human settlements inclusive, safe, resilient and sustainable while target 11.1 specifically envisages to ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums by 2030; vi. The Habitat Agenda which challenges governments to use shelter development as a tool to break the vicious cycle of poverty, homelessness and unemployment; vii. African Union Specialized Technical Sub-Committee No. 8 on Urban Development and Human Settlements (formerly AMCHUD). This is a commitment by African governments to address issues of urban development and human settlements including housing; and viii. Agenda 2063: The Africa we want - there is need to provide opportunities for all Africans to have access to decent and affordable housing in clean, secure and well planned environments in sustainable human settlements. 2.2.3

The Kenya Vision 2030

The housing sector is characterized by inadequacy of affordable and decent housing, lowlevel of urban home ownership, extensive and inappropriate dwelling units, including slums and squatter settlements. Under the social pillar of Kenya Vision 2030, the Government undertakes to provide the countryâ&#x20AC;&#x2122;s population with adequate and decent housing in a sustainable environment. One of the blue printâ&#x20AC;&#x2122;s flagship projects is the production of 200,000 housing units annually through a mixture of initiatives in order to fill the huge housing gap in the country. 2.2.4

Sessional Paper No.3 of 2004 on National Housing Policy for Kenya

On Employer Assisted Housing, the National Housing Policy notes that most employees, especially those that are lowly paid and not adequately facilitated to access affordable

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housing, are likely to stay in substandard housing such as slums and informal settlements as a coping mechanism. The Policy encourages employers to facilitate their employees by way of loans either directly or indirectly through the existing network of mortgage finance institutions for the purpose of acquiring residential properties. The Government commits itself to facilitate both public and private sectors to assist their employees in acquiring housing in accordance with the Employers Ordinance Act, Sec 41 and in recognition of the fact that adequately housed labour-force generates higher productivity. The Government has taken lead in employer assisted housing through establishment of the Civil Servants Housing Scheme Fund and other employers are encouraged to emulate this. 2.2.5

Land Act, 2012

Section 43 (1) deals with conveyance, assignment, transfer of land, transfer of lease or other instrument used in the disposition of an interest in land by way of transfer. According to Section 80, a charge shall have effect as a security only and shall not operate as a transfer of any interests or rights in the land from the chargor to the chargee but the chargee shall have, subject to the provisions of this part, all the powers and remedies in case of default by the chargor and be subject to all the obligations that would be conferred or implied in a transfer of an interest in land subject to redemption. Section 85 deals with the right to discharge whereby the chargor shall, upon payment of all money secured by a charge and the performance of all other conditions and obligations under the charge, be entitled to discharge the charge at any time before the charged land has been sold by the chargee or a receiver under the power of sale. Incase of mortgage loan applications for purchase of single residential houses, the above relevant provisions in the Act stipulate the requirements on transfer, charging and discharging of property. For construction loan, the title or certificate of lease must be surrendered for charging and discharged after full repayment of the loan. 2.2.6

Land Registration Act, 2012

Section 34 deals with official searches whereby a person who requires such in respect of any parcel, shall be entitled to receive particulars of the subsisting entries in the register, certified copies of any document, the cadastral map, or plan filed in the registry upon payment of the prescribed fee. Section 37 provides that a proprietor may transfer land, a lease or a charge to any person with or without consideration, by an instrument in the prescribed form or in such other form as the Registrar may in any particular case approve. In section 56 on form and effect of charges, a proprietor may by an instrument, in the prescribed form, charge any land or lease to secure the payment of an existing, future or a contingent debt,other money or moneyâ&#x20AC;&#x2122;s worth, or the fulfillment of a condition and, unless the chargeeâ&#x20AC;&#x2122;s remedies have been by instrument, expressly excluded, the instrument

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shall, contain a special acknowledgement that the chargor understands the effect of that section, and the acknowledgement shall be signed by the chargor or, where the chargor is a corporation, the persons attesting the affixation of the common seal. The Land Registration Act enables the actual transfer, charging and discharging to be reflected in the title documents. 2.2.7

Sectional Properties Act, 1987

The Sectional Properties Act (SPA), which came into force in 1991 was introduced â&#x20AC;&#x153;to provide for the subdivision of buildings into units being owned by individual proprietors and common property to be owned by the proprietors of the units as tenants in common, and to provide for the use and management of the units and common property and for connected purposesâ&#x20AC;? (Government of Kenya, 1987). Common property comprises the areas that are used by all owners, such as the grounds, driveways, roads, recreation facilities, corridors, entrance areas and the exterior of the building. Prior to the enactment of the Act, when a developer wished to sell individual flats or maisonettes and where for some reason a subdivision survey was not practicable, the developer could apply for registration of an architectâ&#x20AC;&#x2122;s plan of the building on which the units were serially numbered under the Registration of Documents Act (RDA). RDA however, had a number of shortcomings: - there was no uniformity in the details on the plans and in the manner of delineating individual units; there was no law, which distinguished what was individual property from common property; though common services were usually administered by a management company, it was not mandatory under existing law; a company incorporated under the Companies Act was not the most suitable entity for management of common services; and problems in the Land Registry because issue of titles to flats led to a multiplicity of valid titles to the same parcel of land. The main focus of the SPA was therefore to address the aforementioned shortcomings in earlier procedures. SPA is only applied to land held either on freehold title or leasehold with an unexpired term of not less than 45 years. Registration is done under the Land Registration Act. On registration of pertinent sectional plans, the original title is cancelled to be replaced by the individual titles issued under the SPA, hence eliminating servitude to the original title holder. The individual titles can therefore be easily transferred, charged or mortgaged, and owners can manage their obligations directly, which enhances safety of their registered rights. According to the National Housing Survey Report of 2012/2013, 75.7% of all housing units developed in 2011 were flats. Flats and apartments are coming up even in areas that had been zoned for low-density residential areas. This is due to rapidly escalating value of land, heightened security, preference to communal way of life and the ever- rising cost of building materials that make cost of housing far beyond reach of the majority of the urban population. These house types are advantageous in that several housing units can be put up on a small parcel of land thereby increasing the occupancy density and lowering the prices of the units to affordable levels.

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2.2.8

Physical Planning Act, 286

It is a mandatory requirement under Section 30 to apply for development permission from a local authority (County Government) under whose jurisdiction the proposed development will be carried out. Development under the Act is defined as any original material change in use of land and any redevelopment which might be carried out in future. Carrying out development on any land without obtaining development permission is an offence. The approving authority is at liberty to stop/suspend or demolish an illegal development. 2.2.9

Public Health Act, 242

Approval for proposed building plans must be granted by the public health department. This applies to housing projects by the CSHSF and the applicants who are applying for construction loans. It is provided for in Section 126A in relation to buildings and sanitation for: a) Controlling the construction of buildings, and the materials to be used in the construction of buildings; b) Controlling the space about buildings, the lighting and ventilation of buildings and the dimensions of rooms intended for human habitation; c) Controlling the height of buildings, and the height of chimneys (not being separate buildings) above the roof of the buildings of which they form part; d) Prohibiting the erection or use of temporary or movable buildings, whether standing on wheels or otherwise, and for prohibiting or restricting the use of tents or similar buildings for business or dwelling purposes; e) Requiring and regulating adequate provision for the escape of the occupants of any building in the event of an outbreak of fire; f ) Preventing the occupation of a new or altered building until a certificate of the fitness thereof for occupation or habitation has been issued by such local authority; g) Compelling employers to provide housing for their employees; h) Compelling owners to repair or demolish unsafe dangerous or dilapidated buildings. 2.2.10 Survey Act, 299 According to Section 24 on boundary marks to be shown on plan: - Every trigonometrical station, fundamental benchmark and boundary beacon erected or placed for the purpose of defining the boundaries of any holding or land shall be shown on the plan (if any) attached to, or referred to in, any document or instrument purporting to confer, declare, transfer, limit, extinguish or otherwise deal with or affect any right, title or interest, whether vested or contingent to, in or over such holding or land, being a document or instrument which is required to be registered, or is ineffectual until registered, under any written law for the time being in force relating to the registration of transactions in or of title to land. Survey plans prepared under this Act are important in showing authentic cadastral boundaries of properties.

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2.2.11 County Government Act of 2012 In granting building plans approvals, county governments will be guided by Section 111 (3) (d) that requires that development control in the city or municipality should be within the national housing and building code framework. In section 111(4) city or municipal land use and building plans shall be binding on all public entities and private citizens operating within the particular city or municipality. In Section 111(5) city or municipal land use and building plans shall be the regulatory instruments for guiding and facilitating development within the particular city or municipality. In regard to CSHSF housing development, project approval for construction must be sought from the relevant county authority. Applicants who are applying for construction loan must also seek for building and structural plans approval from county governments. 2.2.12 Urban Areas and Cities Act, 275 One of the objects and purposes of this Act is to establish a legislative framework for classification of areas as cities, municipalities and towns. This is important to the Fund since it currently finances properties in the cities, urban and peri-urban areas. 2.2.13 Environmental Management and Co-ordination Act, 387 In the second schedule, projects requiring submission of an Environmental Impact Assessment (EIA) report includes establishment of new housing developments exceeding 30 housing units. The ongoing and proposed projects of the Fund comprise of over thirty housing units and EIA reports are required. 2.2.14 National Construction Authority, 2012 The object for which the National Construction Authority (NCA) is established is to oversee the construction industry and coordinate its development. The contractors who carry out housing development must be registered with NCA. The Fund outsources building contractors registered with NCA to develop housing units. 2.2.15 Persons with Disabilities Act, 133 National Council for Persons with Disabilities is mandated to ensure the provision of suitable and affordable housing for persons with disabilities. Persons with disabilities are given special consideration when applying for houses and financing from the CSHSF.

2.3 Case Studies on Mortgage Housing Schemes This section gives highlights of case studies on mortgage housing schemes in selected countries.

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2.3.1 Nigeria National Housing Fund (NHF) is a Federal Government introduced scheme, which entitles all Nigerians above the age of 21 years in paid employment to a low interest government funded loan that is fixed throughout the life of the mortgage. Members of the scheme contribute 2.5% of their monthly salary to the fund through Federal Mortgage Bank of Nigeria (FMBN). The contributors can access loans up to 15 million Naira with an equity contribution of 10% - 30% of the loan amount depending on the loan amount at the rate of 6% interest payable over a period of 30 years. Aims and Objectives • Mobilization of funds for the provision of affordable residential houses for Nigerians. • Provide loans to Nigerians for erecting, purchasing or renovating houses. • Encourage programs that would enhance housing financing among low and medium income earners. The Fund also services the non-salaried informal sector. • Provide long term loans to mortgage institutions for lending to contributors of the Fund Funding • • • •

Mandatory contribution of 2.5% of monthly income of Nigerians earning N3000 and above per annum. Commercial and Merchant Banks to invest 10% of their loans and advances portfolio. Insurance Companies are mandated to invest 20% of non-life and 40% life funds in the housing sector with 50% of these directly in the funds. Financial contributions of the Federal Government.

Benefits • • • • • • • •

Housing loan of up to 90% of the cost of the house. Interest on loans remains fixed throughout the life of the mortgage at 6% p.a. Long period of repayment of up to 30 years. Contributions can serve as additional old age security. Up to N15 million can be borrowed. Refunds with 2% interest on retirement. Loan repayment is about the same as a typical monthly rent. Every contributor has a lifetime registration number, a passbook for personal recording of contributions and an account statement

Eligibility • • •

Registration via NHF 1 (employer) and NHF 2 (employee) forms. Deducted monthly contributions remitted to FMBN promptly. Atleast 6 months contributions should be made.

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•

Passbook to be updated by employer and is transferable from one employment to the other. Yearly statements of cumulative contributions plus accrued interest available. Apply through any accredited Primary Mortgage Institute (PMI) Applicant must provide satisfactory evidence of regular income.

• • •

Requirements for National Housing Fund (NHF) Loan Scheme: 1. 2. 3. 4. 5. 6. 7. 8.

Be a contributor to the fund for at least six months Have satisfactory evidence of regular flow of income to guarantee the loan Apply on a prescribed mortgage loan application form Submit photocopies of valid title documents Approved survey/site plans and approved building plans, bill of quantities Letter of consent to mortgage, to Union Homes Saving and Loans Limited Valuation report prepared by a firm of registered surveyors and valuers where applicable Offer letter/acceptance and allocation letter (incase of Government projects)

2.3.2 Ghana Public officers in Ghana enjoy a mortgage housing scheme where the maximum loan accessible is not more than 25,000 Ghanaian Cedis and beneficiaries could be offered up to 100 percent loan subject to their ability to pay. The repayment period is 20 years or up to the beneficiary’s retiring age. The main purpose of the housing scheme is to benefit the public sector employees own houses sooner than they may under their own efforts. This is because “under this scheme, employees within that sector can access relatively cheaper mortgage loans to buy their own houses.” For an employee to access the facility: • •

He must have been working in the public sector for a minimum of five years. The applicant must not have reached the general mandatory retiring age of 60 or 65 in the case of Judges of the High Court and 70 years in the Appeals and Supreme Courts. • For applicants who have 5 years or less, to retirement, the scheme will lend to them provided government agrees to pay the outstanding loan amount due, out of the borrowers’ total lump sum entitlements when he or she is about to go on pension or when the loan matures. The amount of loan to be granted under the Scheme is determined by the Management Board and does not exceed ten times the gross annual salary of the applicant. Interest on a loan is charged at the rate of two and one-half per centum (2.5) per annum on the reducing balance of the loan. The property shall be mortgaged to the Board and

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the title deeds and mortgage deeds relating to the property, duly stamped and registered, shall be deposited with the Board. A borrower who obtains a loan shall take out in respect of the loan or the property or both, such insurance policy or policies with such insurer and on such terms and conditions as the Board may approve. 2.3.3 Malaysia Malaysia Government provides housing loan to government employees. Requirements for mortgage loan: i) ii) iii) iv) v)

Must be Malaysian Confirmation of job position Over one (1) year service after confirmation Not bankrupt or having disciplinary issue Must have more than five (5) years before retirement Terms and conditions of mortgage loan: 1. The maximum term for loan is up to 360 months (30 years) 2. The interest rate is fixed at 4% p.a on a monthly reducing balance 3. The loan agreement terminates immediately on the day of resignation and need to be settled within one (1) month or else the loan interest will be reviewed to 7% p.a. 4. Second loan is allowed if first loan is settled or the loan limit is not reached yet. 5. The loan repayment starts only when the property under construction is completed up to 95% (which means on the day the house key pass to owner). 6. Loan repayment is by direct deduction from monthly salary 7. Borrowers must take a compulsory mortgage insurance. 8. No lock-in period. Borrower can sell the property anytime with no extra financial charge. However, permission must be obtained before the selling.

Qualification of Loan Amount 1. 2. 3. 4.

The maximum loan amount is based on the monthly basic salary and not the total salary (excluding all allowance and bonus) The maximum loan is RM 450,000, no matter how high the salary is The amount of loan approved is based on the loan eligibility/house price/amount applied/outstanding bank loan/market value. For the first loan, the monthly payment must not exceed 60% of the current basic pay, whilst for the second loan, it is subject to the monthly payment not exceeding 50% of the estimated monthly pension received based on the current basic pay.

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Role of valuation and property service department (JPPH) This department is tasked to provide valuation services to the Housing Loan Division (HLD) of the Ministry of Finance. In doing so, they: • • •

Determine the market value of the property for the purpose of housing loan and fire insurance Verify the construction stage of the property for the purpose of progress payment Certify the completion of additional/renovation work for progress payment No valuation fee is charged for valuation if the applicant is a government employee.

Types of housing loans There are seven types of housing loans as follows: I. II. III. IV. V. VI.

Purchase of completed housing or residential parcel Construction of a house on land belonging to the applicant Purchase of a house or a residential parcel under construction. Purchase of land for the purpose of construction of a house Redemption of an existing loan from a bank/financial institution Construction of a house on the applicant’s land which has been purchased by a government housing loan. VII. Renovation of a house Housing Loan Funding Funding for a housing loan can be done either the conventional way or by adopting Islamic principles using different sets of application forms. Progress Payment Progress payments are only applicable for housing loans type II, III, VI, and VII. Payment is made based on the work/construction progress. The applicant must submit to JPPH a claim on the progress/completion of work and copy to HLD for further action. The progress of work has to be inspected and verified before payment can be recommended. Second Housing Loan Requirements • • •

•

An applicant must have settled their first housing loan An applicant applying for a second housing loan is not entitled to apply loan for renovation. The amount of loan entitlement for a second loan is based on the difference between the current eligibility and the amount that had been taken on the first loan subject to the monthly payment not exceeding 50% of the estimated monthly pension that will be received based on the current basic pay. For loans for purchase of land for the purpose of construction of a house, the amount of eligibility must not exceed 50% of the balance of the current eligibility.

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Additional Works Loan Requirements • • • •

Cost of addition works must be valued by JPPH The application for additional works must be submitted together with the application for housing loan The additional works for a low cost house must be made concurrently during the construction or completed within six months after completion of the house. The total amount of cost of building and additional works must not exceed the maximum eligibility.

Renovation Loan Requirements Application for the renovation purposes are only allowed after five years from: • •

Date of approval for type I and IV Date of assurance of voucher for payment of 95% or 100% for type II and III

Application for renovation loan can only be approved for houses purchased by government housing loan and the building plan has been approved by the local authorities. 2.3.4 Mexico FOVISSSTE is a publicly-mandated agency created in 1972 with the goal of creating dedicated sources of housing finance for public sector workers. •

From the legal point of view, FOVISSSTE is a dispersed institution ordered to manage a fund “owned by the workers” formed with the contributions made by the government agencies on behalf of their employees • From the social point of view and related with the housing for workers who benefit from a social security system, FOVISSSTE is, along with INFONAVIT, a key institution of the Mexican social security • Each FOVISSSTE loan is tied to a life and property insurance policy Founding objective: 1. Provide mortgage loans to 2.3 million public workers from the federal, state and municipal governments, as well as public universities and local agencies 2. Preserve the inflation-adjusted value of housing savings of those workers who have not received a loan FOVISSSTE’s funding structure is composed of: 1. An amount equal to 5% of the base salary of each employee deposited by each employer into the employee’s housing fund account; 2. An additional 30 percent of the employee’s salary if he has a mortgage loan; 3. Investment of excess cash; and 4. Resources obtained from the capital markets by issuing TFOVIS. TFOVIS are

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residential mortgage backed securities in which FOVISSSTE cedes collection rights on a portfolio of mortgage loans to an individual trust. These mortgage loans are originated under certain eligibility criteria and the only source of payment are cash flows paid on those loans for interests and principal. When a worker is granted a loan, the funds in the housing fund account are used as a down payment to reduce the loan–to value–mortgage (LTV). If the worker never receives a mortgage loan, all contributions made to the account during his working period are added to the worker’s pension amount. Prepayment Risk In case of death or disability, FOVISSSTE writes off the loan to the creditor, and for those loans in the structure, FOVISSSTE prepays the total balance to the trust from a reserve account created for this purpose. This reserve is covered by an insurance agreement with GrupoMexicano deSeguros S.A. de C.V. Mortgage Loan Products Loans are used to purchase new and used houses and accrue interest at a fixed rate. a) Traditional loans: - It is granted for the acquisition and construction on home soil, in the case of new housing; or acquisition, improvement, extension or payment of liabilities for existing homes. It is a product that is given to the winner in the annual raffles. The maximum loan amount is up to $ 869,902.00 pesos plus the savings in the Housing Sub - Account with a maximum term of 30 years. Payment of the credit is 30% of the basic salary, via payroll. b) Subsidized loans: - It is a traditional credit complemented by a grant from the National Housing Commission (CONAVI). It is a product intended for workers earning less than $ 5,118.63 pesos. Their fate is acquisition of new or used housing and do not need to have drawn. The maximum loan amount is $ 348,905.53 pesos, plus savings in the Housing Sub - Account. The sum of these amounts cannot exceed $ 393,740.80 pesos, which represents the maximum value of housing that can be purchased with this loan. c) Credits Pensiona2: - Credit for pensioners not exceeding 75 years and over in the stage of active workers did not exercise credit FOVISSSTE. No drawings are required and awarded based on the order of entry. Their destination applies only to acquisition of new or used housing. It has a maximum amount of $ 430,993.40 pesos plus the balance of the Housing Sub -Account with a maximum term of 20 years. d) Spousal credits: - It is a financing scheme designed to FOVISSSTE right holders who are legally married to an affiliate of INFONAVIT. In this case, the state worker will not be subjected to draw and the beneficiary listed on the IMSS must meet the requirements of their institution. Their fate is acquisition of new or used housing. There is no maximum limit on the value of the home or the loan amount. e) Plus Alia2: - It is a product of co-financing between FOVISSTE and the financial institution of your choice, to increase the capacity credit for workers who have

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above their base salary compensation contribution. It does not require drawing to request and your destination is acquisition of new or used housing. There is no maximum limit on the value of the home or the loan amount. It may be pooled. f ) Credits Respalda2: - It is a product for those workers who wish to use their balance Housing Subaccount as a first payment for a loan granted by a financial institution. Their fate is acquisition of new or used housing and does not require drawing. There is no maximum limit on the value of housing, it has a maximum term of 30 years and can be pooled. g) Credits Respalda2 M: - Credit expansion, repair or improvement of housing. It is a product that can be obtained regardless of whether a credit had before with the institution. One will receive maximum credit of $ 80,000.00 pesos by the financial institution to a maximum period of 30 months. The claimant must have at least $ 6,000.00 pesos in the balance of the Housing Sub - Account. Mortgage Loan requirements 1. Borrowers are active employees of a governmental institution, are 20 to 65 years old, and have at least eight years before their full pension period begins. 2. Loans accrue at an interest rate of 4% - 6%, have no missed payments over the past 12 months; and have no extensions. 3. All properties are lien free, except for the loan mortgage. 4. Must not have obtained a loan from the institution before. (Except credits “to the word”). 5. Have at least nine month periods of contributions at the time of registration. 6. The LTV ratio must be less than 95%. 7. The product type must be traditional loans for new or used homes. Extensions Borrowers can also apply for a 12-month extension, or prorroga, if they stop working for a government entity. They then become exempt from making payments for 12 consecutive months. Following the extension period, borrowers are required to resume payments, even if they have not found a new job. Extensions are not accounted as delinquencies, but, during this period, no payments from these loans are made to the trust account. FOVISSSTE’s guiding philosophy, is that in order to adequately fulfill its social mission, it is required to comply with the highest standards of efficiency, quality and rendering of accounts. Major Achievements (2000-2006) • • •

Solved 620,000 out of 655,000 problems inherited from the past that affected many working families along the country. The Fund has been successfully and deeply modernized. In only 4 years, they granted 352,000 loans -USD 12.3 billions-; that means 1.34

•

2015/2016 CSHSF SURVEY

•

times the 2000-2006 timeframe and it is higher than the figures of the first 20 years of the Fund. The value of their portfolio moved from USD 6.8 billion to almost USD 16.2 billion, but now it is made up with well originated and delivered loans. In 2010 FOVISSSTE was consolidated as the most important mortgage backed securities issuer from the Mexican market.

Reforms from 2006-2012 1. 2. 3. 4. 5. 6. 7.

Foster FOVISSSTE’s growth and minimize the historical delay of credits. Diversification of credit supply, to cater for credit needs of different income layers. Solve inherited operational issues. Modernization aimed at increased efficiency, to increase credit supply. Implement accountability to provide transparency in the operations. Modernize governance and establish healthy practices to world-class standards. Strengthen its financial capabilities through effective collection processes, operational efficiency and access to the capital markets.

2015/2016 CSHSF SURVEY

CHAPTER 3 ANALYSIS AND FINDINGS 3.1 Introduction This chapter presents findings of the responses gathered from the respondents with respect to the objectives and other findings which were relevant to the study. Out of a sample size of 2400 civil servants, 2362 responded, representing 98.4 per cent coverage.

3.2

Background Information

This section contains background information of the respondents guided by the following variables:- age, sex, job group, years of employment and estimated amount of other sources of income amongst others. 3.2.1

Age of respondents

Majority of the respondents (60.6%) were aged 40 years and above, with those aged 50-54 years at 18.2 percent. The respondents who were aged 60 years and above were the least at 0.3 percent, followed by those aged 20-24 years at 0.4 percent. The mean age of the respondents was 43 years while the median age group was 40-44 years. 3.2.2

Age by Sex

The survey respondents comprised of 56.6 percent males and 43.4 percent females. Between 20 and 24 years, majority were female at 70.3 percent while for the other age groups, majority were male especially those aged 60 years and above (85.6%) as indicated in Figure 3.1. Figure 3. 1 : Percentage distribution of age by sex

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3.2.3

Age by job group by disability

The respondents living with disability were 2.9 percent with the majority being in job group G-J at 49.3 percent. Those aged 50-59 years in the same job group comprised the majority at 58.8 percent. 3.2.4

Age by sex by job group

In job group A-F, majority of the respondents were 30-34 years with the male and female being 26.7 percent and 25.8 percent respectively. Job group G-J had most of the respondents at 50-54 years with the female being 19.4 percent while the male were 17.8 percent as shown in Table 3.1. Table 3.1: Percentage distribution of age by sex by job group Age Groups 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 Total percentage

6.7

16.8

15.5

14.0

14.6

18.2

13.6

0.3

Job group

Sex

A-F

Male

0.7

12.3

26.7

22.0

16.0

9.3

8.0

5.0

0.0

Female

2.7

14.9

25.8

15.4

13.1

9.5

10.4

8.1

0.0

Male

0.2

5.9

14.0

14.7

10.1

14.7

17.8

21.5

1.0

Female

0.2

7.3

17.8

16.5

13.9

13.7

19.4

11.2

0.0

Male

0.0

2.2

13.3

13.8

16.2

16.4

23.2

15.0

0.0

Female

0.0

2.4

12.7

15.8

18.2

23.4

18.2

8.9

0.3

Male

0.0

2.2

15.6

13.3

40.0

26.7

0.0

Female

0.0

4.8

0.0

4.8

19.0

47.6

23.8

0.0

Male

0.0

26.3

0.0

47.4

26.3

0.0

Female

0.0

25.0

50.0

0.0

G-J K-N P-R

S and Above

3.2.5

Age by job group by years of employment

In job group A-F, respondents who indicated to have worked for the longest period were aged 55-59 years, with 85.7 percent indicating that they had worked for 36-40 years and 66.7 percent having worked for 31-35 years. Those who had worked for 1- 5 years were mostly aged 34 years and below at 70.9 percent. Job group K-N had the highest number of respondents (96.0%) who had worked for 3640 years and were aged 55-59 years. The respondents in this job group (46.4%) who had worked for 1-5 years were mostly aged 30-34 years. In job group P-R, 66.7 percent of the respondents had worked for 6-10 years with most of them being aged 30-34 years. Those aged 50-54 years and 55-59 years had a higher number of respondents (66.7% each) who had worked for 26-30 years and 31-35 years respectively as indicated in Table 3.2.

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Table 3.2: Percentage distribution of age by job group by years of employment Age Groups 20-24 25-29

30-34

35-39

40-44

45-49

50-54

55-59 60 & Above

0.4

6.7

16.8

15.5

14.0

14.6

18.2

13.6

0.3

4.8

29.2

36.9

16.7

12.5

0.0

6-10

0.0

10.3

35.5

33.0

17.2

3.4

0.0

11-15

0.0

12.5

41.7

25.0

8.3

0.0

Total percentage 1-5

A-F

G-J

K-N

P-R

S- and above

16-20

0.0

4.2

29.2

54.2

8.3

4.2

0.0

21-25

0.0

3.6

10.7

42.9

32.1

10.7

0.0

26-30

0.0

2.0

21.6

54.9

21.6

0.0

31-35

0.0

33.3

66.7

0.0

36-40

0.0

14.3

85.7

0.0

41-45

0.0

100.0

0.0

1-5

1.4

27.9

35.0

25.0

5.7

2.9

2.1

0.0

6-10

0.0

10.1

37.0

33.8

14.0

4.2

1.0

0.0

11-15

0.0

10.5

34.2

28.9

15.8

10.5

0.0

16-20

0.0

11.3

44.3

25.8

13.4

5.2

0.0

21-25

0.0

1.0

18.6

50.0

26.5

3.9

0.0

26-30

0.0

1.0

26.9

47.2

24.4

31-35

0.0

48.1

49.1

2.8

36-40

0.0

1.3

0.0

5.3

90.8

2.6

1-5

0.0

21.7

46.4

21.7

8.7

1.4

0.0

6-10

0.0

33.1

33.7

23.6

7.3

1.1

0.0

11-15

0.0

2.6

55.3

26.3

15.8

0.0

16-20

0.0

5.4

45.9

29.7

13.5

5.4

0.0

21-25

0.0

9.2

51.3

36.1

3.4

0.0

26-30

0.0

1.0

0.0

22.7

57.7

18.6

0.0

31-35

0.0

47.1

51.5

1.5

36-40

0.0

4.0

96.0

0.0

6-10

0.0

66.7

0.0

33.3

0.0

11-15

0.0

25.0

50.0

25.0

0.0

16-20

0.0

54.5

27.3

18.2

0.0

21-25

0.0

41.7

58.3

0.0

26-30

0.0

4.8

66.7

28.6

0.0

31-35

0.0

33.3

66.7

0.0

1-5

0.0

100.0

0.0

21-25

0.0

50.0

0.0

26-30

0.0

47.4

52.6

0.0

31-35

0.0

100.0

0.0

2015/2016 CSHSF SURVEY

3.2.6 Age by job group by monthly estimated amount of other source of income Respondents who indicated that they had other sources of income were 33.6 percent. Out of these, those aged 50-54 years led at 18.2 percent followed by those aged 30- 34 years at 16.8 percent. Respondents aged 20-24 years were the least at 0.4 percent. In job group A-F, majority of the respondents (66.7%) aged 30-34 years indicated that the estimated amount of other sources of income was Kshs.41,003–54,503 per month as indicated in Figure 3.2. Figure 3. 2 Percentage distribution of monthly estimated amount of other source of income for Job group A-F

Those in job group G-J had majority of the respondents (60%) aged 40-44 years having another source of income of Kshs.68,005–81,505 per month. Those aged 50- 54 years (40%) had other monthly earnings above Kshs.81,506. In job group P-R, those aged 50-54 years had an equal proportion of respondents earning Kshs.500–14,000 and Kshs.54,504–68,004.

3.3

Awareness of Civil Servants Housing Scheme Fund

3.3.1

Source of information

Table 3.3 shows that 45.2 percent of the respondents reported that the source of information about Civil Servants Housing Scheme Fund was through circulars while 39.5 percent said it was through colleagues. Those who reported to have received the information through print media, television, ministry website, radio, social media, seminars / workshops were 27.9 percent, 12.3 percent, 10.3 percent, 8.0 percent, 3.4 percent and, 1.4 percent respectively.

2015/2016 CSHSF SURVEY

69.8 percent of officers in the Ministry of East Africa Affairs, Commerce and Tourism reported to have accessed the information through Circulars, followed by Ministry of Defence at 69.2 percent.

Social media e.g.

Colleagues

Seminars/ Public awareness/ Workshops

39.5

1.4

Ministry of Land, Housing and Urban Development

28.7 44.7 20.2

3.3 11.3

3.7

52.9

2.6

Ministry of Mining

16.5 32.9 33.6

0.0

41.8

0.0

Ministry of Transport and Infrastructure

1.5 36.6 21.7 11.3

7.7

7.6

48.5

1.5

Ministry of Agriculture, Livestock and Fisheries

1.5 54.1 32.9 11.5 12.1

1.5

47.3

0.0

Ministry of Water and Irrigation

4.3 29.8 12.8

0.0

8.5

0.0

57.4

0.0

Ministry of Environment and Natural Resources

4.6 43.2 23.1

0.0 13.6

0.0

29.2

0.0

Radio

3.4

Print media

8.0 12.3

Total

Through circulars

10.3 45.2 27.9

Ministry website

Television

Table 3.3: Percentage distribution of employer by source of information about civil servants housing scheme Fund

Name of Employer (Ministry)

Ministry of Health

15.9 47.3 34.7

8.1 23.2

4.1

57.4

2.0

Ministry of Energy and petroleum

0.0 32.8 56.2

0.0 33.6

0.0

55.5

0.0

Ministry of Interior and Coordination of National Government

7.8 42.5 30.4 12.3 14.9

3.8

34.0

1.1

Ministry of Education

8.2 60.9 27.2

8.0

5.0

1.0

14.3

0.0

Ministry of Labour, social Security and Services

2.8 54.6 26.8

5.8

5.7

1.4

36.1

1.4

Ministry of Devolution and Planning

3.1 37.2 28.2

3.1 11.6

7.3

54.5

3.5

Ministry of National Treasury

8.8 38.3 35.7

7.4 11.4

4.7

35.3

2.0

Ministry of Industrialization and Enterprise Development

5.0 32.1 17.4

5.0 10.0

0.0

57.5

0.0

Ministry of Information, communication and Technology

4.2 58.0 41.0 12.5 20.9

4.2

45.5

0.0

Ministry of Sports, Culture and the Arts

9.6 52.0

9.6

0.0

32.8

9.6

Ministry of East Africa Affairs, commerce and Tourism

5.8 69.8 23.6

6.2 12.0

0.0

41.8

0.0

Ministry of Defence

3.4 69.2 17.1

3.4 10.1

0.0

20.5

0.0

Office of the Attorney General and Department of Justice

0.0 58.4 19.1

3.3

7.8

0.0

38.0

0.0

The Presidency

17.2 64.8 27.2

0.0

5.0

0.0

27.2

0.0

Ministry of Foreign affairs and international trade

22.9 33.1 22.0

0.0 22.0

0.0

11.0

0.0

56.7

0.0

Not stated

9.6

0.0 54.6 43.3

0.0

2015/2016 CSHSF SURVEY

3.3.2 Job group by the level of awareness of the existence of Civil Servants Housing Scheme Fund The respondents who indicated that they were aware of the existence of the Scheme were 72.0 percent. Of those who were not aware, majority were in job group G-J at 50.9 percent followed by job groups A-F and K-N at 30.7 percent and 17.8 percent respectively as indicated in Figure 3.3. Figure 3. 3: Percentage distribution of Job Group by the level of awareness of the existence of CSHSF

3.3.3 County by awareness Table 3.4 shows that over 60.0 percent of respondents in Muranga, Meru, Mombasa, Tana River and Taita Taveta counties got information about CSHSF through circulars while 58.1 percent of respondents from Uasin Gishu County said it was through colleagues. However, social media, seminars and workshops were not a major source of information.

2015/2016 CSHSF SURVEY

Radio

Television

Social media e.g. facebook

Colleagues

Seminars/ Public awareness/ Workshops

23.6

60.5

32.6

4.7

4.6

0.0

44.1

0.0

Kwale

4.5

54.6

26.8

9.0

18.2

9.3

13.8

0.0

Kilifi

14.5

57.0

21.5

0.0

7.0

28.5

0.0

Tana River

0.0

64.6

6.9

0.0

29.1

0.0

21.2

0.0

Lamu

12.2

39.7

30.4

0.0

5.9

24.5

0.0

Taita-Taveta

7.8

64.5

12.0

3.9

0.0

3.9

23.6

0.0

Garissa

15.3

22.9

23.0

15.3

23.0

7.6

46.5

0.0

Wajir

0.0

21.0

41.8

16.5

8.3

0.0

33.1

4.1

Mandera

17.0

16.4

12.6

25.2

4.1

41.8

8.2

Marsabit

0.0

41.2

41.7

12.9

55.0

25.7

41.7

0.0

Isiolo

9.8

44.8

49.7

9.8

24.8

9.8

39.8

0.0

Meru

14.1

67.4

31.3

21.5

8.6

12.3

49.7

0.0

Tharaka-Nithi

7.1

14.2

21.2

7.1

29.3

0.0

Embu

14.3

47.6

28.6

4.7

9.5

0.0

38.1

0.0

Kitui

3.6

47.9

33.4

3.9

14.5

0.0

37.0

0.0

Machakos

5.6

39.5

16.7

2.7

8.1

2.7

44.0

0.0

Makueni

12.6

40.5

31.2

6.4

6.2

0.0

34.3

0.0

Nyandarua

0.0

49.7

57.9

16.3

37.7

4.1

45.9

4.1

Nyeri

0.0

48.1

49.0

39.0

29.3

3.2

35.4

3.2

Kirinyaga

14.5

57.0

7.0

21.5

0.0

36.6

0.0

Muranga

16.0

61.9

31.5

6.3

22.3

9.7

42.2

0.0

Kiambu

2.8

22.3

37.7

7.9

10.5

0.0

37.0

2.8

Turkana

11.2

45.4

30.5

15.5

19.2

8.0

33.9

0.0

West Pokot

10.5

49.9

14.4

0.0

3.5

0.0

28.7

0.0

Samburu

0.0

52.1

17.0

0.0

5.7

37.0

0.0

Trans Nzoia

0.0

33.3

16.0

34.6

0.0

33.3

0.0

Uasin Gishu

28.6

50.0

35.4

0.0

58.1

0.0

Elgeyo-Marakwet

22.3

55.7

14.8

14.5

14.8

3.6

18.4

0.0

Nandi

11.4

50.2

42.3

19.0

22.8

3.8

15.2

0.0

Baringo

3.1

31.1

49.8

18.6

15.3

0.0

43.9

3.1

Print media

Through circulars

Mombasa

County

Ministry website

Table 3.4: Percentage distribution of awareness by county

Radio

Television

Social media e.g. facebook

Colleagues

Seminars/ Public awareness/ Workshops

38.7

6.5

19.7

9.6

48.3

9.6

Nakuru

3.3

16.8

29.7

13.2

36.5

0.0

33.3

13.5

Narok

13.9

45.0

31.8

18.3

13.5

9.3

18.0

4.5

Kajiado

3.1

34.2

34.0

9.2

9.5

3.1

34.7

0.0

Kericho

24.0

47.3

38.0

0.0

18.7

0.0

28.0

0.0

Bomet

26.3

57.4

47.8

5.6

10.8

5.6

26.3

0.0

Print media

Through circulars 25.3

County

Ministry website

2015/2016 CSHSF SURVEY

6.3

Laikipia

Kakamega

17.5

40.8

23.3

12.1

35.4

0.0

23.3

0.0

Vihiga

18.6

20.3

16.3

4.0

8.3

48.5

0.0

Bungoma

13.9

40.0

13.2

0.0

46.1

0.0

Busia

6.6

50.2

12.7

18.4

6.1

0.0

31.4

0.0

Siaya

17.9

35.0

23.3

17.9

23.3

0.0

17.6

0.0

Kisumu

12.1

22.7

40.4

3.0

9.3

6.3

37.2

3.0

Homabay

0.0

26.8

49.3

7.8

15.3

0.0

38.9

7.8

Migori

4.1

58.3

32.9

12.5

8.2

53.6

0.0

Kisii

21.7

51.3

26.6

8.5

4.3

43.7

4.3

Nyamira

4.1

11.4

30.5

15.2

15.3

3.8

34.9

0.0

Nairobi

10.6

50.2

22.8

3.1

8.2

1.5

45.2

3.3.4

Years of employment by awareness of existence of Civil Servants Housing Scheme Fund

The level of awareness was fairly distributed irrespective of the years of employment. Those who had served for 6-10 years were more aware at 29.5 percent compared with those who had served for 26-30 years at 15.2 percent. Figure 3.4 is a reflection of those who said that they are aware of the Fundâ&#x20AC;&#x2122;s existence across the ministries. All respondents in the Ministry of East Africa Affairs, Commerce and Tourism stated that they were aware of the Fundâ&#x20AC;&#x2122;s existence. The lowest level of awareness was in the Ministry of Mining where only 62.5 percent said they are aware. The Ministries of Interior and Coordination and Ministry of Education had 64.2% and 65.2% respectively of their officers being aware of the existence of the fund.

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Figure 3. 4: Percentage distribution of respondents who were aware of existence of CSHS Fund by Ministries

Figure 3.5 shows the percentage of respondents in each Ministry who said they were not aware of the existence of the CSHS Fund. The Ministry of Mining and Ministry of Interior and Coordination of National Government has the highest number of officers not aware at 37.5 and 35.8 percent respectively. Of note is the high percentage (21.2%) of respondents in the Ministry of Lands and Housing who are not aware of the existence of the Fund in spite the it being domiciled in the Ministry. Figure 3.5 Percentage distribution of respondents who were not aware of existence of CSHS Fund by Ministries

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3.3.5

Awareness by application by success

From survey data, 12.8 percent of respondents who were aware of the existence of CSHSF had applied for the products. Of these applicants, 45.8 percent were successful. 3.3.6

Job group by application by success

Out of the applicants in job group S and above, 75.2 percent were successful, followed by those in job group P-R at 57.1 percent, K-N at 48.8 percent, G-J at 19.2 percent and A-F at 13.3 percent.

3.4

Information on Beneficiaries

This section contains information on beneficiaries as gathered from the survey data. 3.4.1

Type of house by reasons for the choice

Out of the three house types (flat, bungalow and maisonette), 64.4 percent benefited from flats followed by those who benefitted from maisonettes at 21.7 percent and bungalows at 13.9 percent. The main reasons given for the choice of the house types were: - only available at the time (54.6%), within financial ability (40.5%) and suitable for personal needs (26.1%). Other reasons given were: - near work station (11.4%), privacy (2.3%), security (1.4%) and living in the house at the time of sale (1.0%). Of the beneficiaries who indicated that, that house type was the only one available at the time of sale, 65 percent had benefitted from flats, followed by 43.1 percent from maisonettes and 24.5 percent from bungalows. For those who indicated within ones financial ability as their reason, 52.6 percent benefited from bungalows, 46.3 percent from flats and 15.4 percent from maisonettes as indicated in Figure 3.6. Figure 3. 6 Percentage distribution of reasons for choosing type of house

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3.4.2

Reasons for not occupying the house

Out of the beneficiaries, 15.8 percent reported that they were not occupying the house they bought. Of these, 39.2 percent indicated that they had an alternative house, 27.3 percent reported they bought as an investment, 18.6 percent reported it was far from their work station while 6.2 percent reported that it was still under construction. 3.4.3

Successful application by type of facility

Out of the successful applicants, 59.6 percent benefited from purchase of a house developed by the Scheme, 25.5 percent from mortgage to purchase a house and 8.6 percent from mortgage to construct a house. Another 6.3 percent indicated to have benefited from rental houses developed by the Scheme. 3.4.4

Job group by years of employment by facility benefited from

Most of the beneficiaries (58.7%) were in job group K-N followed by 27.5 percent in job group P-R. Those who had least benefited were in job group A-F at 2.1 percent. Of the beneficiaries in job group K-N, 56.7 percent had benefited from purchase of a house developed by the Scheme. Most of the applicants who benefited from a house developed by the Scheme (37.7%) had served for 26-35 years. 3.4.5 Job group by facility of home ownership benefited from by reason for choice of facility The survey findings hereunder are for home ownership beneficiaries besides renters. These beneficiaries were as follows: - 59.5 percent in job group K-N, 27.9 percent in job group P-R, 4.2 percent in job group G-J, 7.3 percent in job group S and above; and 1.1 percent in job group A-F. All benefeciaries in group A-F (1.1%) benefited from mortgage to purchase a house. Similarly, 4.2 percent of those in job group G-J benefited from mortgage to purchase a house developed by the scheme. The beneficiaries in job group K-N who benefited from mortgage to purchase a house developed by the scheme were at 35.5 percent, mortgage to purchase a house at 17.7 percent and mortgage to construct a house at 6.2 percent. Successful applicants in job group P-R who benefited from mortgage to purchase a house developed by the scheme were 19.1 percent, mortgage to purchase a house were 4.1 percent while mortgage to construct a house were 2.9 percent. Those in job group S and above who benefited from mortgage to purchase a house were 2.4 percent while those who benefited from mortgage loan to purchase a house developed by the scheme were 4.9 percent. Among the reasons beneficiaries gave for their selected products were: - location of the

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house at 56.2 percent, competitive price and lack of time to supervise construction each at 31.1 percent, genuinety of the property at 24.6 percent. Other reasons were none involvement in seeking development permission at 22.2 percent, avoiding high cost of built environment professional fees at 21.1 percent and not being stressed while supervising construction at 20.5 percent. 3.4.6

Job group by facility benefited from by ways of raising the deposit

The successful applicants raised their deposit as follows: - borrowing from cooperative (49.5%), private savings (43.3%) and borrowing from relatives and friends (12.5%). Most respondents in job group K-N at 49.2 percent reported that they raised their deposit from private savings while 43.9 percent raised their deposit by borrowing from cooperatives as indicated in Table 3.5. Table 3.5 Percentage distribution of job group by facility benefited from by ways of raising the deposit Job Group A-F

G-J

K-N

P-R

S and above

Ways of raising 10% deposit

Total

Mortgage loan to purchase a house

Purchase of a house developed by the scheme (tenant purchase, outright purchase)

Mortgage loan to purchase a house

Mortgage loan to construct a house

Purchase of a house developed by the scheme (tenant purchase, outright purchase)

Mortgage loan to purchase a house

Mortgage loan to construct a house

Purchase of a house developed by the scheme (tenant purchase, outright purchase)

Renting of house developed by scheme

Mortgage loan to purchase a house

Purchase of a house developed by the scheme (tenant purchase, outright purchase)

Product benefited from

Borrowing from cooperative

49.5

0.0

75.0

29.4

16.7

55.9

25.0

100.0

61.5

0.0

100.0

50.0

Borrowing from commercial bank

11.0

100.0

0.0

5.9

0.0

8.8

25.0

0.0

15.4

100.0

0.0

Borrowing from relatives and friends

12.5

0.0

25.0

11.8

0.0

11.8

0.0

15.4

0.0

100.0

0.0

Private savings

43.3

0.0

25.0

58.8

66.7

41.2

50.0

0.0

30.8

0.0

100.0

50.0

After sale of property

9.1

0.0

11.8

16.7

8.8

0.0

50.0

7.7

0.0

Investment groups, Chamas

2.5

0.0

5.9

0.0

7.7

0.0

Borrowing from shylocks

1.0

0.0

2.9

0.0

Business

3.8

0.0

100.0

0.0

50.0

Farming

1.4

0.0

50.0

0.0

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3.4.7

Job group by facility benefited from by period of delay in occupation

Of the beneficiaries, 56.2 percent were not delayed in occupying the house as compared to 43.8 percent who reported delay. Out of those who were delayed, 71.0 percent were those who benefited from purchase of a house developed by the scheme, 24.2 percent from mortgage loan to purchase a house and 4.8 percent from mortgage loan to construct a house. The period of delay was minimal (1-10 months) for beneficiaries of mortgage to construct a house compared to other products which took slightly longer. 3.4.8 Job group by facility benefited from by percentage of gross salary used to service the facility The beneficiaries who reported that they spent 16-30% of their gross salary to service the mortgage facility were 55.6 percent. Those who spent 31-60% were 22.5 percent followed by those who spent 0-15% at 18.4 percent and 3.6 percent who spent over 60%. All beneficiaries in job group A-J spent 16-60% of their gross income in servicing the mortgage facility. Beneficiaries in job group K-R who spent over 60% of their gross salary to service their loan were 3.6 percent while those who spent 0-15% were 18.4 percent. 3.4.9

Challenges in accessing the loan

Majority of the beneficiaries (55.3%) indicated that they did not face any challenge in accessing the loan compared to 44.9 percent who did. Of those who faced challenges in accessing the loan, 37.2 percent reported delays such as raising the 10 percent deposit, accessing money and delays in completion of houses. Those who reported delays in processing of documents and subsequent disbursement of funds were 32.0 percent. Those who reported financial constraints as a challenge in accessing the loan were 17.0 percent while those who reported high competition were 13.6 percent. 3.4.10 Job group by years of employment by challenges in servicing the loan Majority of the beneficiaries (64.8%) indicated that they encountered challenges in servicing the loan compared to 45.2 percent who did not. The beneficiaries who reported delayed reconciliation were 47.1 percent; financial constraints were 43.7 percent whereas 9.2 percent reported lack of adequate information. For the beneficiaries who had served for 21-35 years, 38.2 percent reported to have encountered financial constraints in servicing the loan while 34.5 percent reported delayed reconciliation. 3.4.11 Job group by years of employment by meeting of housing needs The beneficiaries who reported that their housing needs were met were 78.6 percent as compared to 21.4 percent who reported that their housing needs were not met.

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All the beneficiaries in job group A-F reported that their housing needs were met, followed by 84.2 percent in job group P-R, 77.2 percent in job group K-N, 75 percent in job group G-J and 66.7 percent in job group S and above. Those who had worked for 26-30 years (24.3%) led in having their housing needs met while those who had worked for 36-40 and 11-15 years were the least in having their housing needs met at 6.6 and 5.9 percent respectively. 3.4.12 Job group by years of employment by reason for meeting or not meeting the housing needs Those who indicated that their housing needs were met cited suitability of houses (comfort and location) (78.5%) as the main reason. Those who indicated that their housing needs had not been met cited the following reasons:- housing typology (size and type), poor workmanship, delays in mortgage and rent deduction remittances; and high cost of management (service charge).

3.5

Information on Non-beneficiaries

This section contains information on non-beneficiaries as gathered from the survey data. Most of the non-beneficiaries were in job group G-J at 45.1 percent followed by those in job group K-N at 27.7 percent then job group A-F at 23.9 percent and job group P-R at 2.8 percent. Despite majority of the respondents having indicated that they had not benefitted from the Scheme, 96.3 percent still believed that it was a good facility for civil servants to access affordable and suitable housing. Furthermore, 95.7 percent of them needed more information about the Scheme. Majority of non-beneficiaries (93.8%) preferred house ownership to renting. Of these, 45.1 percent were in Job group G-J. Those who preferred flats in this job group were 42.8 percent followed by those in job group K-N at 30.3 percent. In job group A-F, 55.7 percent preferred bungalows while those in job group G-J (50.5%) and K-N (43.3%) preferred maisonettes. Those who preferred flats for renting were 45.8 percent in job group G-J and 27.8 percent in job group A-F. Maisonettes for renting were preferred by 37.8 percent of those in Job group G-J. Those who preferred to be facilitated in urban areas were 80.1 percent whereas 19.9 percent preferred to be facilitated in the rural areas. Nairobi (21.4%), Kiambu (5.6%), Meru (4.3%), Nakuru (4.2%), and Machakos (3.8%) counties were cited as the most preferred counties for facilitation to access housing for ownership. Nairobi, Kiambu and Meru counties were the most preferred counties as location for rental facilities at 12.4, 10.2 and 8.8 percent respectively.

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3.5.1

Age by mode of house to benefit from

Majority of non-beneficiaries (93.8%) preferred house ownership to renting as indicated in Table 3.6. Table 3.6: Percentage distribution of age by mode of house to benefit from

Mode of housing

Age Group Total 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60 & above

Ownership

93.8

100.0

91.8

95.4

92.8

96.6

94.0

93.8

90.4

100.0

Renting

6.2

0.0

8.2

4.6

7.2

3.4

6.0

6.2

9.6

0.0

3.5.2

Job group by preferred product of house ownership

Majority of non-beneficiaries preferred mortgage to construct a house at 64.9 percent followed by 21.3 percent who preferred to purchase a house developed by the Scheme while 13.8 percent preferred mortgage loan to purchase a house. Majority of those who preferred mortgage loan to construct a house were in job group G-J (65.9%) followed by job group A-F (64.7%), K-N (64.3%), S and above (58.4%) and P-R (54.3%) as indicated in Figure 3.7. Figure 3. 7: Percentage distribution of preferred product by job group

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3.5.3 Job group by mode of house to benefit from by amount to spend on preferred house Most of the non-beneficiaries (24.0%), were willing to spend Kshs.1,901,002– 2,802,002 followed by 17.2 percent willing to spend Kshs.99,000–1,000,000 and 16.5 percent willing to spend Kshs.2,802,003–3,703,003 towards house ownership. In job group A-F, majority (28.5%) were willing to spend Kshs.99,000–1,000,000, followed by 26.1 percent who were willing to spend Kshs.1,901,002–2,802,002. In job group G-J, majority (27.1%) were willing to spend Kshs.1,901,002–2,802,002 followed by 19.3 percent who were willing to spend Kshs.99,000–1,000,000 and 17.4 percent who were willing to spend Kshs.2,802,003–3,703,003. Majority of those in Job group K-N (71.6%) were willing to spend Kshs.1,901,002–5,505,005. In job group P-R, 27.8 percent were willing to spend Kshs.8,208,009 and above followed by 19.4 percent who were willing to spend Kshs.4,604,005–5,505,005 and 11.1 percent who were willing to spend Kshs.3,703,004–4,604,004. In job group S and above, 60 percent were willing to spend Kshs.8,208,009 and above as indicated in Figure 3.8. Figure 3. 8 Percentage distribution on amount willing to spend on preferred house by job group

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3.5.4 Preferred house type by job group by age Bungalows were the most preferred house type at 47.2 percent followed by maisonettes and flats at 34.2 and 18.2 percent respectively. Those in job group S and above preferred flats (60.0%) while K-N and P-R preferred maisonettes at 36.4 and 30.4 percent respectively as indicated in Figure 3.9. Figure 3. 9 Percentage distribution of preferred house type by job group

Those aged 50-54 years preferred flats for house ownership at 20.1 percent, with the majority (18.7%) of those who preferred maisonettes being aged 30-34 years. Most of those who preferred bungalows were aged 30-34 and 50-54 years at 17.8 and 16.6 percent respectively. 3.5.5

Age by job group by preferred product to be facilitated with

Mortgage loan to construct was the most preferred product across all the job groups led by job group G-J at 65.9 percent, followed by job group A-F at 64.7 percent, Job group K-N at 64.3 percent and job group P-R at 54.3 percent. Purchase of a house developed by the scheme was most preferred by those in job group P-R at 28.3 percent, K-N at 24.0 percent and A-F at 22.7 percent. For non-beneficiaries who preferred mortgage loan to construct, the highest percentage (83.3%) in job group G-J were aged 60 years and above, with those in job group K-N (73.9%) aged 40-44 years followed by Job group A-F (71.4%) aged 25-29 years and job group P-R (70.0%) aged 50-54 years as indicated in Table 3.7.

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Table 3.7: Percentage distribution of age by job group by preferred product to be facilitated with

35-39

40-44

45-49

50-54

55-59

60 & Above

S and above

P-R

30-34

K-N

25-29

G-J

20-24

A-F

preferred scheme product

Total

Current Job Group

Age group

Mortgage loan to purchase a house

12.5

7.1

15.3

9.1

18.2

18.4

10.9

3.0

0.0

Mortgage loan to construct a house

64.7

62.5

71.4

64.2

63.6

61.0

59.2

69.6

66.7

0.0

Purchase of a house developed by scheme

22.7

25.0

21.4

20.4

27.3

20.8

22.4

19.6

30.3

0.0

Mortgage loan to purchase a house

15.5

0.0

21.4

20.4

15.9

15.2

12.9

11.9

0.0

Mortgage loan to construct a house

65.9

50.0

64.3

59.3

67.1

65.9

67.5

68.0

67.8

83.3

Purchase of a house developed by scheme

18.5

50.0

14.3

20.4

17.1

18.3

17.2

19.1

20.3

16.7

Mortgage loan to purchase a house

11.6

0.0

12.5

12.1

10.2

9.0

17.6

10.2

8.0

100.0

Mortgage loan to construct a house

64.3

0.0

56.3

59.3

69.4

73.9

65.6

59.4

58.7

0.0

Purchase of a house developed by scheme

24.0

0.0

31.3

28.6

20.4

17.1

16.8

30.5

33.3

0.0

Mortgage loan to purchase a house

17.4

0.0

100.0

66.7

0.0

10.0

12.5

0.0

Mortgage loan to construct a house

54.3

0.0

50.0

0.0

16.7

44.4

70.0

62.5

0.0

Purchase of a house developed by scheme

28.3

0.0

50.0

0.0

16.7

55.6

20.0

25.0

0.0

Mortgage loan to purchase a house

20.0

0.0

100.0

0.0

Mortgage loan to construct a house

60.0

0.0

66.7

33.3

0.0

Purchase of a house developed by scheme

20.0

0.0

100.0

0.0

3.5.6

Job group by preferred product by reasons for the preferred product

Tastes/preferences, affordability and convenience were cited as the main reasons for choosing any of the three Schemeâ&#x20AC;&#x2122;s products at 44.2 percent, 17.3 percent and 15.3 percent respectively. Tastes/preferences, accessibility/location and affordability were the main reasons cited for preferring mortgage loan to construct at 88.7 percent, 69.9 percent and 60.7 percent respectively. Those who preferred a house constructed by the Scheme because of suitability were 53.3 percent while 49.3 percent and 30.5 percent preferred the same product because of convenience and affordability respectively.

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Convenience was the main reason for choosing to purchase a house developed by the scheme (49.3%) and loan to purchase a house (33.1%).as indicated in Table 3.8. Table 3.8: Percentage distribution of job group by preferred product of home ownership by reasons for the preferred product

Total

A-F

G-J

K-N

P-R

S and Above

Job group

Mortgage loan to purchase a house

15.5

10.3

12.9

20.0

28.6

0.0

Accessibility/loc ation Mortgage loan to construct a house

69.9

76.9

75.3

62.7

42.9

0.0

14.6

12.8

11.8

17.3

28.6

0.0

5.9

0.0

Reasons for the preferred product

Preferred product of home ownership through the fund

Purchase of a house developed by scheme Tastes/ preferences

Mortgage loan to purchase a house

7.9

6.6

9.2

7.0

Mortgage loan to construct a house

88.7

90.3

88.0

88.4

3.4

3.1

2.8

4.7

Mortgage loan to purchase a house

33.1

30.1

36.2

29.1

40.0 100.0

Mortgage loan to construct a house

17.6

22.6

15.3

17.7

0.0 100.0

Purchase of a house developed by scheme

49.3

47.3

48.5

53.2

60.0

0.0

Mortgage loan to purchase a house

32.8

20.5

42.4

32.4

0.0

Mortgage loan to construct a house

13.9

12.8

15.3

13.5

0.0

Purchase of a house developed by scheme

53.3

66.7

42.4

54.1 100.0 100.0

8.9

10.5

10.7

Purchase of a house developed by scheme Convenience

Suitability

Mortgage loan to purchase a house Affordability

Trust in Government

0.0

Mortgage loan to construct a house

60.7

61.1

63.7

55.3

75.0

0.0

Purchase of a house developed by scheme

30.5

28.4

25.6

39.0

25.0

0.0

1.6

0.0

2.1

1.6

0.0

96.8 100.0

95.8

96.8 100.0

0.0

Mortgage loan to purchase a house Availability of plot

5.7

94.1 100.0

Mortgage loan to construct a house Purchase of a house developed by scheme

1.6

0.0

2.1

1.6

0.0

Mortgage loan to purchase a house

2.2

0.0

5.9

0.0

Mortgage loan to construct a house

2.2

12.5

0.0

95.7

87.5

94.1 100.0 100.0

0.0

Purchase of a house developed by scheme

3.5.7 Job group by mode of house to be facilitated with by preferred number of bedrooms The preferred number of bedrooms for ownership were in the following order: - Three bedroom (64.7%), two bedroom (15.9%), four bedroom (12.0%), five bedroom (3.2%) and one bedroom (1.7%). For those who preferred to be facilitated through rental housing, 47.5 percent preferred three bed room houses and 29.8 percent preferred two bed room houses. Job group G-J and K-N preferred three bed room houses for home ownership at

2015/2016 CSHSF SURVEY

47.3 percent and 28.3 percent respectively. 48.1 percent of those in job group G-J and 30.7 percent of those in job group A-F preferred two bed room houses for home ownership. Of those who preferred rental facilities, 45.2 percent of job group G-J preferred two bed room houses as indicated in Table 3.9. Table 3.9: Percentage distribution of job group by mode of house to be facilitated with by preferred house size Job group No. of bedrooms One bedroom Two bedroom Three bedroom Four bedroom Five bedroom Six bedroom Seven bedroom More than seven bedroom Not stated

3.5.8

Mode of housing

A-F

G-J

K-N

P-R

S and above

Ownership

35.1

43.2

18.9

0.0

2.7

Renting

16.7

33.3

50.0

0.0

Ownership

30.7

48.1

20.9

Renting

35.7

45.2

16.7

2.4

0.0

Ownership

22.1

47.3

28.3

2.0

0.3

Renting

25.4

44.8

29.9

0.0

Ownership

16.5

38.4

40.4

4.7

Renting

27.8

61.1

5.6

0.0

Ownership

13.0

43.5

42.0

1.4

0.0

Renting

0.0

100.0

0.0

Ownership

27.8

50.0

22.2

0.0

Renting

0.0

100.0

0.0

Ownership

20.0

40.0

0.0

Renting

0.0

100.0

0.0

Ownership

0.0

50.0

25.0

Renting

0.0

100.0

0.0

Ownership

8.0

60.0

28.0

4.0

0.0

Renting

0.0

100.0

0.0

Job Group by preferred house type by reason

Overall, family needs were cited as the main reason for choice of house type at 54.6 percent with the least consideration for choice of house type being affordability at 12.1 percent. Bungalow was the most preferred house type by respondents in job group G-J (23.6%) and the main reasons given for this choice were family needs at 63.6 percent and suitability at 29.6 percent.

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3.5.9

Job group by preferred facility by percentage of gross salary on mortgage

The non-beneficiaries who were willing to set aside 0-15% of their gross salary to service their mortgage were 40.8 percent while those who were willing to set aside 15-30% were 42.1 percent. Majority of those who were willing to set aside up to 15% of their gross salary to service a mortgage were in job groups A-F at 53.6 percent and G-J at 45.4 percent. Those in job groups P-R (52.2%), K-N (47.8%), and S and above (40%) were willing to set aside 16-30% of their gross salary to service a mortgage. Of those who preferred mortgage loan to purchase a house, 44.7 percent were willing to set aside 16-30% of their gross salary to service the mortgage. Of those who preferred mortgage loan to construct a house, the majority were willing to set aside 0-15% and 1630% at 42.3 and 41.5 percent respectively. For those who preferred to purchase a house developed by the Scheme 42.4 percent were willing to set aside 16- 30% of their gross salary to service the mortgage. 3.5.10 Amount willing to spend on preferred house by percentage of gross salary willing to set aside The non-beneficiaries who were willing to set aside 15.1-30% of their gross salary to service a mortgage towards their preferred house were 34.9 per cent. Of these, 39.8 percent were willing to spend Ksh.1,901,002â&#x20AC;&#x201C;2.802,002. Those who were willing to set aside 45.1-60.0% of their gross salary to service a mortgage on their preferred house were 30.1 per cent of whom the majority (42.9%) were willing to spend Ksh.7,307,008-8,208,008 million as indicated in Figure 3.10. Figure 3. 10: Percentage distribution of amount willing to spend on preferred house by percentage of gross salary willing to set aside

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3.5.11 Job group by percentage of gross salary on mortgage by reasons for the percentage The main reason given towards setting aside up to 30 percent of gross salary to service a mortgage was other financial commitments at 69.8 percent while regulation was the least of the reasons at 7.5 percent. Of those who cited other financial commitments as the main reason for setting aside up to 15% of their gross salary to service a mortgage, majority were in job groups A-F (52.8%) followed by G-J (47.5%). Those who cited the same reason and were willing to set aside 16-30% of their gross salary to service their mortgage were in job groups S and above at 75.0 percent followed by those in job group P-R at 64.7 percent and those in job K-N at 51.8 percent. 3.5.12 Age by Job Group by means of raising 10 percent deposit The most preferred means of raising 10% deposit was through borrowing from cooperatives at 59.0 percent followed by private savings at 31.1 percent. Across all job groups, borrowing from cooperatives was the most preferred means of raising 10% deposit with the majority in job group S and above at 66.7 percent followed by those in job group G-J at 61.3 percent, A-F at 57.0 percent and K-N at 56.0 percent. Those aged 55-59 years across all job groups preferred raising the 10 percent deposit through borrowing from cooperatives as compared to other means as indicated in Table 3.10.

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Table 3.10: Percentage distribution of job group by means of raising 10% deposit by age

25-29

30-34

35-39

40-44

45-49

50-54

55-59

Saving

27.9

25.0

27.1

32.1

26.3

24.7

26.5

28.3

27.3

0.0

Borrow from cooperative society

57.0

37.5

44.3

59.1

50.5

63.6

51.0

73.9

69.7

0.0

Borrow from the commercial bank

7.9

12.5

11.4

5.8

9.1

6.1

8.7

3.0

0.0

Borrow from relatives and friends

7.1

12.5

12.9

5.1

7.8

8.2

4.3

9.1

0.0

11.6

12.5

10.0

8.8

21.2

5.2

14.3

8.7

12.1

0.0

Investment group e.g chama

7.1

12.5

7.1

3.6

8.1

9.1

10.2

10.9

3.0

0.0

Sale of farm produce

1.0

0.0

1.4

0.0

2.0

0.0

2.0

2.2

0.0

Saving

28.4

0.0

42.9

25.7

29.9

25.4

30.5

31.4

20.9

33.3

Borrow from cooperative society

61.3

50.0

51.4

62.3

61.6

63.5

60.3

58.8

66.7

50.0

Borrow from the commercial bank

9.6

0.0

4.3

9.6

11.0

10.3

10.6

8.2

10.2

16.7

Borrow from relatives and friends

4.9

50.0

1.4

6.0

4.3

7.1

7.9

3.1

3.4

0.0

Sale of property

Business

G-J

Sale of property

10.0

0.0

5.7

9.0

9.8

9.5

11.9

13.4

8.5

0.0

Investment group e.g chama

5.4

0.0

8.6

7.8

6.1

5.6

4.0

3.6

4.5

0.0

Sale of farm produce

1.0

0.0

2.4

0.0

1.0

3.4

0.0

Business

K-N

0.0

1.7

0.0

Saving

37.1

0.0

43.8

51.6

43.9

34.2

38.4

28.9

25.3

0.0

Borrow from cooperative society

56.0

0.0

37.5

56.0

59.2

47.7

59.2

58.6

58.7

0.0

Borrow from the commercial bank

8.4

0.0

12.5

5.5

4.1

12.6

3.2

9.4

17.3

0.0

Borrow from relatives and friends

7.4

0.0

12.5

7.7

10.2

8.1

4.0

7.8

5.3

100.0

12.4

0.0

12.5

9.9

11.2

9.9

11.2

15.6

17.3

0.0

Sale of property Investment group e.g chama

P-R

S and above

60 & Above

20-24

A-F

Means of raising 10% deposit

Total

Job group

Age group

4.5

0.0

6.3

6.6

2.0

3.6

5.6

3.1

6.7

0.0

Sale of farm produce

0.0

1.3

0.0

Business

0.0

1.1

1.0

0.0

1.3

0.0

Saving

45.7

0.0

100.0

33.3

44.4

45.0

37.5

0.0

Borrow from cooperative society

69.6

0.0

50.0

0.0

83.3

77.8

70.0

62.5

0.0

Borrow from the commercial bank

10.9

0.0

22.2

5.0

25.0

0.0

Borrow from relatives and friends

8.7

0.0

20.0

0.0

Sale of property

8.7

0.0

16.7

11.1

10.0

0.0

Investment group e.g chama

2.2

0.0

5.0

0.0

Saving

33.3

0.0

50.0

0.0

Borrow from cooperative society

66.7

0.0

25.0

0.0

50.0

25.0

0.0

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3.5.13 Job group by period to mobilize 10% deposit Most of the non-beneficiaries (71.1%) across all job groups indicated that they would require up to 3 months to mobilize the 10% deposit. Given up to 3 months, those in job group G-J would lead in mobilizing the 10% deposit through borrowing from cooperatives at 60.5 percent followed by those in job group K-N at 52.7 percent and those in job group A-F at 48.1 percent. Within a similar period, to raise the 10% deposit through savings, those in job group K-N were the majority at 38.7 percent followed by those in job group G-J at 35.5 percent and those in job group A-F at 24.5 percent. 3.5.14 Age by job group by saving towards construction/purchase of a house The non-beneficiaries who indicated that they were saving towards construction/purchase of a house were 43.9 percent. Majority of those in job group P-R (58.7%) and K-N (53.5%) were saving towards construction/purchase of a house as compared to those in job groups A-F and G-J at 40.8 percent and 38.9 percent respectively. Those aged 60 years and above led in saving toward construction/purchase of a house at 57.1 percent followed by those aged 25-29 years at 51.0 percent then 30-34 years at 49.6 percent and 35-39 years at 45.9 percent. 3.5.15 Age by Job group by other initiatives towards owning a house The survey found out that 45.5 percent of the non-beneficiaries had other initiatives towards owning a house besides saving. Those in job group P-R comprised the highest percentage (60.9%) on other initiatives towards owning a house followed by job group K-N that comprised 57.5 percent. Those in job group A-F comprised the least percentage (33.9%). Those aged 45-49 years led in having other initiatives towards owning a house at 51.0 percent followed by those aged 50-54 years at 49.7 percent. 3.5.16 Age by job group by other specific initiatives towards owning a house besides saving The survey found out that 58.3 percent of non-beneficiaries had a plot as another initiative towards owning a house besides saving. This was followed by having an already constructed/stalled project at 15.3 percent. Those in job group A-R had a plot as a specific initiative towards owning a house besides saving. This was more apparent in job groups K-N and P-R which comprised 61.2 percent and 60.7 percent respectively. Those in job group S and above (50%) had already constructed/had a stalled project. Of those who had already constructed/had a stalled project, those in job group S and above had the highest percentage (66.7%) followed by job groups G-J, P-R, K-N and A-F at

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16.9 percent, 14.3 percent, 14.3 percent and 12.5 percent respectively. Those aged 50-54 years had the highest percentage (75.0%) across all job groups of having bought a plot as a specific initiative towards owning a house. They were followed by those aged 45-49 years (70.6%) and 40-44 years (61.8%) respectively. The tendency of having constructed/stalled project across all the job groups increased from 30-34 years onwards. For instance, the percentage of those in job group K-N rose from 6.4% to 11.5% and then to 19.4% from 30-34, 35-39 and 40-44 years respectively. 3.5.17 Age by willingness to save through the Scheme Majority of the non-beneficiaries (77.8%) were willing to save through the Scheme to mobilize resources for future facilitation towards home ownership. Those aged 30-34 years had the highest percentage of those willing to save through the scheme (83.6%) as shown in Figure 3.11. Figure 3. 11: Percentage distribution of age by willingness to save through the Scheme

The survey found out that those in job group P-R (82.6%) were most willing to save through the scheme followed by those in job group A-F (80%). Those aged 35-39 years and in job group A-F were more willing to save through the scheme at 85.9 percent followed by those aged 30-34 years that comprised of 82.5 percent in the same job group.

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3.5.18 Age by job group by willingness to commit part of lump sum pension towards access to a house Majority of non-beneficiaries (58.6%) were willing to commit part of their lump sum pension towards accessing a house. Those in job groups P-R and S and above were more willing to commit part of their lumpsum pension toward access to a house with a percentage of 80.4 and 80.0 respectively whereas those in job group A-F were the least willing at 53.9 percent. In job group P-R, all those aged 30-39 years were willing to commit part of their lumpsum pension towards access to a house followed by 88.9 percent of those aged 45-49 years. In job group A-F, those aged 50-54 years were more willing to commit part of their lumpsum pension towards access to a house at 71.7 percent followed by those aged 45-49 years at 63.3 percent. In the same job group, those aged 30-34 years were the least willing to commit part of their lumpsum pension towards access to a house at 48.2 percent. 3.5.19 Age by job group by percentage of lump sum pension willing to commit The survey found out that most of the non-beneficiaries who were willing to commit 15.1% - 30% of their lumpsum pension towards accessing a house were particularly in job groups S and above and P-R at 100 percent and 42.9 percent respectively. 3.5.20 Age by job group by amount of lumpsum pension willing to commit Most of the non-beneficiaries who were willing to commit up to Kshs.1,000,000 of their lumpsum pension towards owning a house were in job groups A-F, G-J, K-N and P-R at 94.3 percent, 91.3 percent, 84.3 percent and 62.5 percent respectively. Those in job group S and above who were willing to commit up to Kshs.3,000,002 of their lumpsum pension proportionately were at 33.3 percent. Indeed, majority of those in job group A-F comprised the highest percentage (94.3%) willing to commit up to Kshs.1,000,000 of their lumpsum pension followed by those in job group G-J (91.3%). All those aged 35-39 years in job groups A-F, G-J and P-R were willing to commit up to Kshs.1,000,000 of their lumpsum pension towards access to a house. Those aged 30-34 years in job group K-N who were willing to commit Kshs.1,000,001â&#x20AC;&#x201C;2,000,001 of their lump sum pension were 33.3 percent followed by those aged 25-29 years at 25.0 percent. 3.5.21 Suggestions on how the Scheme can be improved to serve civil servants better The following are suggestions by the respondents on how the Scheme can be improved to serve civil servants better: 1. 2. 3. 4.

Empower the Scheme financially to ensure funds are available all year round Construct more houses to accommodate many civil servants Construct more houses in all counties Make CSHSF products more affordable and accessible

19. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39.

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5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.

Increase period of raising 10% deposit from the current two months Lower / do away with 10% deposit Induct civil servants about the Scheme at employment Decentralize the Scheme operations to the counties CSHSF to facilitate civil servants to construct houses in the rural areas Minimize time taken before shortlisting for mortgage loan Sensitize civil servants Zero interest rates / reduce interest rates on loans Allow civil servants to save through the Scheme Develop a mortgage repayment schedule for all cadres according to their ceilings Design sharia compliant scheme for Muslim civil servants Transparency in the allocation process Make procedures easy/less expensive (Professional fees). Management cost (service charge) to be reviewed downwards - not commensurate with services Build spacious houses with bigger rooms 20.Proper reconciliation of records Have proper workmanship Priority to be given to previous occupants of redevelopments sites. Introduce a cheaper package for civil servants in job groups A-J Construct high rise buildings to accommodate more people. Consider those about to exit the service for mortgage loans and allow them to repay with their pension. Consider multi-generational mortgage Be allowed to top up loans as per the new regulations as then it was fixed to five million Allow use of share certificates to access the mortgage Better property management Incorporate other social facilities in the estate e.g. gym, swimming pool, enough playground for children, social hall Government to raise salaries to enhance affordability Maintenance should be done regularly Proper follow up on service charge payments CSHSF to support residents associations Remove restriction to refurbish or to change the house Show ability to repay outside pay slip Allow commercial housing development not only residential Frequent information dissemination â&#x20AC;&#x201C; e.g. quarterly statements Use innovative technology like solar and recycling of waste water 40. Make use of professionals within Ministry of Housing or public works to reduce cost accessing

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41. Create awareness on insurance aspect of the loan 42. Allow those in rental houses to have an option of purchase

CHAPTER 4 KEY FINDINGS, CONCLUSION AND RECOMMENDATIONS 4.1 Introduction This chapter presents the key findings of the housing needs assessment, conclusions and recommendations.

4.2 1. 2. 3. 4. 5.

6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17.

Key Findings Only 4.2 percent have benefited from the CSHF despite the attractive package. The median age group of the respondents was 40-44 years. Out of the 71.7 percent of the civil servants who were aware of the existence of the CSHSF,95.7 percent required more information about the Fund. 59.6 percent of the successful applicants benefited from houses developed by the scheme Only 13.3 percent of the applicants in job group A-F succeeded in getting a mortgage loan, with success being skewed in favour of applicants in higher job groups. For instance, 75.2 percent of applicants in job group S and above were successful. 49.5 percent of the beneficiaries raised the 10% deposit through borrowing from cooperatives. There was a delay of upto 60 months in occupation of houses after payment of deposit especially for those who benefited from houses developed by the Scheme. Most of the beneficiaries cited delayed reconciliation of their records as a major challenge in servicing the mortgage loan. 78.6 percent of the beneficiaries had their housing needs met through the Schemeâ&#x20AC;&#x2122;s facilitation. Suitability of houses (comfort and location) was the main reason for housing needs being met. 60.7 percent of non-beneficiaries preferred three bedroom houses for ownership. 64.9 percent of the non-beneficiaries, across all job groups, preferred mortgage loan to construct a house. . The most preferred counties for facilitation to access housing for ownership were: Nairobi (21.9%), Kiambu (5.6%), Meru (4.3%), Nakuru (4.2%), and Machakos (3.8%). 82.7 percent of the non-beneficiaries indicated that they were willing to set aside up to 30% of their gross salary to service a mortgage loan. 71.1 percent of the non-beneficiaries at would require upto 3 months to raise 10% deposit. 60.5 percent of the non-beneficiaries were aged 40 years and above. 58.3 percent of the non-beneficiaries had a plot as another initiative towards owning a house besides saving.

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18. 77.8 percent of the non-beneficiaries were willing to save through the Scheme to mobilize resources for future facilitation towards home ownership. 19. 58.6 percent of the non-beneficiaries were willing to commit part of their lumpsum pension towards accessing a house.

4.3 Conclusion This was the first housing needs assessment for the CSHSF since the fund was established in 2004. Vital information and data has been generated from the assessment. The following conclusions have been drawn: 1. 2. 3. 4.

6. 7.

The most preferred Scheme product is mortgage loan to construct a house. This is because it is cheaper to construct and offers flexibility in design. Majority of civil servants prefer three bedroom houses for ownership in urban areas, preferably in Nairobi, Kiambu, Meru, Nakuru and Machakos counties. Most of the civil servants are aware of the existence of the CSHSF but require detailed information about the Scheme. There are a number of challenges faced in accessing mortgage loan such as: raising the 10% deposit, accessing money from mortgage management service providers, delay in completion of houses, delays in processing of proper ownership documents and subsequent disbursement of funds, high incidental costs and financial constraints. The main challenge that has been encountered by beneficiaries in servicing the mortgage loans and rent payments is reconciliation of records by ministries, counties and other public institutions. The preferred way of raising 10% deposit/contribution is through cooperatives and would take upto 3 months to raise it. Most of the civil servants are willing to spend Kshs.1,901,002â&#x20AC;&#x201C;2,802,002 on their preferred house and also willing to set aside up to 30% of their gross salary to service their mortgage. Majority of the civil servants are aged 40 years and above and are likely to repay higher monthly mortgage instalments with the repayment period pegged on the 60 year age limit. Most of the civil servants are willing to save through the scheme to mobilize resources for future facilitation towards home ownership irrespective of the years worked. This is more so for those who have worked for 1-5 years. They are also willing to commit part of their lumpsum pension towards the same.

4.4 Recommendations Stemming from the above findings and conclusions, the following recommendations are made: 1. Sensitization should be carried out across all ministries and counties to create awareness on the Fund for civil servants through workshops, circulars, website and social media.

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The Scheme to allow civil servants to save on voluntary basis a minimum of 5% of their basic pay through the Fund for future facilitation towards home ownership. The voluntary savings will be utilized as deposits / contributions towards facilitation by the Fund. 3. There is need for CSHSF to review the period for raising the 10% deposit for purchase of houses developed by the Scheme from 60 days to 90 days. This applies to those civil servants who would not have saved to the required 10% deposit thresholds with the Fund. 4. CSHSF to provide 110% financing for officers in job group A-K to enable them meet the prevailing cost of statutory and professional fees such as legal fees, valuation fees, relevant authorities fees, stamp duty, architectural fees, quantity surveyorâ&#x20AC;&#x2122;s fees, structural engineers fees and 16% VAT on all fees and project cost. For officers in job group L-V, the Scheme to provide 100% financing. 5. The Fundâ&#x20AC;&#x2122;s Enterprise Resource Management System (ERP) should be fully operationalized in order to streamline records. The ERP system will ensure that mortgage and rent recoveries for the ministries, counties and other government agencies are up to date. 6. The Scheme should offer online services such as mortgage loan applicants registration, application for mortage loan, application for houses for sale/rental and E-payments. 7. The Cabinet Secretary in consultation with the SMC and SRC to review the mortgage repayment age limit from 60 years to 65 years with an option of committing part of lumpsum pension on retirement towards mortgage repayment. 8. The CSHSF should build internal capacity for a cost-effective and efficient in- house management system and work out modalities of terminating the outsourcing of mortgage management services. Once adequate capacity is built, the CSHSF can extent mortgage management services to other public institutions on agency basis. 9. The CSHSF to consider developing more housing units that will cost less than Kshs.3 million. 10. Since mortgage loan to construct a house is the most preferred Scheme product, there is need to enhance facilitation and undertake sensitization on key requirements. 11. The Scheme should approve and encourage use of Appropriate Building Materials and Technologies. 12. More emphasis should be put on facilitating ownership for three bedroom houses particularly in the urban areas. The CSHSF should not construct studios (bedsitters) as no civil servant is interested in owning or renting such houses. 13. The Scheme to allow civil servants to supplement monthly mortgage repayments from other sources of income. 14. The Scheme should ensure that the houses they develop are of high quality standards in terms of functionality, safety and security. 15. An adhoc desk officer be appointed to coordinate with the National Land Commission, county governments and the Department of Physical Planning for preparation and gazzettement of part development plans to secure all government

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estate land where there are no ongoing court cases. 16. The Scheme to explore possibilities of mobilizing funds through the capital markets and off-shore borrowing. 17. The Scheme should explore the possibility of allowing multi-generational mortgages. 18. The Scheme to benchmark with countries offering similar mortgage products and integrate the lessons learnt in its operations and procedures.

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LIST OF REFERENCES Central Bank of Kenya. (2014). Bank Supervision Annual Report. Nairobi: CBK. Central Bank of Kenya. (2015). Central Bank Statistical Bulletin 2015. Nairobi: Government Printer. Government of Kenya. (2015). The Civil Servants Housing Scheme Fund (amendment) Regulstions, 2015. Nairobi: Government Printer. Government of Kenya. (2015). The Civil Servants Housing Scheme Fund (amendment) Regulstions, 2015. Nairobi: Government Printer. Government of Kenya. (2012). County Government Act, 2012. Nairobi: Government Printer. Government of Kenya. (2012). Land Act 2012. Nairobi: Government Printer. Government of Kenya. (2012). Land Registration Act, 2012. Nairobi: Government Printer. Government of Kenya. (2012). National Construction Authority Act, 2012. Nairobi: Government printer. Government of Kenya. (2012). Persons with Disabilities Act, Cap 133, revised edition 2012 (2003). Nairobi: Government Printer. Government of Kenya. (2012). Public Health Act, Cap 242, revised edition 2012. Nairobi: Government Printer. Government of Kenya. (2012). Survey Act, Cap 299, revised edition 2012(2010). Nairobi: Government Printer. Government of Kenya. (2012). Urban Areas and Citie5 Act, Cap 272. Nairobi: Government of Kenya Government of Kenya. (2010). Constitution of Kenya. Nairobi: Government Printer. Government of Kenya. (2007). Kenya Vision 2030. Nairobi: Government Printer. Government of Kenya. (2004). Sessional Paper No. 3 of 2004 on National Housing Policy. Nairobi: Government printer. Government of Kenya. (2004). Civil Servants Housing Scheme Fund Regulations 2004. Nairobi: Government Printer. Government of Kenya. (1999). Environmental Management and Coordination Act, Cap 387. Nairobi: Government printer.

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Government of Kenya. (1996). Physical Planning Act, 1996. Nairobi: Government Printer. Government of Kenya. (1987). Sectional Properties Act, 1987. Nairobi: Government of Kenya. Kenya National Bureau of Statistics. (2012/2013). Kenya National Housing Survey. Nairobi: Government Printer Kenya National Bureau of Statistics. (2010). Kenya Economic Survey Report. Nairobi: Government Printer Public Service Commission. (2010). Public Service Commission report of 2010. Nairobi: Government Printer. United Nations. (1948). Universal Declaration. United Nations.

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