Developer faults mortgage report over rates given

TMC Managing Director Caroline Kariuki (left) looks on as Hass Consult Head of Marketing and Research Sakina Hassanali speaks during the launch. [PHOTOS: WILBERFORCE OKWIRI/STANDARD]

By FRANCIS AYIEKO

Erdemann Property has faulted the recently released mortgage report that gave the average home loan interest at 16.96 per cent in third quarter of this year, thus keeping housing financing beyond reach of the majority.

Erdemann Property Managing Director John Yang, said the findings failed to capture efforts the home developer is making to partner with the Development Bank of Kenya (DBK), which has considerably brought down home loan costs.

He said through his company’s partnership with the government-owned DBK homebuyers get up to 25 years mortgage at a negotiated fixed rate of 8.5 per cent for one of their projects.

“We believe in public private partnership initiative because this has enabled us to provide affordable and decent housing to the middle and low income category of our population,” he said, adding: “Our partnership with Development Bank of Kenya has revolutionalised property and mortgage markets by offering low priced houses at an interest rate that is 40 per cent below market.”

Special offers excluded

But while acknowledging that such initiatives were good for the mortgage market, The Mortgage Company, the authors of the mortgage report Erdemann has faulted, said they don’t include special offer rates for particular projects in their survey.

“We don’t promote a development-specific rate in our reports. We only deal with the rates applicable to the general public. We can’t quote special rates for particular projects,” said Caroline Kariuki, the Managing Director of The Mortgage Company when contacted by Home & Away.

Development Bank of Kenya charges 19.5 per cent on mortgages that are not associated with Erdemann’s project.

“Maybe in future, we may consider including special offers or products by various lenders in our reports,” said Kariuki.

The third quarter 2013 report by The Mortgage Company (TMC) and Hass Consult, released two weeks ago, showed that many potential home buyers remained locked out of the mortgage market, preferring to rent houses or pursue shorter-term loans to finance house purchases.

The report cited the best rate on offer from the mainstream mortgage market as 13.5 per cent from CfC Stanbic Bank.

Yang said his company’s strategy was not only looking at affordable mortgage but also affordable home prices by using low-cost technologies and building materials.

He said Erdemann would continue to train local residents on building low-cost houses, noting that with government support, the houses would be much cheaper.

“Our small contribution in the housing sector that involves technology transfer is geared to benefit this country in a big way in future and with government support, investment will increase,” said Yang.

He said building affordable low-cost housing in Kenya was still an uphill task and the government should come up with some special policies that would address the unique needs of developers of low-cost housing.

Such incentives, he said, should include tax breaks for both buyers and developers of low-cost housing.