The Civil Servants Housing Scheme Fund (CSHSF)
The Civil Servants Housing Scheme Fund (CSHSF) was established in 2004. The establishment of the fund is in line with the National Housing Policy for Kenya 2004 (Sessional Paper No. 3). The policy among other things called for employers to facilitate their employees to acquire housing. At the heart of Employer Assisted Housing is the idea that employees should be able to afford to live in the communities or neighbourhoods in which they work, and that there are multiple benefits to being able to do so.
Prior to July 2001, the Government was providing subsidized housing to its employees through the provision of Government owned or leased housing or payment of house allowance to those not provided housing by the government. This resulted in a number of problems such as inequity in subsidized housing provision benefiting only 12% while 88% were left to market private housing. There was a disparity between officers receiving house allowance and those receiving owner occupier house allowances which were much higher.
In July 2001, the government commenced the implementation of a new housing policy for civil servants. One of the key objectives of the policy was to divest the government of the responsibility of direct housing of its employees except those involved in essential services, and instead encourage them to own their own houses. The implementation of the policy gave birth to the establishment of the civil servants housing scheme fund, which is a tenant purchase scheme. The objectives for which the scheme was established are providing housing loan facilities to civil servants for the purpose of either purchasing or constructing a residential house, developing housing units for sale or rental by civil servants and raising funds for the implementation of the above.
The benefits of the home ownership scheme to employees are realization of dream of homeownership, enhanced lifestyle associated with homeownership such as greater community and school involvement and quality of life, increased job satisfaction and loyalty to employer, the possibility of reducing commuting time and investment in a home with possible equity appreciation over time.
Since inception, the scheme has facilitated more than 3,000 civil servants to access housing. This has been achieved through housing finance loans or sale of houses constructed through the Scheme. To grant housing loans to Civil servants, the Scheme has partnered with two mortgage finance institutions, Home and Loan of KCB and Housing Finance, with nationwide coverage.
To date about 600 civil servants have been facilitated with loans to construct or purchase residential houses.
Some of the Challenges which have limited access to mortgage loans in the market are stringent lending terms including high qualifying incomes, high interest rates and short-term repayment periods.
To address the said challenges, housing loans under the scheme have the following features:-
- The maximum amount of loan that can be granted to a civil servant ranges between KShs 4 million to KShs 20 million depending on seniority and affordability.
- The loan is repayable within a period of twenty (20) years or before the loanee attains the age of sixty (60) years
whichever is the earlier.
- The interest payable on the loan is at the rate of 5% per annum on a monthly reducing balance.
- The applicant is facilitated up to 90% with a down payment of only 10% expected.
- The loan repayments is through the check – off system which reduces lending risk and administrative cost Between 2006 to date the Scheme has developed and completed 1160 housing units. Out of these, 750 have been sold on tenant purchase while 410 are rental. Another 51 temporary housing units have been developed in Kisumu to facilitate relocation and re-development of an existing estate. The completed construction projects are located in various parts of Nairobi and have targeted the various income groups in civil service. The sold housing units comprised of 2 to 4 bedrooms units and were sold at prices ranging from KShs 1,500,000 to KShs 7,600,000. Some of the completed projects are located in Kilimani, Kileleshwa, Ngara, Jogoo road and Shauri Moyo.
- To optimize on land use, projects developed by the scheme are high rise basically adopting gated community models. The Fund is developing housing projects in the counties. In Kisumu, a 250 No. units housing project is under construction. Other projects will soon commence in Machakos, Kiambu, Embu and Nyeri Counties.