National Bank and Octagon Africa have signed a service partnership with Costa Homes Ltd, a private developer aiming to enhance safety for buyers of affordable houses project with a value of Kshs100 billion.
This comes after the new Retirement Benefits Mortgage Loans Amendment Regulations, 2020, that allows members of pension schemes to use up to 40 per cent of their saving to buy a residential house.
“The pensions industry in Kenya has witnessed phenomenal growth in the last 20 years with the total pension assets increasing from KES 80bn in 2000 to over KES 1.3trn currently. The new regulation provides a significant role in turning the home-ownership dream into a reality and contribution to the growth of the affordable housing agenda. The sector, of over 3 million members, can be able to benefit from the housing agenda and provide a ready market for the uptake of developments,” said Octagon Africa Group Chief Executive Officer Fred Waswa.
The partnership signed by Octagon Africa, Costa Homes and National Bank of Kenya is also a first-of-its-kind model aimed at safeguarding the buyers’ money and promoting the integrity of the developers. Through this model, Octagon Africa will offer administration services and National Bank of Kenya will offer a custodial service. A buyer wanting to buy property from Costa Homes will remit their payments to a custodial account at National Bank of Kenya, Octagon will provide real-time information access with superior administrative capability through online self-service portals. It is only when the developer has completed the house and handed over the keys that the money will be transferred from the custodial account to the developer.
Speaking during the signing of the agreement Waswa said that the robust system, Octagon Pension Administration System (OPAS), will be able to keep records of the payments remitted to the custody accounts and enable buyers to monitor and track their payments at their convenience. “Clients looking to buy, and own homes have the assurance that their money is safe and that they are in control of their investment,” said Waswa.
According to the National Housing Corporation, Kenya currently has a housing deficit of approximately two million units per year mainly attributed to rapid urbanisation and high population growth rate. The Kenya Mortgage Refinance Company approximates that there are only 21,000 mortgages in the country.
“We must work together as industry players and be deliberate about expanding the dream of homeownership to even more people and supporting the Government’s big four agenda. As Costa Homes we are committed to offering ultra-modern and affordable housing developments to mid and lower-income people estimated to cost KES 100 billion,” said Costa Homes Chairman Dr Constantine Mwadime.
“Through this partnership, a premier in the real estate sector, Costa Homes will not use buyers’ monies for construction, instead, we will rely on funding from strategic partners. We believe that this partnership, we will be able to promote the integrity of developers while safeguarding the homeowners’ investments,” added Dr. Mwadime.
The Government is creating 500,000 new home owners through the facilitation of affordable housing; and a homeownership programme that will ensure every working family can afford a decent home by injecting low-cost homes into the housing sector. The Government has put in place various incentives such as strengthening the newly established Kenya Mortgage Refinance Company (KMRC), a Treasury-backed lender, which offers banks and SACCOs cash for onward lending to households and offering zero stamp duty to first-time homeowners.
“As a bank, we are committed to ensuring the home-ownership dream transcends to the middle to low-income households through a guaranteed system that protects the hard-earned money of our customers. We are delighted today to partner with Costa Homes and Octagon to ensure that customers can afford a decent home that caters for their needs,” said National Bank of Kenya Managing Director Paul Russo.