Impact of COVID 19 Pandemic on the Housing Sector as a contributory Factor to Rent Injustice

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COVID 19 pandemic ravaged all sectors in Kenya leaving most if not all households suffering a negative impact on their livelihood. The Ministry of Health and the Office of the President imposed a raft of prevention and control measures that had the impact of destabilization of the socio-economic sphere in Kenya.

We witnessed a substantial decline in all sectors with some sectors suffering a great deal to the point of collapse.

The informal sector contributes an estimated 34.3% of GDP, and accounts for 77% of employment in Kenya. Over 60% of those working in this sector are the youth, aged between 18–35 years, and half of them are women[1].

What this operationally means is that the current economic model in Kenya relies heavily on the active production within the informal sector for a bulk of the resources generated locally. The overall impact of the Ministry of Health restrictions was to marginally reduce the economic viability of the informal sector which in end meant that there was less production and subsequently less income in circulation.

The Impact

Across the board, all Kenyans have in one way or the other suffered loss, disruption or complete distortion of income. The restriction of movement guidelines operationally cut some off from their work stations as well as leading to loss of employment.

What did this mean for the Land and Housing sector? The majority of the urban poor coupled with many other classes of society could not afford rent!

Kenya lacks a proper framework or policy infrastructure to cater for the reprieve and support the private sector during such occurrences like pandemics and other acts of God.

The Legislature, as well as Tenant associations, made an unsuccessful attempt to foster regulation seeking to have a waiver of rents during the subsistence of the Pandemic[2].

The Government was categorical that the issue of regulation of the private sector was untenable as well and interfering with the free trade policies[3].

During the pandemic, we have witnessed numerous rental injustice especially with the impact of forced eviction and breach of tenancy rights at all levels of rental residences[4].

The current projections note that it will take the Kenyan economy approximately a minimum of two years to recover[5].

The Kenyan Rental Housing Sector is largely driven by the private sector with over 61.5% of Kenyans renting their residential abode according to the recent national census released in 2019[6].

This actively translates to the reality that the majority of Kenyans, for one reason or the other do not have access to or are unable to mobilize such resources to enable them to own their own homes and the bulk of them are in fact renting homes.

The unregulated private sector housing value chain means in the end that the disparity between the service provision and the cost of access shall be felt by the consumers. The same can be related to the high cost of living with an average of 40% of urban center household income being consumed by the rental expenses[7].

The overriding reality is that this is not a tenable economic model with the devastation having been felt at the occurrence of the pandemic and the implementation of restrictive measures negatively impacting the economy.

What lessons have Kenyans taken home during this period in so far as the housing sector is concerned?

  1. The Housing Sector value chain needs regulation.

The pandemic has taught us that engaging under a system where 40% of household income on rental expenses is not sustainable. We have witnessed the largest percentage of Kenyans migrating from urban to rural set up since independence. This speaks to the reality that there is a loss of income and urban living costs are not sustainable under the current reality.

There is a need to urgently respond to this by issuing guidelines as to the costing of residential housing infrastructure within the private sector. This will reduce the percentage of domestic income expended on rent and increase the disposable income bracket for most households.

  1. The state must take decisive action to review the Housing Sector Value Chain with the aim of reducing the cost of owning homes in Kenya.

The Cost of Land within the average cost of owning a home in Kenya is Pegged at 20% of the total cost which means the greatest burden has and will remain the commoditization of land with the impact of increasing the cost of owning a home.

The state must move swiftly to regulate the average costings on land ownership to increase the access of land by a majority of Kenyans.

The state must also review the cost of construction within the housing sector through innovative relief programs that will reduce the cost of construction enabling more Kenyans of marginal earning to own homes through construction as well as ensure affordable housing.

The increased tax burden on the construction sector especially with regards to the Housing value chain must be reviewed downward.

  1. The state must review the credit landscape specifically addressing itself to mortgage costs.

Only 11% of the total Kenyan Population can afford and or have access to a mortgage[8]. What this communicates is that the cost of credit in the housing value chain is beyond the reach of over forty-five million Kenyans.

The cost of credit and lack of proper regulation specifically addressing the ownership of homes in the Kenyan housing sector must be addressed to support small to medium-income households access mortgages end eventually own homes.

  1. The state must implement a rapid just and transparent affordable housing scheme.

The Kenyan housing value chain is dominated by the private sector which in effect leads to high-cost implication on access and enjoyment of domestic housing. State intervention by implementing a robust affordable housing framework will have the effect of regulation of market access costs in end reducing the question of rent injustice.

The Affordable housing within the Big Four Agenda promises to provide affordable houses to Kenyans within the scheme. However, this process fails to address the issue of the gaps within the housing sector value chain especially addressing the question of needs assessment.

The plan fails to address itself to the state of housing needs which currently demands urgent implementation of affordable housing plans. The plans need to address the proportionality, just and fair distribution of access to these affordable homes to plug the current gaps within the sector.

Conclusion

In conclusion, the COVID 19 pandemic has brought out numerous cases of rent injustice as well as bringing to the gaps as regards the question of the adequacy of the Housing value chain in Kenya. In retrospect, the migration to a purely capitalist model within the housing sector has had the impact of creating an influx of informal settlements and increased homelessness in the country.

The pandemic calls upon the state to consider policy, legislative, and infrastructural intervention to cushion low-income households in Kenya from a blockade as regards to accessing and enjoying the right to affordable housing.

The right to affordable housing is enshrined in our constitution and overrides the issues of free trade and open markets and as such the state has a responsibility to act in all manner and form to secure the access, preservation, and protection of enjoyment of this right especially for the low income and disadvantaged Kenyans.

 

The author is the Land and HousingProgramme Manager at Hakijamii.pkariuki@hakijamii.com

 

[1] 2012 report by the Institute for Economic Affairs (IEA)

[2] https://www.the-star.co.ke/news/2020-04-14-senate-bill-wants-rent-loans-frozen/

[3] https://www.the-star.co.ke/news/2020-04-22-government-cannot-force-landlords-to-waive-rent-uhuru/

[4] https://www.the-star.co.ke/news/2020-07-12-agent-locks-a-woman-and-sick-child-in-their-house-welds-door-shut-over-rent-arrears/

[5] https://adamsmithinternational.com/articles/covid-19-in-kenya-recovering-from-the-economic-crisis/

[6] https://www.the-star.co.ke/news/2020-02-23-over-seven-million-kenyans-are-homeowners-census/

[7] https://www.businessdailyafrica.com/news/City-residents-spend-40pc-of-income-on-rent/539546-2655694-cocq01z/index.html

[8] https://www.kba.co.ke/downloads/Home%20ownership%20survey.pdf

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