Housing shortage looms, warn Nairobi developers
The possibility of housing shortage and higher rents looms as construction continues to slow down due to the latest blow from City Hall in the form of higher fees.
According to the County Finance Act 2013 developers have to part with hefty fees at every stage.
To get a change of use licence, for example developers now part with Sh360,000, double what it cost one year ago.
An extension of use permit also costs Sh180,000 up from Sh80,000.
Hoarding (fencing around construction area) was doubled to Sh6,000 per annum for areas outside the CBD.
This excludes charges for inspection and more if one has encroached on footpaths, pavements and parking bays.
Applying for a permit for a site construction board that details the project’s stakeholders like engineers, architects and owners costs Sh5,000, up from Sh2,000.
The actual licence costs Sh25,000 annually, a Sh10,000 increase.
But it is at the building permit stage that developers have been hit hardest. Previously, they paid fixed amounts with a domestic project of 0-46 square metres costing Sh1,200.
These amounts were graduated according to the floor size.
This has however been changed to a percentage of the project cost between 1-1.5 per cent; a situation that has seen the fees shoot astronomically. Developers are putting the increase at between 200 and 1,250 per cent.
“The current rates mean that property developers are paying 1.25 per cent of the cost of construction from between 0.001 and 0.006 per cent. These policy actions are not investment friendly.
We are staring at a situation where these new levies will hurt the industry hence slow down the pace of construction,” said Kenya Property Developers Association CEO Robyn Emerson.
She warned there would be a severe housing shortage in Nairobi.