Kenya. Pension-backed mortgages boost to affordable housing
For more than a decade, Kenyans have had the leeway to use up to 60 percent of their accrued retirement benefits as a guarantee for mortgage loans.
However, a study by the Retirement Benefits Authority (RBA) shows that less than 0.1 percent of members of retirement benefits schemes have taken advantage of the provision.
In a bid to further catalyse individuals to utilise their pension savings towards homeownership, the Retirement Benefits (Mortgage Loans) – (Amendment) Regulations was enacted in 2020 allowing members to now redeem up to 40 percent or Sh7 million of their accumulated benefits to buy a ready residential house from an institution.
This has elicited excitement from Kenyans where 68 percent of the respondents in the same survey by the RBA indicated a willingness to take advantage of this.
According to the 2019 census report by the Kenya National Bureau of Statistics, only 23.1 percent of urban dwellers in Kenya own homes while 78.7 percent rent.
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