By Roy Hezron
Those who will be buying houses and homes through Saccos for the first time will now start enjoying tax relief of up to Ksh 25,000 on their monthly salary starting from July this year.
The move is being pushed for by Cabinet Secretary Co-operatives and Micro, Small and Medium Enterprises (MSMEs) Development Simon Chelugui through an amendment of the Income Tax Act which will be part of the Statute Law (Miscellaneous Amendments) Bill, set to be tabled before the National Assembly between now and June this year.
The move is also geared towards extending mortgage reliefs to members of Saccos who get loans to improve, build or buy homes for their own use.
Speaking while unveiling the first board of trustees of Kenya National Entrepreneurs Savings Trust(KNEST) at the National Treasury building in Nairobi on March 15, 2023 , Chelugui noted that in the future, he wants to see Saccos offering long-term loans to their members just like other financial institutions like banks.
He urged Saccos to position themselves to provide more access to affordable mortgage finance in order to enable more Kenyans own more decent homes.
“My ministry will work closely with Kenya Revenue Authority to address the challenges of affordable housing that affect Saccos. We will also address alignment and operationalisation of the Income Tax Act to give effect to mortgage tax reliefs for first-time home buyers who borrow from Saccos by listing in the schedule qualifying mortgage loans providing institutions,” said Chelugui, adding that since the same was entrenched through banks and can be extended to Saccos
The high cost of mortgage, which for years locked out low to middle income earners in Kenya, made former President Uhuru Kenyatta to partner with private lenders to form Kenya Mortgage Refinance Company (KMRC) in April 2018 as a Public-Private Partnership (PPP) under the supervision of the Central Bank of Kenya (CBK).
The role of KMRC is to provide long-term funds to primary mortgage lenders like banks, micro finance banks and Saccos in order to increase the availability and affordability of home loans to Kenyans through providing concessional fixed rate long term finance to mortgage financiers so that they can transfer the same benefits to individual borrowers, making home loans more accessible and affordable to a majority of Kenyans.
In December 2020, Stima and Tower Saccos were among the first four beneficiaries of the participating Primary Mortgage Lenders (PMLs) to benefit from the first disbursed lending of Ksh2.75 billion by KMRC.
Nyandarua based Tower Sacco got a disbursement of Ksh29 Million while Stima Sacco got Ksh69 Million, after they made successful applications and demonstrated a refinanceable mortgage portfolio of 1400 mortgages which acts as the collateral for the funding.
KCB and Housing Finance (HF) Bank were among the seven local banks that committed to set aside Ksh365 billion worth of mortgages for the Affordable Housing Programme. Other shareholders on KMRC financing programme include DTB, Absa, NCBA, Credit Bank and Kenya Women Microfinance Bank (KWFT) as well as Kenya Police, Mwalimu National, Safaricom, Ukulima, Bingwa, Imarisha, Unaitas, Imarika and Harambee Saccos.
The 2021 Sacco Supervision Annual Report released by Sacco Society Regulatory Authority (SASRA) last year shows that the highest proportion of loans advanced by Saccos in 2021 were used in the land and housing sectors of the economy which accounted for 26.98 per cent of the total credit facilities advanced.
