Real estate developers are pushing for the removal of stamp duty on land purchase stating the move will spur growth in the sector and encourage Kenyans to buy homes and properties.
Stamp duty, is paid at a rate of four per cent on land sold for the purpose of commercial development and two per cent for agricultural land.
“If you look at a piece of land going for millions of shillings, the tax translates to a lot of money which buyers find very prohibitive. Besides, the process of paying tax slows purchase or transfer of property by more than three days,” said Mr Mwenda Thuranira, CEO Myspace Properties.
Finance Minister Uhuru Kenyatta is expected to present this year’s budget speech in parliament on Thursday while players in the sector hope the minister will address the issue.
Kenya’s population growth has pushed up demand for housing especially in the urban areas with more than 80 per cent of urban dwellers living in slums as the real estate sector meets barely half of the 200,000 units needed annually.
The percentage of mortgage lending is also high pegged at 18 per cent, allowing little room for middle class income earners opportunity to own homes.
“Civil servants obtain mortgage at five per cent, which is relatively affordable and this window should be extended to other Kenyans who earn a reasonable income,” said Mr Thuranira.
With the Central Bank of Kenya (CBK) having licensed the operations of credit bureaus, it will now be easy for mortgage lenders to share information about borrowers with the help of mortgage brokers, he added.
“They (mortgage brokers) provide all-round service because they understand the industry better than borrowers and are able to shop for the best rates from banks on behalf of their clients while maintaining a data bank on real estate demands. By leaving shopping for mortgage to brokers, banks will also be able to concentrate on their core business.”