State targets 192,259 new housing units despite unmet promises

The government admits that lack of land ownership documents has seen more Kenyans develop cold feet in taking up affordable housing units.

 Amidst a target of 192,259 units to be constructed in the 2026/27 financial year, the government has explained why some of the completed units are not attracting buyers.

The details contained in the 2026/27 budget documents published by the National Treasury explain the challenges President William Ruto’s administration has faced in meeting the 250,000 housing units target as pledged in the Kenya Kwanza administration.

 Lack of land in bulk for affordable housing projects is one of them, even as Ruto lobbies for allocation from counties to speed up delivery of projects. 

Since this lobbying started, more projects have been launched far from major cities - in Mandera, Turkana and Vihiga counties . In addition to land challenges, the government has pointed fingers at political detractors whose interference is affecting project initiation. 

The 2026/27 budget documents show that apart from the 192,259 housing units targeted for construction in the set period, the government also plans to construct 96,000 social housing units, 175,140-bed capacity student hostels and 58,500 institutional housing units. 

This is alongside the refurbishment of 1,500 government pool housing units and the disbursement of mortgage loans to 750 civil servants.

 The budget estimates show the State Department for Housing and Urban Development has the second-highest allocation in the upcoming Sh840.6 billion development budget for the 2026/27 period.

 It has been allocated Sh132 billion.

 The 2026/27 budget documents show the sector has performed since 2022, the year President Ruto came into office, stating that during the period under review, gross allocation for the State Department was Sh11.8 billion, Sh78.2 billion and Sh82.4 billion for the 2022/23, 2023/24 and 2024/25 financial years, respectively.

 In correspondence, the actual expenditure was Sh10.3 billion, Sh25.5 billion and Sh79.5 billion for the respective three financial years. The resultant absorption rates were 87 per cent, 33 per cent, and 96 per cent, respectively.

 “The drop in the absorption for financial year 2023/24 was largely attributed to the affordable housing levy funds whose absorption was impaired owing to court cases and the late enactment of the affordable housing act,” National Treasury explains in the documents.

 It documents the achievements during the period, which include the completion of 2,185 affordable housing units, alongside the ongoing construction of 62,123 affordable housing units at an average completion rate of 32 per cent, 44,803 social housing units at 17 per cent, and 11,527 institutional housing units at 22 per cent.

 “Additionally, 44 markets were completed, while 34 modern markets and 205 Economic Stimulus Programme (ESP) markets are under construction at an average completion level of 48 per cent,” the documents state.

 The budget document adds that the State Department also implemented phase one of the Kenya Urban Support Program (KUSP) across 45 counties, developed and approved 85 Local Physical Development and Land Use Plans (LPDP), processed and issued 2,029 title deeds, and created 13,664 jobs through project activities under KISIP.

 It documents challenges such as funding gaps and delayed exchequer releases, as well as delays in the passage of the County Governments Additional Allocation Bill, which affected the disbursement of conditional grants during the period.

 “The absence of land ownership documents for Affordable Housing Programme (AHP) project sites has slowed the uptake of completed units, while local political interference has disrupted project initiation and operationalisation,” says the National Treasury in the budget documents.

  “Additionally, there is inadequate availability of serviced and suitable land for development, a lack of a land bank to support housing and urban investments, and continued encroachment on land along the Nairobi River basin.”

 The budget estimates show the State Department for Housing and Urban Development has the second-highest allocation in the upcoming Sh840.6 billion development budget for the 2026/27 period.

 It was allocated Sh132 billion. The Affordable Housing Fund will expend to Sh110.3 billion, the Kenya Urban Programme (KenUP) has been allocated Sh18.6 billion, and the Kenya Informal Settlement Improvement Project – phase II is set to receive Sh2.7 billion.

 Housing scheme

 Maintenance of government pool houses has been allocated Sh820.3 million, the Building Climate Resilience of the Urban Poor Project Sh259.0 million, the civil servant housing scheme fund is earmarked to get Sh18.5 million, and construction and rehabilitation of access roads Sh166.5 million.

 Further breakdown shows Sh44.7 billion will go into construction and civil works of affordable housing, Sh20.3 billion into construction and civil works of social housing, and Sh20.2 billion into construction and civil works of institutional housing. Sh17.9 billion will go into the construction and civil works of social and physical infrastructure. The 2026/27 budget documents how the sector has performed since 2022, stating that during the period under review, gross allocation for the State Department was Sh11.8 billion, Sh78.2 billion and Sh82.4 billion for the 2022/23, 2023/24 and 2024/25 financial years, respectively.

 In correspondence, the actual expenditure was Sh10.3 billion, Sh25.5 billion, and Sh79.5 billion for the respective three financial years. The resultant absorption rates were 87 per cent, 33 per cent, and 96 per cent, respectively.

 “The drop in the absorption for financial year 2023/24 was largely attributed to the affordable housing levy funds whose absorption was impaired owing to court cases and the late enactment of the affordable housing act,” National Treasury explains in the documents.

 In the Kenya Kwanza manifesto, President Ruto speaks of the housing challenge as an economic opportunity with an ambitious target of 250,000 units annually.

 “We will achieve this by structuring affordable long-term housing finance schemes, including a National Housing Fund and Cooperative Housing Schemes that will guarantee offtake of houses from developers,” the manifesto reads.

 The plan was to grow the number of mortgages from 30,000 to a million by enabling low-cost mortgages of Sh10,000 and below. Data from the Central Bank of Kenya show mortgages are far from the million target, as the number still oscillates around 30,000.

 “Next to agriculture, we see housing production as the sector that will create quality jobs for the 100,000 or so young people that are graduating from TVETs every year directly in the construction sector and indirectly through the production of building products,” the manifesto reads.