Kisumu: The National Treasury and Economic Planning Cabinet Secretary (CS), John Mbadi, has pledged to provide more financial and policy support to expedite Kenya’s affordable housing initiative. Speaking during the 4th Kenya Affordable Housing Conference in Kisumu, Mbadi announced that the National Treasury has allocated Sh120.2 billion to the housing and settlement sector in the 2025/26 financial year, aiming to address the widening gap in home ownership, particularly in urban areas.
According to Kenya News Agency, Mbadi highlighted that only 26 per cent of urban households in Kenya own their homes, while a significant 70 per cent are renting, often in insecure or informal conditions. To counter this, budgetary allocations are being increased, and innovative financing mechanisms are being introduced. Mbadi emphasized that the housing sector is crucial to the government’s Bottom-Up Economic Transformation Agenda (BEAT) and revealed plans for policy changes to enhance its performance.
Among the new measures to spur growth in the sector is an annual tax relief of up to Sh360,000 for incremental home construction loans. This incentive, introduced in the Finance Act 2025, is designed to ease the financial burden on Kenyans who build homes progressively. Mbadi also underscored the National Treasury’s focus on alternative financing instruments, such as mortgage-backed securities, housing bonds, and blended finance models, to unlock long-term capital and stimulate market-driven housing finance.
He praised the Kenya Mortgage Refinance Company (KMRC) for its pioneering Sh1.4 billion domestic bond in 2022, the first under its Sh10.5 billion Medium-Term Note programme. The Treasury is aligning fiscal policy to encourage deeper capital market participation. Additionally, the government has secured USD 300 million in concessional funding from the World Bank and African Development Bank (ADB) to support KMRC operations. These funds, combined with bond proceeds, have enabled KMRC to refinance mortgages at single-digit interest rates.
Mbadi pointed out that KMRC has refinanced over 4,600 affordable home loans across 39 counties, benefiting about 18,000 people and creating over 11,500 jobs. Nearly half of the loan beneficiaries are women. He also reaffirmed the Treasury’s commitment to mobilizing further concessional funds for KMRC from international development partners to expand its refinancing capacity nationwide.
The Treasury is working to operationalize the Kenya Mortgage Guarantee Trust (KMGT) with an initial capitalisation of pound 4 million. This facility will provide credit guarantees for borrowers with irregular incomes or informal employment, helping to de-risk lending and expand homeownership among underserved groups. The conference, organized by KMRC under the theme “Revolutionising Housing: Innovation Meets Sustainability,” brought together key housing stakeholders to explore solutions to Kenya’s growing urban housing challenge.
