Kenyans who default on their loans for President William Ruto’s Affordable Housing scheme will be evicted sooner if new laws pass.
The Senate on Tuesday, April 1, invited Kenyans to offer comments on the proposed changes that will force homeowners to make their payments on time, and failure to do so will result in their house being repossessed.
In the Business Laws (Amendment) Bill, No. 51 of 2024, the Senate is seeking to reduce the notice period that a lender must observe before exercising the power of sale on properties under the affordable housing scheme.
Section 90 of the Land Act, Cap 280, mandates that a chargee (lender) must issue a three-month notice to the chargor (borrower), detailing the nature and extent of the default and the actions required to rectify it.
If an individual neglects to settle their overdue payment for four continuous months, they will be classified as a defaulter.
"Where a person fails to remedy the default as required under sub-regulation (2) for four consecutive months, the Affordable Housing Board shall take possession of the affordable housing unit," according to the Affordable Housing Regulations 2024 drafted by the Ministry of Lands, Public Works, Housing, and Urban Development last year.
Under the existing Land Act, a lender is required to provide a statutory notice period before initiating the sale of a charged property due to default. This notice period is designed to offer the borrower adequate time to rectify the default or seek alternative solutions.
However, the government, through Senate Majority Leader Aaron Cheruiyot, has proposed a reduction in the statutory notice period specifically for properties under the Affordable Housing Act.
“The Land Act, Cap 280, to reduce the time given to a chargee before exercising the power of sale of property that is under the Affordable Housing Act, No. 2 of 2024, 2024,” reads part of the notice issued by the Senate on Tuesday.
The objective is to expedite the process for lenders to exercise their power of sale in cases of default, thereby enhancing the efficiency of security realisation in the affordable housing sector.
A shorter notice period means borrowers will have less time to address defaults before facing potential foreclosure.
The expedited process could lead to quicker loss of property for those unable to meet their repayment obligations promptly.
However, the government is seeking to boost the lenders' willingness to finance affordable housing projects, potentially leading to more favourable lending terms.
The Senate is inviting opinions from Kenyans on the proposed changes in law, with a timeline of Tuesday, April 15. The memoranda can be sent to the Clerk of Senate or the Standing Committee on Trade, Industrialisation, and Tourism.
