NAIROBI, June 25 (Xinhua) -- Kenya has been acclaimed for coming up with initiatives to meet the rising demand for houses and making them affordable.

The latest plan contained in the 2018/2019 budget presented last week involves the creation of a National Housing Development Fund, which is expected to offer alternative financing solutions for low cost housing.

The fund will be fashioned akin to a pension scheme such that employees will contribute 0.5 percent of their gross earnings each month to a maximum of 50 U.S. dollars and employers will match the amounts contributed.

Contributors will then book the houses, and since the percentage contributed is not sufficient to cater for the cost of the houses, they will start paying for the houses off-plan.

"Individuals in the affordable housing bracket will use the funds to purchase houses through tenant purchase schemes, while individuals with a stronger financial muscle will use the funds as deposits for mortgages or other forms of collateral," Cytonn, a Nairobi-based investment firm, noted Monday.

The fund is the latest initiative by the government aimed at achieving affordable housing under President Uhuru Kenyatta's Big Four Agenda.

Another plan announced in February involves the setting up a 160 million dollars mortgage refinancing company.

The Kenyan Mortgage Refinancing Company (KMRC) will get funding from the World Bank, the Kenya government and private sector led by commercial banks and cooperatives.

KMRC, according to the Treasury, would be a non-bank financial institution to provide long-term funding to mortgage lenders.

The company's main objective would be to enhance mortgage affordability and offer long-term loans at attractive market rates in the country.

"The mortgage company is a step in the right direction towards making the government initiative of providing 500,000 homes per year until 2022 a reality. We expect the body to result to a rise in number of mortgage lenders, the number of mortgage undertakings, and thus increased uptake of homes by the low-income population," said Cytonn.

The government has also offered a 15 percent corporate tax relief to developers who put up at least 100 low-cost residential houses annually and there have also been land swaps that entail the exchange of public and private land between the government and developers.

Antony Kuyo, a real estate consultant with Avent Properties in Nairobi, said that with Kenya's housing deficit growing annually at approximately 200,000 units, the government has no option but lead from the front.

"Over the years, the private sector has been at the forefront of providing houses amid growing demand, with the government only stepping in when it comes to legislation. But this model has not worked as thousands are living in informal settlements," said Kuyo.

High mortgage rates of between 13 percent and 17 percent have made things worse for those in formal employment, with the East African nation only having some 20,000 mortgage accounts.

"The housing fund and the mortgage finance company are novel initiatives that would enable the country meet the over 200,000 deficit annually and provide affordable houses. Under these initiatives, I expect the housing part of the Big Four Agenda to be met," said Kuyo.

However, while the initiatives have been welcomed, experts noted they would not get an easy ride, especially the housing fund.

"The housing fund is likely to face opposition due to possibility of primary contributors not benefiting as it is structured in a lottery form. And employers and employees have begun to oppose it given that both parties are already being subjected to a number of statutory deductions such as National Hospital Insurance Fund," said Cytonn.