The urban population accounts for 76% of the total world population and it is expected to increase to 4 billion people by 2030. (UN-Habitat 2012). More and more towns are now getting converted into cities. This phenomenon of urbanization has brought with it enormous challenges manifested in the acute shortage of housing resulting to expansion of urban slums and informal settlements, unplanned urban sprawl, environmental pollution, deterioration, deficiencies in modern basic facilities, and general urban decay. (Aluko, 2010).Yet governments’ effort to provide affordable housing to the urban poor has remain a dream to be actualized.
The rapid urbanization has greatly impacted on the housing provision with the housing sector characterized by an increasing housing demand Vis a Vis low supply in Kenya. For instance, 150,000 units of houses are demanded yearly and only 30,000 units of houses are built by both private and public sector yearly and deficit of 120,000 units needed yearly. (UN-habitat 2015) Despite numerous efforts from non-governmental organizations (NGOs) and recent governmental activities, the trend is yet to be reversed.
Affordability of housing can be argued from two tenure perspective; Home ownership policy and tenant occupant policy. Home ownership policy has been give more priority than tenant occupant policy or in some country totally ignored, this can be evidenced from the definition of affordable housing by many authors. According to Bramley, 1994; Ludwig et al, (2002). Argues that affordability can be determined by the level and distribution of home prices, household income and the structure of financing costs. It is noted by Sheuya, (2007) that adequate housing finance will determine affordability of housing, because it can help to produce the essential components of housing namely: land, on-site and off-site infrastructure, building materials, as well as offsetting construction costs.
Affordability is also perceived as related to incomes, housing costs, housing availability, employment, maintenance of the existing affordable housing stock, and patterns of new construction.
Housing co-operative as third sector in provision of affordable housing has been classified into three main types of co-operative namely; full equity, limited equity and non-equity, the first two correspond to owner-occupation and last correspond to renting. In a full equity co-operative, members purchases a share equal to the value of a unit of house which give him a right for occupancy .When they leave, they can sell their share at market value. Limited-equity co-operatives that attempts a compromise between affordability and increase in market value, when they leave, members receives payment based on formula to revalue the original share and lastly non-equity co-operative, members are allocated homes on the need basis after paying a nominal amount for a membership share, when they leave they only get their nominal share back. (Birchall, 2009)
Housing co-operative also have three main tenure model. Limited housing co-operatives, acquire land and subdivide the land to the members. Multiple mortgage housing members owns individual units and land but common areas are owned and maintained by co-operative; continuing housing co-operatives-co-operative owns land, houses and common areas but members hold equal shares for all assets. (UNCHS, 1999), generally, housing co-operatives in Kenya can be described as limited housing cooperatives since co-operative members acquire dwellings in freehold ownership status after completion.
Housing co-operative has been historically, still remains the preferred choice for provision of affordable housing for majority of low income household globally. Understanding that affordable cooperatives have been developed under varying historical circumstances provides insights on how they could play a role in the future supply of affordable housing. In Estonia, housing co-operatives manage 60% of the country’s housing stock, while in Poland housing co-operatives own 20%, and in Sweden and Norway about 18% of the total housing stock and Switzerland 5% of the stock. In contrast, co-operative housing accounts for less than 1% of all homes in the UK, Canada and the United States (Moreau and Pittini 2012).
Housing co-operatives in Kenya has been referred as hybrid housing co-operative, members are able to get all the housing needs from the same co-operative for instance, acquisition of land, construction of a building and financing ‘one stop shelter shop” (Sally et al, 2007) Housing co-operative model popular in Kenya is limited equity co-operative whereby co-operative acquire and build affordable housing after completion members are handle in all the documents of ownership.
Affordability of housing in urban area in Kenya has gone high even those with high-income and upper middle-income cannot affordable housing without a mortgage finance. Low-income households who constitute of 83% of people in urban area cannot afford quality housing. Affordability problem is also contributed by inappropriate policies relating to housing, where they exist, they are not clear and poorly implemented, and therefore widening the gap between the stated policy and policy outcome, as a result low income household live in slum and informal settlement and top income and upper middle groups occupy the housing units planned for the poor. (Mitullah 1993)
Recent changes in Economy Policy has led to deregulation and liberalization, creating new opportunities and challenges for housing co-operatives particularly on governance issues. It will demand for strong accountability and control of housing co-operative boards and management not only to state bodies, but also to other stakeholders. (Mullins et al. 2012)
According to Yates and Gabriel,(2006); Disney, (2006); Cairney and Boyle, (2004) argues that affordability problems is influenced by the level and distribution of homes prices, household income and structure of financing Today, affordable housing are faced with numerous challenges, such as adapting to increasing demand for affordable housing, lack of funds, issues of governance ,inappropriate policies, socio-demographic change, improving the sustainability of the housing stock and, the environmental quality of the neighborhoods, and coping with unfavorable conditions in the financial and housing markets.
Lastly urbanization in Kenya has caused various challenges which affects the economic, social and environmental developments of urban areas. This rapid urbanization demands supply of housing to solve housing affordability problems of the urban dwellers in general and in particular the urban poor. Housing provision is one of the major problems caused by high rate of urbanization. (Nabutola, 2004)
1.2 Statement of the problem
Housing is where successive generations find home; to keep healthy, protect, develop, socialize, be educated and prepare one to adulthood. Housing is basic human need. But the increasing intensity of urban growth in the face of low level of economic development in Kenya makes housing delivery for low income households challenging. Although government has taken different housing delivery options to tackle the problem. Even though different efforts have been made, yet addressing the housing needs of the poor has always been almost impossible.
Housing cooperatives as collective organizations offer several additional advantages including; useful vehicles for building community, they are used to organize slum-dwellers into collectives to obtain group credit and to build self-help housing, they provide a long term shelter with different tenure system .housing co-operative is “one stop shelter shop” by providing variety of services to their members, they facilitate mobilization of resources together from their members hence lowering the individual transaction cost, fosters collective action and self-help. It also increases the creditworthiness of a member and lastly limits or prevents speculation housing co-operative
The annual demand for affordable housing in urban towns is 150,000 units and the current annual production is 30,000 units both private and public sector creating a deficit 120,000 units yearly. However, government effort has not reversed the trend. For instance, public-private partnership build houses which consist of 80% of the new houses were for high-and upper middle-income people, while 83% of the demand is coming from low-income families and 89% of the urban population cannot afford a mortgage, generally this explain why low and middle income groups have been left out in housing development and as a result slums and informal settlement will continue to increase.
Housing co-operative will be able to address issues of affordability in broad perspective; First, examining critically policies relating to housing and how they affect affordability of home ownership and rental, which no study has been done, second, housing co-operative from an institutional context, in terms of structure and process in provision of affordable housing, also there is no study which has been done, third housing co-operative historically has been fore front in fighting rights of unprivileged in the society including housing affordability problems to slum dwellers and informal settlers.
Therefore the intention is this study is to examine the role of housing co-operative in provision of affordable housing in Kenya, with the intention of assessing whether the housing needs for low income groups can be met through housing co-operative. The study will also cover the key factors affecting affordability including funding, policy and regulation, and governance issues in housing co-operative.
1.3 General objective of the study
The main objective of the study is to examine the role of housing co-operative in provision of affordable housing in Kenya
1.3.1 Specific objective of the study
1. To establish whether funding affect housing co-operative in provision of affordable housing in Kenya
2. To examine whether government regulation and policy framework affect housing co-operative in provision of affordable housing in Kenya
3. To assess whether governance influence housing co-operative in provision of affordable housing in Kenya
4. To determine factors affecting housing co-operative in provision of affordable housing in Kenya