Parliament Reviews Bill That Could Fast-Track Foreclosure of Affordable Housing Loans

Parliament Reviews Bill That Could Fast-Track Foreclosure of Affordable Housing Loans

NAIROBI, Kenya – Thousands of Kenyans purchasing homes under the government’s Affordable Housing Programme (AHP) could soon have less time to recover from mortgage defaults if Parliament approves proposed amendments to the Land Act, with lawmakers now examining changes that would significantly accelerate loan recovery procedures.

The proposals, contained in the Business Laws (Amendment) Bill, have sparked debate over the balance between protecting homeowners and encouraging financial institutions to invest more aggressively in Kenya’s affordable housing sector.

The National Assembly Departmental Committee on Lands on Tuesday, July 28, began scrutinizing the Bill, which has already been approved by the Senate and is now before the National Assembly for consideration.

According to Parliament, the proposed amendments seek to improve the country’s business environment while strengthening financing mechanisms that support affordable housing projects.

However, the recommendations have also raised concerns that homeowners facing temporary financial hardship may lose their houses much sooner than under the current legal framework.

“The National Assembly Departmental Committee on Lands has begun scrutinising proposed amendments to the Land Act that would significantly shorten the timelines for lenders to enforce loans and sell properties under Kenya’s affordable housing programme,” Parliament said in a statement.

At the center of the debate are Clauses 14 and 15 of the Bill, which propose cutting the statutory notice period issued to borrowers before enforcement action begins from 90 days to 45 days.

The amendments would also reduce the notice period before a lender exercises its statutory power of sale from 40 days to 20 days.

If enacted into law, borrowers who default on mortgages secured through affordable housing units would have considerably less time to settle arrears, negotiate repayment plans, or seek alternative financial arrangements before lenders initiate recovery proceedings.

Unlike conventional mortgages, the shorter timelines would apply exclusively to properties developed under the Affordable Housing Programme, leaving existing recovery periods for other categories of property unchanged.

Supporters of the proposals argue that reducing the recovery period could lower lending risks and make banks and mortgage providers more willing to finance affordable housing developments.

Financial institutions have long cited lengthy debt recovery processes as one of the factors discouraging broader investment in Kenya’s housing market.

With the government targeting the construction of thousands of affordable housing units across the country, access to mortgage financing is expected to play a critical role in helping eligible Kenyans transition into home ownership.

However, some stakeholders have cautioned that speeding up foreclosure procedures could expose low-income homeowners to greater financial vulnerability, particularly during periods of unemployment, illness or unexpected economic hardship.

Committee Chairperson Joash Nyamoko said Parliament must carefully weigh the interests of both lenders and homeowners before making a final decision.

“Our duty is to ensure that any amendments to the Land Act promote investment while safeguarding the constitutional rights of Kenyans. We must interrogate whether the proposed timelines are fair, practical and in the public interest,” Nyamoko said.

Lawmakers acknowledged that while lenders require stronger legal protections to recover loans efficiently, homeowners must also be given a reasonable opportunity to regularize their accounts before losing their properties.

The committee has not yet reached a final position on the proposals and is expected to conduct broader consultations before presenting its report to the National Assembly.

Nyamoko said the review process would involve collecting views from financial institutions, housing developers, legal experts, homeowners, consumer groups and members of the public to ensure the legislation reflects a balanced approach.

The outcome of the review could have far-reaching implications for Kenya’s Affordable Housing Programme, one of the government’s flagship initiatives aimed at expanding access to home ownership while stimulating job creation and economic growth.

Should Parliament approve the amendments, Kenya’s mortgage recovery framework for affordable housing would become significantly faster, potentially reshaping how lenders manage housing finance and how borrowers navigate financial difficulties.

The Bill is expected to return to the floor of the National Assembly after the committee concludes its review and tables recommendations for debate, setting the stage for lawmakers to determine whether the proposed timelines strike the right balance between protecting investments and safeguarding the rights of aspiring homeowners.

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Parliament Reviews Bill That Could Fast-Track Foreclosure of Affordable Housing Loans