Navigating the Affordable Housing VAT Incentive Application Process :A Step-by-Step Guide

By Yitzhak Rabin Juma, programs officer / Affordable Housing VAT Application Specialist

The Affordable Housing VAT Incentive is an initiative championed by the Kenya Property Developers Association with the support of its partners, FSD Kenya, and the State Department of Housing and Urban Development. The main aim of this program is to involve developers in the affordable housing program as strategic partners by supporting them in streamlining project costs, saving money, constructing more houses, and assisting the government in meeting its housing demand.

  1. Who is eligible:
  • To qualify for the VAT incentive, developers must meet specific criteria set by the State Department of Housing and Urban Development through the Development  Framework Guideline. This includes registration as a strategic partner, adherence to specific building standards, and a focus on housing projects that meet affordability thresholds.
  1.  Key information required:
  • Company profile e.g. Certificate of incorporation, Details of directors, financial summary/audited accounts, KRA Pin
  • Project Profile e.g. Name of Project, Location, Scope of work, Project Team and Stakeholders, Project Timeline, Budget and Funding, Architectural designs, Building Specifications, Permits, and Approval
  • Land Diligence e.g. Title Deed, Lease agreements, Title search report
  • Development Design e.g. Architectural design, visual renders, Structural design, Floor plans, Approvals, Healthy and Safety Plans, Construction Timeline, and Phasing Plan
  • Financing e.g. Funding sources, financial documentation (statements or proof of debt)
  1. Step-by-Step Application Process
  • Step 1 Understand the VAT incentive program and its benefits: Developers can schedule a meeting to discuss the eligibility criteria, the application process and the specific project requirements.
  • Step 2 : Assist developers prepare necessary documentation for the application: A checklist will be provided
  • Step 3: Ensure all documents meet the requirements before submission; Guide developers on having the right information before submission
  • Step 4: Officially apply for the Strategic partnership and VAT incentive: Developers submit their application forms and supporting documents to the State Department of Housing and Urban Development.
  • Step 5: Facilitate timely processing of applications: Kenya Property Developers Association has a working relationship with the State Department of Housing and Urban Development enabling applications to be processed expeditiously.
  • Step 6: Developers are informed of the outcome of their application; Upon Approval, the various government departments involved communicate  their decision to the developers providing details on the next step to getting the VAT exemption
  • Step 6: Track your application through the KPDA programs desk. You will be notified once your application is approved.                                                        
  1. Key Timelines
  • The review process typically takes 4 weeks to 6 weeks. If additional documentation is needed, the State Department of Housing and Urban Development will contact the developers and give them a time frame to submit the information required.
  1. Benefits of the VAT Incentive
  • Once approved, developers are exempt from VAT on construction materials and services, leading to significant cost savings. This not only makes housing more affordable for potential buyers but also improves the developer’s profit margins.

Conclusion:

  • The Affordable Housing VAT Incentive is a powerful tool for developers looking to reduce costs and contribute to the nation’s affordable housing agenda. By following this guide, you can streamline your application process and ensure you meet all necessary requirements.