Affordable rental housing delivery in Kenya

Doctoral Thesis

2021

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Rental housing sector remains a significant housing option and an essential component of a vibrant housing market and construction industry as a whole. However, rental housing markets in most developing countries have been characterized by market failure because of the inability to provide adequate rental units commensurate with the urban population's demand. One of the major reasons for the inefficiency is attributed to the little attention by the private developers/landlords towards the rental housing development, yet they are perceived to be the major players on the supply side. The main objective of this research is to critically examine the rental housing market in Kenya and determine why despite the high demand for affordable rental housing, there has not been adequate corresponding supply of good quality housing units, a phenomenon which denotes market failure. This research aims at exploring the institutional environment to find out what has hindered delivery of adequate affordable rental housing despite high demand. This study has been guided by critical realism philosophical perspective and combines the conceptualisation in the Institutional Analysis and Development (IAD) framework and the theoretical richness in the New Institutional Economics (NIE) to develop the conceptual framework for analysing market failure in the rental housing market. The study utilizes mixed methods research design where both qualitative and quantitative research approaches have been employed, comprising a combination of cross-section survey of lower-middle income tenants and interviews of existing landlords, developers, key informants from the relevant public and private sector stakeholders. The main findings of this study underscore the significance of institutional environment in influencing the outcomes of the housing market, and note that as currently constituted, the institutional framework is not practically well-matched to support delivery of affordable rental housing units and as such discourages developers from the rental sector. The frameworks ranging from policy, regulatory and financial systems coupled with inferior performance of rental sector compared to development for sale systematically, but inadvertently lead to market failure in the rental housing market. This study recommends formulation of a distinct Rental Housing Policy and consequently Rental Housing Act complete with implementation framework to deal with issues intrinsic to the rental sector. It has made various and diverse contributions to the existing body of knowledge which comprise theoretical, contextual, empirical and policy perspective.
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