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.
Urbanization has greatly affected the demand and supply of affordable housing particularly to the poor urban who are forced to look for alternative housing in slums and informal settlement 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 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 housing affordability can be determined by financing cost, income and house price. 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. Housing co-operative have been undergoing many transformation but still their role of providing affordable housing has not changed.. 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.
According to DTZ New Zealand (2004) identified the factors affecting affordability of housing from different literature. The factors are interrelated. First, wealth, interest rates, house price and rent are key determinant of Mortgage finance and rent payments .Second, lab our market conditions directly affect people’s incomes, particularly, their certainty of future income streams. Third, changes in demand for housing is also affected by house prices and interest rates.
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)
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)