The Civil Servants (Housing Scheme Fund) Regulations

Legal Notice 98 of 2004

This is the latest version of this Legal Notice.

The Civil Servants (Housing Scheme Fund) Regulations

Citation: Legal Notice 98 of 2004
Primary work: Housing Act
Date: 31 December 2022
Language: English
Type: Legal Notice

HOUSING ACT

THE CIVIL SERVANTS (HOUSING SCHEME FUND) REGULATIONS

LEGAL NOTICE 98 OF 2004

Published in Kenya Gazette Vol. CVI—No. 79 on 17 September 2004
Commenced on 1 September 2004

[Amended by Civil Servants (Housing Scheme Fund) (Amendment) Regulations, 2015 (Legal Notice 17 of 2015) on 20 February 2015]
[Amended by Civil Servants (Housing Scheme Fund) (Amendment) Regulations, 2015 (Legal Notice 231 of 2015) on 11 December 2015]
[Revised by 24th Annual Supplement (Legal Notice 221 of 2023) on 31 December 2022]

1. Citation and commencement

These Regulations may be cited as the Civil Servants (Housing Scheme Fund) Regulations, 2004, and shall be deemed to have come into operation on the 1st September, 2004.

2. Interpretation

In these Regulations, unless the context otherwise requires—“borrower” means a person in receipt of a loan out of the Fund;“Cabinet Secretary” means the Cabinet Secretary for the time being responsible for housing;“civil servant” means an employee in a Ministry within the National Government;“Committee” means the Scheme Management Committee established under regulation 6 of these Regulations;“equity release” means a loan that allows the home owner to access equity in his or her home without having to sell it for purposes of improving it;“financial year” means a period of twelve months ending on the 30th June of each year;“Fund” means the Civil Servant Housing Scheme Fund established by regulation 3 of these Regulations;“mortgage finance company” has the meaning assigned to it under section 2 of the Banking Act (Cap. 488);“officer administering the Fund” means the accounting officer of the Ministry for the time being responsible for housing;“tenant purchase institution” means a company incorporated in Kenya which has not less than twenty years experience in operation of tenant purchase loan schemes for over two thousand housing units at one moment.[L.N. 17/2015, r. 2, L.N. 231/2015, r. 2.]

3. Establishment of the Fund

There is hereby established a Fund to be Known as the Civil Servant Housing Scheme Fund.[L.N. 17/2015, r. 3, L.N. 231/2015, r. 3.]

4. Objective and purpose of the Fund

The objective and purpose for which the Fund is established is to—

(a)provide housing loan facilities to civil servants for the purposes of either purchasing or constructing a residential house;

(b)develop housing units for sale and for rental by civil servants; and

(c)raise funds for the implementation of the objectives stated under paragraphs (a) and (b) of this regulation.

5. Capital of the Fund

The capital of the Fund shall consist of—

(a)the initial capital of three hundred million shillings paid out of the vote of the Ministry of Lands and Housing for the 2004/2005 financial year and such other funds as may be voted in subsequent financial years;

(b)proceeds from the sale of non-strategic houses; and

(c)all monies that shall be paid into the account operated by the officer administering the Fund.

6. Management of the Fund

(1)The Fund shall be administered by the Scheme Management Committee which shall consist of—

(a)the Officer administering the Fund;

(b)the Principal Secretary responsible for the National Treasury;

(c)the Principal Secretary responsible for Labour, Social Security and Services;

(d)the Principal Secretary responsible for Human Resource Management and Development;

(e)the Principal Secretary responsible for infrastructure;

(f)the Principal Secretary responsible for Coordination of National Government; and

(g)the Attorney-General.

(2)The functions of the Committee shall be to—

(a)supervise and control the day to day administration of the Fund;

(b)determine and regulate interest payable by loanees;

(c)approve all housing development and financing proposals;

(d)enter into agreement with persons or legal entities for the purposes of providing services to the Fund;

(e)develop an equitable criteria for the beneficiaries of the Fund;

(f)establish management guidelines and engage such staff as may be necessary to assist the Committee and the officer administering the Fund; and

(g)such other duty as may be directed by the Cabinet Secretary for the purposes of the proper management of the Fund.

(3)The Committee shall meet at least four times in a year.

(4)The officer administering the Fund shall be the chairman of the Committee.

(4A)The officer in charge of the Fund Secretariat shall be the Secretary to the Committee.

(5)The quorum for a meeting of the Committee shall be the chairman and three other members.

(6)The decision of the Committee shall be by simple majority and in the case of a tie, the chairman shall have a casting vote.[L.N. 17/2015, r. 4, L.N. 231/2015, r. 4.]

7. Purpose of Loan

(1)A loan granted under these Regulations shall solely be utilized for—

(a)purchase of a residential house for the occupation of the applicant;

(b)improvement of a residential house occupied by the applicant;

(c)development of a residential house for the occupation of the applicant;

(d)purchase of land and development of a residential house for occupation by the applicant;

(e)equity release for improvement or development of a residential property; and

Provided that, a loan granted under these Regulations shall not be utilised for commercial purposes.

(2)A loan for development of residential property shall be granted at the discretion of the Committee to a civil servant who is in possession of a title deed to the land on which the development is to be carried out.[L.N. 231/2015, r. 5.]

7A. Maximum funding

(1)The funds that may be loaned to a civil servant under these Regulations shall be as provided in the Schedule.

(2)The Cabinet Secretary, in consultation with the Committee, may from time to time vary the maximum funds that may be loaned to a civil servant under these Regulations.[L.N. 17/2015, r. 5, L.N. 231/2015, r. 6.]

7B. Criteria for grant of loan

The maximum loan that may be granted under these Regulations shall be based on the ability to pay and shall be payable by check off system.[L.N. 17/2015, r. 5, L.N. 231/2015, r. 6.]

7C. Eligibility

Eligibility for a loan under these Regulations shall be for a civil servant who has been confirmed in employment provided that any civil servant on contract terms of service shall have an unexpired contract period of more than twelve months.[L.N. 231/2015, r. 6.]

8. Disbursement of Loans for development

(1)A loan granted for the development of residential property, shall be released to the borrower in phases in accordance with subregulations (2) and (3) of this regulation.

(2)The first disbursement of a loan released to a civil servant shall be—

(a)twenty five per centum of the cost of construction:Provided that the cost of construction shall not exceed the maximum funding under these Regulations; or

(b)twice the open market value of the land on which the residential property is proposed to be constructed;

whichever is lesser.

(3)The subsequent disbursements shall be based on the rate of completion of the various phases of development as certified by a valuer, registered as such under the Valuers Act (Cap. 532), at the cost of the borrower.[L.N. 17/2015, r. 6, L.N. 231/2015, r. 7.]

9. Application for Loan

(1)A civil servant who wishes to apply for a loan from the Fund shall make such application to the officer administering the Fund in such manner as the Committee may prescribe.

(2)An application for a loan for construction purposes shall be accompanied by the following documents where applicable—

(a)copies of the designs of the proposed residential property duly approved by the relevant authority within whose area it is to be situated;

(b)priced bills of quantities in respect of the proposed development;

(c)proof of ownership of the land on which the construction is to be carried out.

(d)deleted by L.N. 231/2015, r. 8(a)(iv).

(3)An application for a loan to purchase a house shall be submitted together with the following documents—

(a)a certified copy of the sale agreement relating to the purchase;

(b)proof of ownership of the property by the seller;

(c)proof of the availability of funds specified under paragraph 3C;

(d)any other document that the Committee may require for the purpose of determining the application.

(3A)An applicant under this regulation shall meet any other condition imposed by the Committee under these Regulations.

(3B)A loan granted under these Regulations—

(a)shall be funded at the rate of ninety per centum of the value of the property; and

(b)shall not exceed the maximum loan amount set under regulation 7A.

(3C)The balance over and above the maximum loan amount under regulation 7A and all other monies payable including stamp duty, transfer fees and other related charges shall be paid by the borrower.

(4)The borrower shall be required to deposit the balance under paragraph (3) with the Fund together with all monies payable as stamp duty and other legal fees.

(5)The Committee may, where it deems appropriate, appoint an advocate to act on his behalf in respect of transactions relating to the property under these Regulations.[L.N. 17/2015, r. 7, L.N. 231/2015. r. 8.]

10. Leasehold property

Where the property intended to be purchased through a loan from the Fund is leasehold property, no loan shall be granted unless the expiry date of such lease is at least forty-five years from the date the loan was granted.[L.N. 17/2015, r. 8, L.N. 231/2015. r. 9.]

11. Repayment of Loan

(1)A loan granted under these Regulations shall be repayable within a period of twenty years or before the loanee attains the age of sixty years, whichever is earlier.

(2)A borrower may give prior authority in writing for his pension dues to be utilised to clear any outstanding debt in case he retires before repaying the loan.

(3)Where the property is developed by the Fund for the purposes of tenant purchase, the borrower shall pay a deposit of ten percentum of the value of the property and shall subject to paragraph (4) be granted a loan of the remaining ninety percentum to be repaid monthly and in accordance with these Regulations.

(4)The loan granted to a borrower under paragraph (3) shall not exceed the maximum loan under regulation 7A.[L.N. 17/2015, r. 9, L.N. 231/2015. r. 10.]

12. Interest of Loan

(1)The interest rate payable on a loan under these Regulations shall be a minimum of three percent and a maximum of five percent per annum on a monthly reducing balance inclusive of administration costs.

(2)The interest charged under this regulation shall be paid by the borrower.

(3)The Fund, tenant purchase institution or mortgage finance company as the case may be, may utilise not more than two decimal five per centum of the interest charged under paragraph (1) to cover its management costs.[L.N. 17/2015, r. 10, L.N. 231/2015. r. 11.]

13. Lien under Loan property

(1)The Fund shall register a charge on any property financed through a loan granted under these Regulations and such charge shall impose an obligation on the chargor—

(a)not to mortgage, charge, surrender the lease, or sell or agree to sell or part with possession of the charged property or part thereof without the prior written consent of the Committee;

(b)to meet and pay all rates, rents, insurance and any other outgoing payments in respect of the property and send the proof of such payments to the Committee; and

(c)to provide a transfer deed duly signed by the borrower and a letter authorizing the Fund to sell the property in case of default in payment.

(2)All residential properties purchased or developed through the Fund shall be constructed of such standards and material as being acceptable and to which the Committee may approve.

(3)During the tenant purchase or loan repayment period, the borrower shall—

(a)ensure that the property is used for residential purposes only;

(b)maintain the property in a satisfactory state of repair; and

(c)make no extension or any structural alteration to the property or title thereto without the prior approval of the Committee.

(4)(a) A civil servant shall be eligible to two loans provided that the loans shall not run concurrently;

(b)Where one is applying for the second benefit or the spouse has benefited before, priority shall be given to those who have never benefited;

(c)the two loans shall not exceed the officer's current entitlement at the time of the application.

(5)All legal documentation and disbursement of funds shall be supervised by the officer administrating the Fund.

(6)A civil servant covered under any other public funded scheme shall not be eligible to benefit from the Fund.

(7)A civil servant occupying a Government house who is granted a loan under these Regulations shall, within six months of such grant, vacate the Government house.[L.N. 17/2015, r. 11, L.N. 231/2015. r. 12.]

14. Insurance in respect of loan property

(1)Every borrower shall take and maintain a life insurance policy and a fire insurance policy with an insurance company approved by the Committee, whose cost shall be paid out of the Fund, as group cover, and debited in the borrower's account.

(2)Every beneficiary of a house under construction by the Fund shall take a mortgage protection cover for the provisional sale price of the property.[L.N. 17/2015, r. 12, L.N. 231/2015. r. 13.]

14A. Safe custody of document

The original documents relating to property financed by a loan from the Fund shall be kept in safe custody by the officer administering the Fund.[L.N. 17/2015, r. 13, L.N. 231/2015. r. 14.]

14B. Protection of Government interest

The Committee shall be entitled to do everything lawful and necessary to protect the interest of the Government in the property in respect of which a loan is granted.[L.N. 17/2015, r. 13, L.N. 231/2015. r. 14.]

15. Default in repayment

(1)Where a borrower who has benefited from sale of a house constructed through the Fund defaults in repayment of the loan for a period of three consecutive months, the Committee shall repossess and sell the property to another deserving civil servant.

(2)Where a borrower leaves service, the borrower shall continue to service the loan at the same terms and conditions as set out in these Regulations, provided that where the borrower defaults for a period of four months in repayment, the interest shall be converted to prevailing commercial rates.

(3)Notwithstanding these Regulations, where a borrower leaves service on disciplinary grounds or resigns before serving for a period of ten years, the Committee may grant the borrower a maximum period of four months to repay the full outstanding loan or permit the borrower to repay the outstanding loan at the prevailing market rate and on such other terms and conditions as the Committee may from time to time prescribe.

(4)Where the commercial rates are applicable and the borrower is in default for a period of four months, the Fund may call in the loan and sell the charged property by public auction or private treaty.[L.N. 17/2015, r. 14, L.N. 231/2015. r. 15.]

16. Administration of the Fund

The officer administering the Fund shall—

(a)open and manage a bank account for the Fund;

(b)supervise and control the administration of the Fund;

(c)utilize the interest accruing thereto to defray operating expenses, and may impose any reasonable restriction or other requirement concerning such use;

(d)cause to be kept books of account and other records in relation to the Fund;

(e)prepare, sign and transmit to the Auditor-General in respect of each financial year and within three months after the end thereof, a statement of accounts relating to the Fund, in such details as the Treasury may, from time to time, direct in accordance with section 18(2) of the Exchequer and Audit Act (Cap. 412).

[L.N. 17/2015, r. 15, L.N. 231/2015. r. 16.]

17. Transfer or sale of Loan property

No person shall sell or in anyway transfer any property acquired from or through the Fund under these Regulations unless—

(a)a period of not less than eight years has expired from the date—

(i)of the payment of the full purchase price of the property together with such interest as may be due; or

(ii)of the payment in full of the loan advanced by the Fund together with such interest as may be due;

(b)the sale or transfer has been approved by the Committee.

[L.N. 17/2015, r. 16(a), L.N. 231/2015. r. 17(a).]

17A. Financing Partnerships

The Fund may enter into a viable financing or development partnership with a person or legal entity for the purposes of implementing the objectives and purposes of the Fund.[L.N. 17/2015, r. 16 (b), L.N. 231/2015, r. 17 (b).]

17B. Management partnerships

The scheme may enter into viable management partnerships with a scheme from any other public body.[L.N. 17/2015, r. 16 (b), L.N. 231/2015, r. 17 (b).]

18. Duties of mortgage institution

Where the Committee, pursuant to regulation 6(2)(d) of these Regulations, appoints a tenant purchase institution or a mortgage finance company to administer the Fund, the institution shall—

(a)operate individual accounts for each borrower and provide details of recoveries of the loan;

(b)charge security on properties acquired through loans from the Fund to protect the interests of the Fund and act as a custodian for such charges;

(c)disburse cheques or transfer funds for newly approved loans to borrowers after the necessary documentation has been completed by the Committee;

(d)pay all outgoing and issue demand notices to defaulting borrowers through the officer administering the Fund;

(e)upon repayment of the loan, interest and other expenses which may be outstanding, discharge the charge and release the security documents to the borrowers; and

(f)perform such other duties as may be assigned to it from time to time by the Committee.

[L.N. 17/2015, r. 18, L.N. 231/2015, r. 18.]

19. [Deleted by L.N. 231/2015, r. 19.]

20. Miscellaneous

These Regulations shall be supplemented by such requirements as may be detailed in the loan application form supplied by the Fund and by the contract between Fund and the borrower.

21. Amendment to Regulations

The Committee may, from time to time recommend to the Cabinet Secretary any amendment to these Regulations.

SCHEDULE

FUNDS

[L.N. 17/2015, Sch., L.N. 231/2015, Sch.]

Beneficiaries		Mortgage Scheme Threshold
Civil Service Grades S, T, U and equivalent grades in Public Service		Up to twenty million shillings.
Civil Service Grades P, Q, R and Equivalent grades in Public Service		Up to fifteen million shillings.
Civil Service Grades K, L, M, N and Equivalent grades in Public Service		Up to ten million shillings.
Civil Service Grades G, H, J and Equivalent grades in Public Service		Up to six million shillings.
Civil Service Grades A, B, C, D, E, F and Equivalent grades in Public Service		Up to four million shillings.

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History of this document

31 December 2022 this version

Revised by 24th Annual Supplement

11 December 2015

Amended by Civil Servants (Housing Scheme Fund) (Amendment) Regulations, 2015

20 February 2015

Amended by Civil Servants (Housing Scheme Fund) (Amendment) Regulations, 2015

17 September 2004

Published in Kenya Gazette 79

01 September 2004

Commenced

The Civil Servants (Housing Scheme Fund) Regulations

Legal Notice 98 of 2004

The Civil Servants (Housing Scheme Fund) Regulations

Related documents

LAWS OF KENYA

HOUSING ACT

THE CIVIL SERVANTS (HOUSING SCHEME FUND) REGULATIONS

LEGAL NOTICE 98 OF 2004

1. Citation and commencement

2. Interpretation

3. Establishment of the Fund

4. Objective and purpose of the Fund

5. Capital of the Fund

6. Management of the Fund

7. Purpose of Loan

7A. Maximum funding

7B. Criteria for grant of loan

7C. Eligibility

8. Disbursement of Loans for development

9. Application for Loan

10. Leasehold property

11. Repayment of Loan

12. Interest of Loan

13. Lien under Loan property

14. Insurance in respect of loan property

14A. Safe custody of document

14B. Protection of Government interest

15. Default in repayment

16. Administration of the Fund

17. Transfer or sale of Loan property

17A. Financing Partnerships

17B. Management partnerships

18. Duties of mortgage institution

19. [Deleted by L.N. 231/2015, r. 19.]

20. Miscellaneous

21. Amendment to Regulations

SCHEDULE

FUNDS

History of this document

31 December 2022 this version

11 December 2015

20 February 2015

17 September 2004

01 September 2004

Related documents

Is amended by