The Public Finance (Parliamentary Mortgage (Staff) Scheme Fund) Regulations

Legal Notice 18 of 2013

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Legal Notice 18 of 2013
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Public Finance Management Act
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LAWS OF KENYA

PUBLIC FINANCE MANAGEMENT ACT

THE PUBLIC FINANCE (PARLIAMENTARY MORTGAGE (STAFF) SCHEME FUND) REGULATIONS

LEGAL NOTICE 18 OF 2013

  • Published in Kenya Gazette Vol. CXV—No. 28 on 22 February 2013
  • Commenced on 22 February 2013
  1. [Amended by Public Finance Management (Parliamentary Mortgage (Staff) Scheme Fund) (Amendment) Regulations, 2020 (Legal Notice 48 of 2020) on 17 April 2020]
  2. [Amended by Public Finance Management (Parliamentary Mortgage (Staff) Scheme Fund) (Amendment) Regulations, 2020 (Legal Notice 187 of 2020) on 25 September 2020]
  3. [Revised by 24th Annual Supplement (Legal Notice 221 of 2023) on 31 December 2022]

1. Citation

These Regulations may be cited as the Public Finance (Parliamentary Mortgage (Staff) Scheme Fund) Regulations.

2. Interpretation

In these Regulations, unless the context otherwise requires—“borrower” means a person in receipt of a loan out of the Fund;“Commission” means the Parliamentary Service Commission established under section 45B of the former Constitution as continued under Article 127 of the Constitution;“Committee” means the Loans Management Committee established under regulation 6;“financial year” means the period of twelve months ending on the 30th June in each year;“Fund” means the Parliamentary Mortgage Scheme Fund established under the Government Financial Management (Parliamentary Mortgage Scheme Fund) Regulations and continued under paragraph 9 of the Second Schedule to the Public Finance Management Act;“member of the Scheme” means an employee of the Parliamentary Service Commission who is employed on permanent and pensionable terms;“Nairobi” means the metropolis of Nairobi as designated by the ministry for the time being responsible for metropolitan development;“Officer Administering the Fund” means the Clerk of the National Assembly;“property” means a residential house purchased through a loan from the Fund and includes the land purchased under loan from the Fund on which such house is to be developed;“valuer” means a person registered as a valuer under the Valuers Act (Cap. 532).

3. Establishment of the fund

The Parliamentary Mortgage Scheme Fund established under the Government Financial Management (Parliamentary Mortgage Scheme Fund) Regulations, 2008 established under the Government Financial Management Act (now repealed) is continued.

4. Object and purpose of the Fund

The object and purpose of the Fund shall be to provide a loan scheme for the purchase, development, renovation or repair of residential property by members of the Scheme.

5. Capital of the Fund

(1)The initial capital of the Fund shall consist of the monies standing to the credit of the account on the date of the coming into operation of these Regulations.
(2)Parliament may appropriate additional monies to the Fund.
(3)The Fund shall be administered as a special account in the Parliamentary Fund and shall be operated by the Officer Administering the Fund.
(4)The administrative costs accruing to the Fund shall, where such administrative costs constitutes a surplus after meeting the requirements of regulation 18(1)(b) be credited to the capital of the Fund.[L.N. 48/2020, rr. 2 & 3, L.N. 187/2020, rr. 2 & 3.]

6. The Loans Management Committee

(1)There is established a committee to be known as the Loans Management Committee, which shall consist of—
(a)the vice-chairman of the Commission who shall be the chairman;
(b)the chairman of the Staff Welfare Committee of the Commission;
(c)the Clerk of the Senate;
(d)the Director-General of Parliament; and
(e)a member of the Scheme elected by the members of the Scheme.
(2)The officer administering the Fund shall be an ex officio member of the Committee and the secretary to the Committee.
(3)The Committee shall administer the Fund and shall—
(a)process applications for loans in accordance with the existing terms and conditions of borrowing;
(b)liaise with the housing company (if any) to set up a revolving fund for the disbursement of the loans; and
(c)supervise the day-to-day running of the Fund.
(4)The meetings of the Committee shall be convened by the chairman or in the absence of the chairman, by a member designated by the chairperson and shall be convened at such times as may be necessary for the discharge of the Committee’s functions.
(5)The quorum for a meeting of the Committee shall be the chairman and any three members.
(6)The Committee shall meet at least once every calendar month.[L.N. 48/2020, r. 4, L.N. 187/2020, r. 4.]

7. Commission may appoint mortgage institution

Notwithstanding regulation 6(3), the Commission may, if it considers it appropriate to do so, appoint a mortgage institution to administer the Fund on its behalf.

8. Utilization of loan monies

(1)A member of the Scheme 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 Loans Management Committee may prescribe.
(2)A loan obtained under these Regulations shall be utilized for the purchase, development, renovation or repair of residential property for the occupation of the applicant and his or her immediate family.
(3)A loan for the development of residential property may be granted at the discretion of the Committee—
(a)to a member of the Scheme who is in possession of a title deed to the land on which the development is intended to be carried out; or
(b)in two installments, for the purchase of the land at which the residential property is to be developed and for the subsequent development of the property.
(4)The amount of the first installment granted for the purchase of land under paragraph (3)(b) shall not exceed forty per cent of the maximum loan amount for which the member of the Scheme is eligible.

9. Disbursement of loans for development

A loan granted for the development of a residential property under these Regulations shall be released to the applicant in the following phases—
(a)the first disbursement based on the value of the land on which the residential property is proposed to be developed; and
(b)the subsequent disbursements based on the rate of completion of the various phases of development as certified by a qualified valuer at the cost of the applicant.

10. Application for a loan

(1)An application for a loan under these Regulations shall be accompanied by the following documents where appropriate—
(a)copies of the designs of the proposed residential property duly approved by the local authority within whose area it is to be situated;
(b)bills of quantities in respect of the proposed development, renovation or repair;
(c)an official search of the title to the property intended to be purchased;
(d)a certified copy of the sale agreement relating to the property.
(2)The applicant shall bear the cost of stamp duty and other legal fees.
(3)Where a borrower fails to comply with the requirements of paragraph (2) within the stipulated time, the officer administering the Fund shall, upon giving the borrower fourteen days’ notice, deduct the amount due from the salary of that borrower in such installments as may be appropriate and remit such deductions to meet such costs as may be due.
(4)All legal transactions in respect of the property being purchased shall be conducted by an advocate appointed by the Commission.

11. Leasehold property

Where the property intended to be purchased through a loan from the Fund is leasehold property, such loan shall be granted where the expiry date of such lease is at least forty-five years beyond the final loan repayment date.

12. Maximum loan disbursement

(1)The maximum loan entitlement for a member of the Scheme in respect of the designation or job group scale specified in the first column of the Schedule shall not exceed the respective amount set out in the second column of the Schedule.
(2)For a member of the Scheme to qualify for a loan, such member shall be required to be—
(a)confirmed in appointment; or
(b)on contract with the Parliamentary Service Commission with the relevant documentation duly completed.
(3)A loan granted to a borrower under these Regulations shall be funded at the rate of—
(a)ninety per centum of the value of the property, where such property is situated in Nairobi; and
(b)eighty per centum of such value where the property is situated in any other area, and the borrower shall be required to deposit the balance thereof with the Fund.

13. Repayment of loan

A loan granted under these Regulations shall be repayable within a period of twenty-five years or the remaining period of service of the borrower, whichever is less.[L.N. 48/2020, r. 5, L.N. 187/2020, r. 5.]

14. Administrative Costs

(1)The administrative costs chargeable on a loan shall be three per centum per annum on a monthly reducing balance and this rate may be reduced from time to time at the discretion of the Commission.
(2)A mortgage institution appointed under regulation 7 to administer the Fund may charge an administrative costs of not more than four per centum to cover management costs.
(3)The administrative costs charged under paragraphs (1) and (2) of this regulation shall be met by the borrower.[L.N. 48/2020, r. 6, L.N. 187/2020, r. 6.]

15. Lien

(1)The Commission shall have a charge registered on the property financed through a loan granted under these Regulations and shall be entitled to have its name entered in all documents of title for such property.
(2)The borrower shall—
(a)not mortgage, charge, surrender the lease or sell or agree to sell or part with possession of the charged property or any part thereof without the prior written consent of the Commission;
(b)meet and pay all rates, rents, insurances and any other outgoings in respect of the property and send the proof of such payments to the Commission; and
(c)provide a transfer deed duly signed by the borrower and a letter authorizing the Commission to sell the property in case of default in payment.
(3)All residential properties purchased through the Fund shall be constructed of such material as may be acceptable to the Commission.
(4)During the loan repayment period, every 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)not alter or make any structural alteration to the property, carry out any valuation, assessment or investigation relating to the property or title thereto, as the case may be, without the approval of the Commission.
(5)No borrower shall be eligible for more than one loan at a time.
(6)All legal documentation and disbursement of funds shall be supervised by the officer administering the Fund.[L.N. 48/2020, r. 7, L.N. 187/2020, r. 7.]

16. Mortgage insurance

(1)A borrower shall take out and maintain a mortgage protection policy and a fire policy with an insurance firm approved by the Commission, the cost of which shall be paid out of the Fund and debited in such borrower’s account.
(2)The originals of all documents relating to property financed by a loan from the Fund shall be kept in safe custody by the officer administering the Fund.

17. Default in repayment

The Commission may call in a loan and in default sell the charged property by public auction or private treaty where the borrower is in breach of the terms under the loan agreement or the covenant contained in the charge of the mortgage instrument.

18. Administration of the Fund

(1)The officer administering the Fund shall—
(a)supervise and control the administration of the Fund;
(b)utilize the administrative costs accruing thereto to defray operating expenses, and may impose any reasonable restriction or other requirements concerning such use;
(c)cause to be kept books of accounts and other books and records in relation to the Fund and for all loans financed from the Fund;
(d)prepare, sign and transmit to the Auditor-General in respect of each financial year and within three (3) months after the end thereof, a statement of accounts relating to the Fund, prepared and signed by him specifying the income of the Fund and showing the expenditure incurred from the Fund, in such details as the Commission may from time to time direct in accordance with the Public Finance Management Act;
(e)furnish such additional information as may be required for the purpose of examination and audit by the Auditor-General; and
(f)designate and appoint such staff as may be necessary to assist him in the administration of the Fund and may require such staff to carry out such inspections as may be necessary to verify any information submitted under these Regulations.
(2)Every statement of account prepared under this regulation shall include details of the balances between the assets and liabilities of the Fund and shall indicate the financial status of the Fund as at the end of the financial year concerned.[L.N. 48/2020, r. 8, L.N. 187/2020, r. 8.]

19. Responsibilities of mortgage institution

The responsibilities of the mortgage institution, if any, appointed under these Regulations shall be—
(a)to operate individual accounts for each borrower, which shall provide details of recoveries of the loan;
(b)to charge security on properties acquired through loans from the Fund to protect the interests of the Fund and act as custodian of such charges;
(c)to disburse cheques for newly approved loans to various vendors, after the necessary documentation is completed by the Committee;
(d)to pay all outgoings and issue demand notices where necessary to members through the officer administering the Fund;
(e)upon repayment of the loan, interest and other expenses which may be outstanding, to discharge the charge and release the security documents to the borrower; and
(f)upon default, to call in the loan and on behalf of the Commission sell the charged property by public auction or private treaty, in which event the Fund shall meet any shortfall between the loan outstanding and the proceeds of sale.

20. Supplementary terms

(1)These Regulations shall be supplemented by such terms as may, from time to time, be detailed in the application form supplied by the Commission and in the contract between the mortgage institution and the Commission.
(2)Subject to these Regulations, the Commission shall issue guidelines on—
(a)the purchase and development of land and residential properties under these Regulations;
(b)the utilization of surplus Funds for the purchase and development of land and residential property under these Regulations; and
(c)such other matters as may be necessary for the proper management and administration of the Fund.

21. Transition

A person who immediately prior to the commencement of these Regulations was servicing a loan obtained under the Regulations shall be entitled to enhance the principal amount of the loan to the respective amount provided for in the Schedule.

22. Repeal of L.N. 46/2008

The Government Financial Management (Parliamentary Mortgage Scheme Fund) Regulations (L.N. 46/2008) are repealed.

SCHEDULE [r. 12(1)]

Designation/job Group ScaleMaximum entitlement
PSC 6KSh. 8,000,000
PSC 5KSh. 7,000,000
PSC 4KSh. 6,000,000
PSC 1-3KSh. 5,000,000
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