Many countries, facing affordable housing shortages like Kenya, have grown the mortgage market in order to support demand – but this model rarely reaches low-income households. The rental market, then, poses a possibility for increasing secure housing tenure by closing the gap between the status owner and tenant. These models allow for a household to initially rent a dwelling, and then purchase it at a reduced price based on the rent that has already been paid.
This model has been less commonly used in Africa than in Europe or Latin America, but Kenya has implemented its own version of rent-to-buy. They utilize a long rental period of fifteen years or more, which dilutes the portion saved within a long consumption phase. Other countries have found five to ten years more appropriate as a rental period. And if the purchase does not take place, residents do not have the right to stay in their homes, or they only get a fraction of their accumulated savings back.
Sources:
Le Duff, D., Schaefer, J., & Tutin, C. (2021) Rent-to-Buy: What Potential Does it Offer For Improving Access to Affordable Housing? Agence Française de Développement (AFD).