Nairobi builders face Sh60,000 fee for project assessment

City Hall in Nairobi. The county currently offers the service at no cost.
City Hall in Nairobi. The county currently offers the service at no cost. PHOTO/FILE
Nairobi County is planning on imposing a Sh60,000 fee for initial project assessments, adding more pressure on developers who are already grappling with rising building costs.

The fee, which has been proposed in the Nairobi Finance Bill 2014, will be for evaluating preliminary, non-detailed schematic drawings which inform the development of detailed development applications.

City Hall currently offers the service at no cost. The developer is only required to submit schematic drawings to the county’s planning department for analysis. Once evaluation is done, the department offers its opinion on whether the project is okay, needs some alterations or cannot be approved.

According to Nairobi Lands, Physical Planning and Housing chief officer Rose Muema, the input of the county’s planning department is needed before developers can invest millions in developing detailed architectural and engineering plans.

“This is important for such developers before they engage the services of architects to do the detailed development application that could cost millions. It’s always important to get that opinion for big projects before you start,” said Ms Muema.

Ms Muema said a lot of man-hours are put into the process, which involves taking the design drafts through departments such as planning, engineering and fire before a final opinion is offered. This, she said, has informed introduction of the fee.

READ: Construction levy hikes a blow to hard-pressed developers

The property evaluation fee is yet another cost for developers who are expected to pay a levy of 0.5 per cent of the value of the project to the National Construction Authority (NCA) and 0.1 per cent of project cost for environmental impact assessment.

This means a developer of a Sh5 billion shopping mall is required to pay Sh25 million to the NCA and Sh5 million to the National Environmental Management Authority (Nema) before he can embark on the project.

The introduction of evaluation fee is already facing fierce opposition from Nairobi residents who argue that it could further push up the cost of housing.

For Peter Mwaniki, the “exorbitant levies” are killing dreams of struggling Kenyans like him to build homes.

“The Sh60,000 fee is quite a lot for a common citizen struggling to build his or her home,” Mr Mwaniki says.

Economists reckon that the new levies risk slowing down development of housing in the county as potential borrowers must raise more money before seeking loans.

EDITOR'S NOTE: Read the latest issue of Construction Business Review. Flip through the pages of the paper real-time or download a copy to read offline. Sign up for a FREE subscription to get the paper delivered to your inbox every month.