House and car loan shocker for MCAs
The dream of many Members of County Assembly to own a mansion in the leafy suburbs and drive a top of the range car was shattered by tough new regulations on mortgage and car loans.
Each MCA will now be entitled to a maximum of Sh3 million mortgage and Sh2 million car loan, according to the regulations.
This compares poorly to what MPs are entitled to- Sh20 million mortgage, a Sh7 million car loan and a Sh5 million car grant.
And further making the MCAs package less appealing is the fact that they will have to repay them in full before the next general election.
Repay in full
It means, should they take them up, they’ll have just about 40 months to repay as opposed to the normal 60-month period if they had received the loans at the beginning of their term- April last year.
The MCAs can start receiving the car loans and mortgages next month. The packages will be under two schemes — Nairobi City County Assembly Mortgage Scheme Fund and Nairobi City County Assembly Car Scheme Fund —both of which will attract a three per cent interest rate.
The monies have been factored in the supplementary budget even as regulations governing the schemes are at the final stages at the County Assembly.
The regulations crafted by the Sarah Serem-led Salaries and Remuneration Commission recommend the management of the schemes be placed under a financial institution and a mortgage provider.
“The County Assembly Service Board may, if it considers it appropriate, appoint a mortgage institution to administer the Fund on its behalf and to carry out the functions,” reads the mortgage scheme regulations.
According to Serang’ombe Ward Rep Pius K’Otieno, the MCAs are likely to use the mortgages to offset more expensive mortgages they may already by servicing.
“I think most of us will just use the mortgage to swap expensive ones or part of them that currently charge as much as 17 per cent,” said Mr K’Otieno.
A spot check revealed that on average, a three-bedroom house in Nairobi’s middle-income estates costs Sh6 million while brand new top of the range vehicles like Mercedes Benz, Toyota Prado, Range Rover and BMW cost more than the Sh2 million on offer.
MCAs had also demanded car grants like MPs, but the remuneration team ruled out the possibility.