A group of 35 Kenyan Saccos has unveiled a housing loans plan in which their members will get interest-free mortgages.

The scheme dubbed Africa Tenancy Purchase Initiative will see credit union members pay an upfront deposit of 10% of the cost of a unit and then pay the balance in “rent” instalments for up to 20 years.

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The unions, including Kimisitu Sacco, Safaricom Sacco, Habitat Housing Co-operative, and Nation Sacco, have a pipeline of five projects under the tenant purchase scheme comprising high-rise apartment blocks within the Nairobi metropolis.

Up to 5,000 members are expected to benefit in the next two years, a number that is projected to rise as more Sacco’s join the scheme.

“With more than 90% of Kenyans being tenants, this scheme converts their rent payments to make them homeowners.  There is no interest rate,” said Mr David Ndegwa, a real estate developer and member of the scheme’s steering committee.

“We have critically analyzed the consumer behavior and the dynamics around how much a typical Kenyan in urban areas pays for rent and structured an affordable rent-and-purchase mechanism,” he said in an interview.

The International Finance Corporation will offer partial credit guarantee for the housing projects, while Co-operative Bank and Shelter Afrique will provide short-term financing to develop the units, said Mr Ndegwa.

Upcoming projects include Sh2 billion Sunset Boulevard phase two located in Athi River, $7.7m. Komarock Wendani Heights, $57.6m Karen Heights and Art Stone in Juja comprising 400 apartments, and $211.2m Habitat Heights in Athi River made up of 5,200 units.

For example, a Sacco member looking to buy a $36,480 two-bedroom apartment at Sunset Boulevard — whose construction begins next month — will pay $3,648 as down payment, and the remainder in monthly rent installments of between $144 and $240.

It would take 14 years to clear the balance, assuming monthly pay of $192.