Tenant Purchase Schemes (TPS) are innovative housing finance models that allow individuals to move into a house as tenants and gradually become homeowners by paying monthly installments, often over a long period.
In Kenya, TPS has become a popular pathway to homeownership, especially for low- and middle-income earners who might not qualify for traditional mortgages or lack upfront capital.
How the Tenant Purchase Scheme Works
Under the TPS model, a housing agency or developer – typically the government, through bodies like the National Housing Corporation (NHC), or public-private partnerships , constructs housing units and offers them to buyers who make a down payment and continue to pay the remaining balance in monthly installments.
These payments are often structured over 15 to 25 years and are calculated based on the value of the property, the buyer’s income level, and prevailing interest rates.
During the repayment period, the buyer occupies the home as a tenant but is treated as a prospective owner. Once the full amount is paid, ownership is transferred to the tenant through a legal title deed.
Why Tenant Purchase Schemes Matter in Kenya
- Affordability
TPS allows people to own homes without the heavy burden of paying a lump sum or obtaining a high-interest mortgage. This makes it accessible to many Kenyans who are unable to secure traditional housing loans. - Bridging the Housing Gap
Kenya faces a housing deficit of over 2 million units, with demand growing due to rapid urbanization and population growth. TPS is seen as a practical way to meet this demand while enabling homeownership, especially in urban areas. - Government Involvement
The National Housing Corporation (NHC) has been at the forefront of implementing TPS across Kenya. Projects such as Starehe, Lang’ata, and Madaraka estates in Nairobi are historic examples of tenant purchase models that helped many civil servants and ordinary citizens become homeowners. - Support for the Affordable Housing Programme (AHP)
TPS is a key component of the government’s Affordable Housing Programme under the Big 4 Agenda. By offering flexible payment plans and reduced unit prices, TPS plays a central role in achieving the goal of constructing and delivering 500,000 affordable homes nationwide. - Economic Empowerment
Homeownership through TPS not only provides shelter but also gives individuals a tangible asset that can improve creditworthiness, provide security in old age, and be passed on as inheritance.
Challenges Facing Tenant Purchase Schemes
Despite its promise, TPS in Kenya faces challenges such as:
- Limited funding for large-scale housing construction.
- Delays in issuance of title deeds upon completion of payments.
- Maintenance issues in older TPS developments.
- Default risks, especially where economic conditions worsen.
The Future of TPS in Kenya
The Tenant Purchase Scheme continues to evolve, with newer projects integrating digital platforms for application and payment tracking. There’s also growing involvement from private developers who are adopting the TPS model to appeal to a broader market.
As Kenya pushes forward with its housing agenda, strengthening and expanding TPS can play a transformative role in reducing the housing gap, promoting inclusive urbanization, and turning the dream of homeownership into a reality for millions.
