The meeting needs of socio-economic groups (low

The world’s urban population has increased from 2.6 billion, which is 45% of total world population in 1999 to 3.9 billion which is 54% of the total world population in 2014, creating high demand for housing in urban areas particularly to low and middle income household. According to the World Cities Report (2016), 881 million urban households live in slums and informal settlement and lack essential basic needs. About 1.6 billion household will be demanding for affordable housing by 2025 (UN-Habitat, 2016).

In Kenya, urban population has grown faster than the rest part of the country. According the United Nations Population Division in (2010), estimated that 9.1 million people (22.24%) of total population live in urban area and is projected to increase to 26.6% by 2020 .However, about 60% of urban population lives in substandard housing and about 90% of housing demand come from low and middle income household. The major challenge of housing urban poor is affordability. The affordability of housing is critical not only to individual household but also to entire economy and the environment. (Mulliner & Maliene, 2011)

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Globally, Affordability of housing has attracted number of scholars, policy makers, and academician in many years. However, there has been no universal acceptable definition of housing affordability (Abelson 2009; Gan and Hill 2009; Ndubueze 2007; Stone 2005). Hence affordability is subjective. According to Noppen (2014) define housing affordability as ability of household meeting housing needs without compromising other non-housing  expenses. According to Milligan et al (2007) defines housing affordable as housing that is appropriate priced in meeting needs of  socio-economic groups (low and moderate income household) and meeting other essential costs. Across the  world, there has been shift from  inability of public and private sector providing affordable housing  across all income groups towards market solution housing co-operative and demand oriented support (Gibb, 2011; Marom & Carmon, 2015)..

Housing co-operative has been historically, still remains the preferred choice for provision of affordable housing for majority of low income household globally. In Estonia, housing co-operatives manage 60% of the country’s housing stock, while in Poland housing co-operatives own 20%, and in Sweden and Norway about 18% of the total housing stock and Switzerland 5% of the stock. In contrast, co-operative housing accounts for less than 1% of all homes in the UK, Canada and the United States (Moreau and Pittini 2012)

A housing cooperative is form of consumer co-operative owned and managed by their members according to co-operative principles and values. The first housing co-operative was formed in France in 1730 and spread to other countries. Housing co-operative model differ from one country to another but what makes housing co-operative unique from other housing model is that they are jointly owned and controlled by their members. This has clear implication on their operation.

Housing cooperatives in Kenya has been considered useful instruments not only provision of physical housing needs but also  economic and social needs of unprivileged people in the society. There are three major  model of housing cooperatives found in Kenya: Limited Objective Cooperatives provide specific services to members for instance, acquiring land, subdivide the land, and giving titles to members, their goal is achieved when construction is complete and when individual takes ownership. Multiple ownership cooperatives; co-operative owns common areas, and facilities but individual member owns specific unit and land. Tenant cooperatives-Members owns a share which entitle him to take part in day to day management of a co-operative, (Nabutola 2004)

Co-operative housing approach has been successful in addressing market failures and delivering affordable housing to low and middle income household through primary housing co-operative across the country which are organized and managed on the co-operative principles and values, commitment in working within their local communities. This ensure that provision of affordable housing is blended within the society (Ntema, 2011).

Housing co-operative have a unique relationship between tenants and housing co-operatives, whereby the tenants are consumers as the same time they are owners. Tenants not only play a critical role in day to day activities but also in management, governance and strategic decision of their co-operative. Also housing co-operative have distinct characteristics which enable them to combine their effort and resources together. They accumulate enough resources to construct affordable housing to their members’ in an organized manner. (Nabutola 2004)

Today, housing co-operative has been facing a number of challenges in provision affordable housing to low and middle income household including; rapid urbanization, lack of legislative and policy that support low income housing finance, lack of research and development, limited access to finance & high cost of finance, lack of effective partnerships with all stakeholders in housing sector, inappropriate regulation and standards, incubating institutions and unsustainable subsidy structures (Alassane 2014)

According to Nthule,(2012) argue that affordability problem can be addressed by provision of both rental housing and owner occupier housing  for low and middle income household commensurate with their demand particularly in urban area. In 2008, the supply of affordable housing favoured the high income group with a 60% supply surplus. While the upper middle, lower middle and lower income groups suffer 15 %, 92 %and 98 % deficits respectively (GoK, 2009). In 2015 the cheapest housing in Kenya  was  costing  US$ 17 000 using a mortgage finance with interest rate of 16% ,bond term 25years and down payment of 20% needed. The income required to purchase this house was US$ 8 821 which is higher than the average annual household income of US$ 4 140. Meaning that only 10.2% of urban household can affordable this house from formal developer. It is apparent that housing shortage cannot be solved in Kenya without addressing the issues of low and middle income household. (CAHFA, 2016) 

1.1  Statement of the problem

Demand for affordable housing in urban area has surpasses the supply making housing delivery for low and middle income households in urban area challenging. Although government has taken different housing delivery options to tackle the problem, but still the impact has been minimum or not feasible (Abdie, 2012)

According to the Ministry of Housing and urban planning, the private sector have heavily invested in top and upper middle segment as shown by their projects, 48% of their construction is consumed by top income household , 35% upper middle income ,15%  lower middle and  2% by  low income categories (GOK – Vision 2030, 2013). On the other hand the demand of housing among the low income and the lower-middle income categories is 83% compared to the demand for housing among the upper middle and high income categories whose demand is 17% cumulatively.

The demand for affordable housing has been influenced by demand and supply housing, rate of vacant houses, home ownership rate, cost of financing, trend in housing cost vs income, public fund spend on housing and the rate of homelessness. Urban population demand 150,000 units per annual but only 30,000 units are produced creating a deficit of 120,000 units per annual. Forcing a larger urban population particularly low and middle income household to find alternative housing in slums and informal settlement where living conditions for human development are not favorable. (UN Habitat, 2015).

Co-operative housing is a key model that can be described as pathway or destination. Integrity of housing co-operative can be classified into three pressing factors namely; Autonomy and independence, voluntary membership and security of tenure. Housing co-operative respond to diversity of tenure, for instance, psychological and social aspects are interconnected with actual ownership and related to cultural and social environment. Also the model respond to other life aspirations and changing inter-generational dynamic of globalizing and re-localizing based on member tenant ownership and control (SEHC, 2015)

Co-operative housing approach creates a unique sense of security of tenure, control is embedded in the purpose, philosophy and structure of housing co-operative hence strengthens tenant tenure system. Also the approach promote community participation aiming at empowering the members in decision making. (SEHC, 2015)

Despite, the success of housing co-operative in provision of affordable housing, still housing co-operative is little known in Kenya. Due to the pressing demand for affordable housing it has attracted a number of scholars, academician and other researchers to develop an interest in housing co-operative as alternative housing provider. Therefore this study aim at establishing the role of housing co-operative in provision of affordable housing, also the study will determine the level of affordability of housing provided by housing co-operative,, the factors affecting affordability  and lastly to examine the influence of co-operative characteristics in provision of affordable housing .

1.3 General objective of the study

The main objective of the study is to examine the role of housing co-operative in provision of affordable housing in Kenya

1.3.1        Specific objective of the study

1.                  To determine level of  affordability of  housing co-operative in Kenya 

2.                  To analysis the  factors affecting housing co-operative in provision of affordable housing in Kenya

3.                  To establish appropriate housing co-operative operational characteristics for extension of sustainable housing services in Kenya


1.5 Significance of the study

The potential of housing cooperatives as an institution cannot be overemphasized as practical way of providing affordable housing for the low-income group .The flexibility of the co-operative housing approach is recommendable, it take into consideration of diversity of their members capability of affording housing either through individual home ownership or rental housing, members enjoys security of tenure from housing co-operative either as owners of a unit or owners as tenants. (Davis 2006)

Historically housing co-operative has been working with the community in improving the living standards of the poor people, promoting partnership and capacity building. However, housing co-operative need to be supported by government in terms of provision of conducive environment, appropriate legislative and policies  particularly relating to housing for low income household (Munkner, 2001)

Most of houses build by individual investors have not meant the standards of affordable housing either they are built on illegal land, or land meant for public utility. Hence not suitable for human consumption neither have any financial recognition from the market. The best way of addressing all these issues is through co-operative housing approach which has capacity and experience in addressing these problems.

According to United Nations (UN, 2009) argues that research on housing co-operative is overdue and it will be difficult for government to identified  kind of support housing co-operative need particularly in terms of legislative and policies .Therefore, research in housing co-operative is imperative in Kenya because such a study has not been done before.

2.0 Literature Review

2.0 Introduction

This section provides a review of theories related to this study, housing concepts, factors affecting housing affordability and previous studies which have focused on housing market.



2.1 Theoretical review

2.1.1 Self-Selection Theory 

Self-selection theory was founded by a philosopher David Hume in 1757, He argue that it is not possible for a person to make unprejudiced evaluative judgement (gracyk,2009).The theory of congruence is critical to housing self-selection processes, it examine the interrelationship between environmental choice, human behavior and residential satisfaction (Michelson 1977). The theory blend very well with housing co-operative, it assume that every household have equal opportunities from which to select. Residents may choose housing co-operative because they belief on their principles and values while others may take choice due to constrained of lack of housing alternative within housing market. Michelson (1977) argues that pre-existing traits and behavior determine a residential location and type of a dwelling.

2.1.2 Stakeholder Theory

According to Freeman, (1984) argues that stakeholder are individuals and groups who are affected or affect the activities of an organization. Stakeholders theory argues that changes are invertible in an organization once they come solution should be sought by cooperation of all the stakeholders (Freeman1984).The theory relate to housing co-operative in terms of management and control of home ownership and tenant housing. Stakeholder of housing co-operative have double economic function both as users and shareholders (Tirole2001).Thomas (2004) argues that stakeholder participation characters enhance efficiency and voluntarism in housing co-operative. Emerging trend of multi-stakeholder housing co-operative has broaden the scope of housing co-operative in terms of objectives. Also it has strengthen housing delivery strategies in terms of new innovation and creating networks of partners across the world (Van Opstal & Gijselinckx, 2009).