For those of us who do not seem to get point, here is an exempli gratia,

I intend to build a block of flats having 15 flats or units at a cost of ksh 1.5 million per flat.

This gives me a total of ksh 22.5 million required for the construction. Add another 10% or kshs 2.25 million for the professional fees.

Assuming you are targeting the middle class rents of kshs 20k the cost of land will be roughly kshs 6 million (Assume you have already bought the plot).

The capital cost requirement for this business will effectively be ksh 24.75 million (say ksh 25m)

Now you approach a financier (HFCK who have cheaper cost of money rates) and present your proposal which they agree to fund.

You construct the 15 units to completion within the shortest time possible.

Assuming that the interest on money borrowed is 15%p.a and the loan is to be paid in 20 years (which is too long a period) I will end up paying a monthly instalment of about ksh 320k to HFCK.

My monthly collection from the business is kshs 375k leaving me with a net of kshs 55k to pay others.

The tax man arrives and demands his 30% of total collection which is kshs 112.5k.

When this happens my returns from the business is kshs -57.5k!!! I will never recover my money...

This scenario will still be similar to the one of an investor having the original construction capital in a bank account...my thoughts.

For those of us who do not seem to get point, here is an exempli gratia,

I intend to build a block of flats having 15 flats or units at a cost of ksh 1.5 million per flat.

This gives me a total of ksh 22.5 million required for the construction. Add another 10% or kshs 2.25 million for the professional fees.

Assuming you are targeting the middle class rents of kshs 20k the cost of land will be roughly kshs 6 million (Assume you have already bought the plot).

The capital cost requirement for this business will effectively be ksh 24.75 million (say ksh 25m)

Now you approach a financier (HFCK who have cheaper cost of money rates) and present your proposal which they agree to fund.

You construct the 15 units to completion within the shortest time possible.

Assuming that the interest on money borrowed is 15%p.a and the loan is to be paid in 20 years (which is too long a period) I will end up paying a monthly instalment of about ksh 320k to HFCK.

My monthly collection from the business is kshs 375k leaving me with a net of kshs 55k to pay others.

The tax man arrives and demands his 30% of total collection which is kshs 112.5k.

When this happens my returns from the business is kshs -57.5k!!! I will never recover my money...

This scenario will still be similar to the one of an investor having the original construction capital in a bank account...my thoughts.

Better to incorporate a company to run your real estate and be creative to lower the 30%...

All those crying about the 30% tax on rental income... Perhaps, this means the cost of houses/construction is too high!

Land prices have gone crazy. A reduction in rental income should discourage Developers paying increasingly higher prices for raw land. After all the cost of raw land is passed on to the price of housing units.

A reduction in loan uptake [borrowers] should force lenders to reduce rates OR place cash in T-Bonds.

A reduction in construction should force vendors of cement, furniture, tiles, etc to reduce their profit margins.