The 3% housing levy on all salaried employees, which will be paid equally by both employees and employees in the formal sector, will apply from the end of March after President William Ruto signed the bill into law on Tuesday, 18 March.
- Under the law, employees will pay 1.5% of their gross salaries to the affordable housing program.
- Employers will also match the amount contributed by their employees.
- Others not in formal employment will pay 1.5% of their gross earnings every month.
The government aims to use the revenue from the levy to build 200,000 houses per year, and create 300,000 to 1 million jobs annually.
The High Court in Nairobi found an earlier version of the law, which had been in effect from July to November 2023, illegal. The ending of the legal process in January 2024 placed the government in a legal quagmire, as it had been collecting the levy through the Kenya Revenue Authority.
The new version of the law was passed in March by both Houses of Parliament, with amendments in the Senate on contributions from the informal sector and the role of county governance units. Other changes include the removal of a contribution cap, and the inclusion of a clause that one person may only access one unit.
The controversies around the Affordable Housing Program are unlikely to end with the signing of the bill into law. In the Senate, opposition senators suggested several amendments, including the retention of a contribution cap and the channelling of the funds to county units as conditional grants. At least one senator has suggested that he will be filing a court case to halt the levy’s implementation.
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