State officials risk Sh20m fine for mismanaging housing levy funds

The government has initiated stern measures to deal with officials found misappropriating the Housing Levy funds.

According to Housing Principal Secretary Charles Hinga, officials found guilty of mismanagement of the funds risk facing severe consequences, including a hefty fine of Sh20 million, a maximum imprisonment term of 10 years, or both penalties concurrently.

“The Act itself imposes serious penalties on anyone who is going to misappropriate the money. So it is a Sh20 million fine or 10 years in jail or both,” Hinga said on Wednesday during an interview at Citizen TV.

Similarly, he revealed the establishment of a governing board comprising diverse stakeholders tasked with supervising the allocation of housing levy funds.

He noted that among the key participants selected for the board include the Central Organisation of Trade Unions (COTU), the Federation of Kenya Employers (FKE), and the Council of Governors (CoG) among others.

"The board has very wide representation, including three independent directors, alongside an impartial chairperson who is also independent," he said.

He reiterated that the structure aims to ensure transparency and accountability in the management of housing levy resources, with independent oversight to safeguard the interests of all stakeholders involved.

President William Ruto officially assented to the Affordable Housing Bill on Tuesday, following its successful passage through Parliament.

President's warning

Addressing attendees at State House during the signing ceremony, Ruto issued a stern caution to all involved officials, emphasising the indispensable role of integrity in realising the country's housing objectives.

President William Ruto assents to the Affordable Housing Bill at State House, Nairobi on March 19, 2024.(Photo: PCS)

"And I want to give a warning from here, anybody involved in this programme if you just step off the line, it's not going to be business as usual. So, integrity integrity integrity it is. This programme must be corruption-free. We have agreed on everything quantity, and costs, unlike in the past when costs changed, there will be no escalations or issues. Integrity is going to be front back centre to ensure this succeeds," Ruto said.

Highlighting the collective commitment of Kenyans to bolstering their compatriots' dignity through this endeavour, Ruto asserted that the project's integrity must be safeguarded at all costs.

He expressed optimism that the initiative would pave the way for homeownership opportunities for individuals across the socio-economic spectrum.

Ruto said his plan is to create at least 2-3 million homeowners in the short term in Kenya.

"This project must have integrity. And I hope everyone is listening. These are public resources, Kenyans are committing their money for the dignity of other Kenyans can have a job, have decent housing, eradicate slums, and increase the number of homeowners in Kenya. Teachers, doctors and everybody else will have the opportunity to own a home,” he said.

The new law provides for the affordable housing levy at the rate of 1.5 per cent of the gross income of a business or an individual and a matching contribution of the same amount in the case of employers.

The 1.5 per cent tax from both the employer and the employee will take effect at the end of the month.

It also provides for a double taxation check, by exempting persons who pay the matching contribution from paying the levy on their gross pay.

It further provides for affordable housing relief at 15 per cent for employees who make contributions to the Levy. Other tax-related incentives relate to the reduction of the turnover tax from 3 per cent to 1.5 per cent, to alleviate the tax burden for the informal sector.

The law establishes a Fund, into which the levy is payable and the Fund shall be managed by Affordable Housing Board which shall be responsible for the management of monies raised through the Housing Levy.