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Parliament passes bill paving way for return of 1.5% housing levy tax

A file photo of lawmakers during a parliamentary session. (Photo: National Assembly)

By Bashir Mohammed | Friday, March 15, 2024

Ruto is expected to sign the Affordable Housing Bill (National Assembly Bills No. 75 of 2023) anytime.

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Parliament passed the legislation governing the enactment of the contentious Affordable Housing Bill on Thursday. This means that once President William Ruto signs it into law, both employers and employees will soon face 1.5 per cent tax deductions.

Ruto is expected to sign the Affordable Housing Bill (National Assembly Bills No. 75 of 2023) anytime.

This move comes after the Court of Appeal barred the collection of the levy in January. However, the ruling Kenya Kwanza government revived discussions on the levy on the floors of Parliament, with government-allied legislators pushing for the bill's enactment despite objections from opposition MPs.

Pro-government MPs also accepted the Senate's proposed amendments to the bill, including the establishment of county affordable housing committees to oversee the affordable housing project. Governors will appoint a non-executive chairperson to lead these committees and advise on affordable housing in their respective devolved units.

Under the leadership of National Assembly Finance and Planning Committee chairman Kimani Kuria, the county committees will ensure the equitable distribution of housing projects across the country.

“The Senate has established the county committees to ensure that the housing projects are spread across the country in the spirit of fairness and ensuring that no county is left out,” said Kuria on Thursday.

In addition to backing the proposal to establish the county committees, MPs approved the Senate's decision to decrease the cost of collecting the levy by the Kenya Revenue Authority (KRA) to 0.5 per cent.

Furthermore, the senators enhanced the bill by making it compulsory for the National Housing Board to exclusively manage any transfer of housing units, thus enabling low-income individuals to become homeowners.

“Except with the prior written consent of the Board, a purchaser of an affordable housing unit under this Act shall not, by contract, agreement, or otherwise, sell or agree to sell his or her unit or any interest therein to any other person,” the bill reads in part.

According to the new law, Kenyans who save in the scheme can retrieve their savings if they are unable to secure a house. They only need to request a withdrawal by providing a 90-day written notice to the National Housing Board.

“A person who has made a voluntary saving and has not been allocated an affordable housing unit may withdraw their savings by issuing ninety days’ written notice to the agency for a refund with any accrued interest,” the legislation reads