The Affordable Housing Program was originally introduced as a savings contribution scheme under the National Assembly Finance Act to help address Kenya’s housing deficit.
However, legal challenges arose since Kenyan law does not mandate savings contributions in a money bill.
Moreover, after public participation, where, the National Assembly revised the law.
Consequently, in March 2024, the Housing Fund was officially converted into the Housing Levy, making it a mandatory tax for all employed Kenyans.
The levy rate was reduced to 1.5% of an employee’s gross salary, with employers matching the contribution.
Additionally, individuals earning income outside formal employment must also contribute 1.5% of their gross income.
The Kenya Revenue Authority (KRA) now collects the levy alongside other taxes, and employers have been required to deduct and remit payments since March 2024.
Also Read: Alice Wahome Shuts Down Gachagua After Affordable Housing Remarks
Why Do Kenyans Contribute to the Levy?
The funds collected through the levy are managed by the State Department for Housing and Urban Development. The state department is mandated to oversee the construction of affordable housing units across the country.
These houses are meant to provide decent, safe, and subsidized housing options for Kenyans, ensuring that more citizens can access homeownership or affordable rent.
Further, the program allows Kenyans to acquire homes through cash purchases and financed home loans through approved lenders.
Also, Kenyans can acquire the houses through tenant purchase (rent-to-own) options.
The levy is in no way a personal savings contribution. Although Kenyans can make voluntary savings through the Boma Yangu online portal to help with their home purchase deposit, these savings are separate from the levy itself.
Also, the government has clarified that the Housing Levy is not refundable.
Additionally, there is no direct discount on home prices based on individual levy payments.
However, all Kenyans benefit from the program because homes are offered at subsidized rates compared to private developments.
Additionally, the availability of flexible financing makes homeownership more accessible.
Also Read: KRA Clarifies Deductions for Affordable Housing Levy
Who Manages the Housing Levy, and How Is It Used?
The Affordable Housing Board is responsible for managing the funds under the Affordable Housing Fund (AHF).
The funds are strictly allocated to building affordable housing units across Kenya, developing infrastructure such as roads, water, electricity, schools, and hospitals and providing financing options like Tenant Purchase Schemes (TPS) and low-interest home loans.
Even if you don’t plan to buy a home, you are mandated to contribute to the levy.
The government indicates that it helps stabilize housing prices, making homes more affordable for future buyers, creating jobs in the construction, finance, and housing sectors and improving public infrastructure like roads, schools, and hospitals, which benefit all Kenyans.
For employed Kenyans, Housing Levy deductions appear on your payslip as part of statutory deductions. For self-employed individuals, contributions are recorded in tax records.
However, since the levy is a tax and not a savings scheme, it is not reflected in your Boma Yangu online account balance.
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