President Ruto expected to sign Affordable Housing Bill

William Ruto

President William Ruto assents to the County Government Additional Allocations Bill (National Assembly Bill No. 23 of 2023) at State House, Nairobi.

Photo credit: Pool

What you need to know:

  • Bill provides that employers match the 1.5 contribution from their employers with a similar amount. 
  • House leader of majority Kimani Ichung’wah hailed the Bill saying it addresses issues of unfairness.

President William Ruto is expected to sign the Affordable Housing Bill 2023 into law today after the National Assembly rubber-stamped the version approved by the Senate on Tuesday this week effectively forestalling the convoluted route of the mediation process.

The Bill that seeks to establish the Affordable Housing Fund, where the levies deducted from incomes shall be paid, to be managed by the national board, was passed on Thursday despite spirited opposition from MPs aligned with the minority side in the House who termed it unconstitutional. 

Had the National Assembly disagreed with the Senate changes, the Bill would have gone through a mediation process that is required to produce a mediated version within a month failure to which, the Bill stands lost.

To address the issues raised by the court, the Bill has expanded the imposition of the monthly 1.5 percent affordable housing levy to include incomes other than salaries paid to employees in the formal employment sector. 

However, what the Bill fails to address is how the government will collect the levy from those in informal employment, a gap that would likely see the petitioners return to court.

Nonetheless, the Bill provides that employers match the 1.5 contribution from their employers with a similar amount. 

The Bill as amended by the Senate proposes the introduction of County Affordable Housing Committees that will play a critical role in the overseeing of the affordable housing project.

This effectively gives counties a greater say in the implementation of the project considering that housing is a devolved function.

The House also agreed with the Senate proposal to reduce the cost of collecting the housing levy by Kenya Revenue Authority (KRA) from 2 percent to 0.5 percent of the amount the taxman collects.

Finance and National Planning Committee chairman Kimani Kuria (Molo) said the Senators’ move to involve counties in the project is in the spirit of fairness and ensuring that no county is left behind.

“The Senate has established the county committees to make sure that the housing projects are spread across the country in the spirit of fairness and assuring that no county is left out,” Mr Kuria said.

This even as some MPs warned that the creation of County Housing Committees usurps the mandate of the county governments making them subordinate to the national housing board.

However, House leader of majority Kimani Ichung’wah hailed the Bill saying it addresses issues of unfairness in the acquisition of the affordable housing units.

“Those with cartel tendencies will not use proxies to acquire as many units as possible,” said Mr Ichung’wah adding that those who acquire the houses and want to transfer to another party either by way of selling, will only do so with the consent of the national housing board.

The Kikuyu MP further noted that while time may have been limited “some amendments that the House Finance Committee could not agree on will be introduced either in the Statute Law (Miscellaneous Amendment) Bill or the Finance Bill 2024.”

The proposed law has also given reprieve to persons who made a voluntary saving and have not been allocated an affordable housing unit to apply for withdrawal of their savings by issuing a 90-day written notice for a refund with any accrued interest.

The voluntary contributor may apply to the national housing board for approval of issuance of an affordable mortgage to develop a rural affordable housing unit. 

The application will be accompanied by an agreement that the applicant agrees to have their saved deposits and the land upon which the unit is to be built to be used as collateral.

The Bill was introduced in the House in December last year after the High Court declared unfair, discriminatory and unconstitutional the housing levy that was introduced following an amendment to the Employment Act through the Finance Act 2023 that limited the levy to salaried employees in the formal sector.

The Bill goes on to say that the defaulted or unremitted amount shall be “summarily” recovered as a civil debt from the entity or person liable to remit the amount.

Currently, an employer who defaults in remitting the amount, is liable to payment of a penalty equivalent to 2 percent of the unpaid funds for every month if the same remains unpaid.

President Ruto is targeting to construct 200,000 affordable housing units annually, which he has promised will create between 600,000 and 1 million jobs each year.

In a bid to actualize this, the National Assembly has appropriated and ring-fenced Sh73 billion in the current financial year’s budget towards the project that seeks to facilitate the provision of funds for the affordable housing and affordable housing schemes in the promotion of home ownership among Kenyans.