The Ministry of Lands, Housing, and Urban Development has confirmed that deductions under the Affordable Housing Programme are a tax, not savings.
This clarification follows remarks by Lands Cabinet Secretary Alice Wahome, who stated that the current one-point-five per cent Housing Levy is a mandatory tax and does not guarantee contributors a house.
According to the government, the National Assembly initially introduced the Housing Fund as a savings scheme under the Finance Act but later amended the law, converting it into a tax.
“In March 2024, Parliament passed a law transitioning the Housing Fund into the Housing Levy, making it a mandatory tax for all employed Kenyans,” read part of the statement.
The revised law, which took effect on March 19, 2024, requires employers to deduct and remit the levy monthly. Despite the changes, the government clarified that the funds will still support affordable housing projects, infrastructure development, and increased access to homeownership.
“While voluntary savings in the housing portal can be used for a home deposit, the levy is a national initiative aimed at lowering home prices and providing affordable financing options,” the statement added.
Wahome further explained that Kenyans seeking to acquire homes through the programme must sign up for financing, as the levy itself does not entitle contributors to a house.
“The money you contribute does not guarantee you a house. It helps build the units, but buyers must make structured payments under the rent-to-own scheme, which can run for up to 30 years,” Wahome stated during an interview on NTV’s Fixing the Nation.
The government reiterated that the programme is structured to ensure homeownership remains affordable and sustainable through planned deposits and financing options.
