Inside the house levy plan that the government seeks to unfold


Housing principal secretary Charles Hinga

The housing levy that the government is working on implements has caught many Kenyans unaware putting in mind that itis in the government’s agenda to provide housing to the residents.

And then out of nowhere the government gives a directive that is against their expectations.

The directive by the government to employers to start deducting 1.5 per cent housing levy from all employees in the public and private sector beginning next month was hit by a blow after labour court quashed it.

Housing and Urban Development Principal Secretary Charles Hinga Mwaura and the Kenya Revenue Authority Commissioner-General John Njiraini in a joint statement said employers are required to deduct and remit the levy by the 9th of each succeeding month effective May 9.

Transport, Infrastructure, Housing and Urban Development Cabinet Secretary James Macharia was earlier in January this year quoted saying the affordable housing project will be implemented after successful talks with workers’ union and employers.

Mr Macharia did not explain how the deal was reached with FKE and the Central Organisation of Trade Unions (Cotu) who had filed a case in bid to stop the levy.

The 1.5 per cent levy on salaries is expected to generate about Sh57 billion a year, from about 2.5 million salaried Kenyans, with additional revenue expected to come from voluntary contributors, who will be putting in a minimum of Sh200 into the fund per month.

Mr Atwoli had earlier faulted the scheme, in his application to stop the levy, saying the scheme “was too heavy a burden for Kenyan workers in wake of rising cost of living.”

Under the State home plan, contributors earning more than Sh100,000 will use their savings to get mortgages with annual interest of seven percent to buy the affordable houses.

Contributors can use their savings as a deposit or security when negotiating for mortgages to buy the affordable houses, while low-income buyers can use the savings to access tenant purchase schemes that eventually leave them as owners.

Workers earning less than Sh50,000 which repreents the highet number of Kenyns will be offered homes under the tenant purchase scheme.

Those on gross pay in excess of Sh50,000 will be offered mortgages at seven per cent per annum and expected to repay their loans after 15 years.

At seven percent per annum, the pricing of the mortgages is cheaper than commercial rates that charge double-digit interest rates.

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