Kenyans should brace for a comeback of the housing levy after Parliament on Thursday passed the legislation that will anchor the affordable housing programme.
President William Ruto is expected to sign the Affordable Housing Bill (National Assembly Bills No. 75 of 2023) anytime.
The development therefore means that the government will, as early as the end of March, start deducting the 1.5 per cent tax from both the employer and the employee.
The courts had last month abolished the levy but the Kenya Kwanza administration has moved to have it back through legislation.
An appellate court on January 26 rejected the government’s bid to continue collecting the levy under the tax law.
On Thursday, pro-government lawmakers railroaded the Bill despite protests from opposition MPs.
The Azimio lawmakers termed the legislation illegal and unconstitutional.
“We need to be careful that we don’t pass Bills that will end up in court,” Kathiani MP Robert Mbui warned.
Rarieda MP Otiende Amollo cautioned the house that the programme is exposed to legal hurdles for failing to address matters raised by the courts.
“The technical, legal and policy issues we raised on this affordable bill remain, one day if it is not the courts then Kenyans will vindicate us,” he said.
Under the approved legislation, Parliament regularised the 1.5 per cent contribution for workers. The same percentage will be matched by the employers.
Members of the National Assembly also concurred with the Senate amendments which included the new proposal to create County Affordable Housing Committees.
The yet-to-be-established Committees will be tasked with the responsibility of overseeing of the affordable housing project.
Governors will nominate a non-executive chairperson to the county committees who will be advising them on affordable housing within the county.
Finance and Planning Committee chairman Kimani Kuria said the introduction of the committees is a step towards involving the counties in the affordable housing programmes.
“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,” the Molo MP said.
The new introduction effectively puts counties at the centre of the implementation of the programme which is a devolved function.
Another amendment by the Senate and which the National Assembly adopted is the reduction of the cost of collecting the levy by KRA which was initially at two per cent.
In the approved Bill now waiting for the president's assent, the collection cost has been reduced to 0.5 per cent of the amount collected by KRA.
National Assembly Majority Leader Kimani Ichung’wah while contributing on the floor praised the Senate for sealing loopholes that may have been exploited by cartels to buy more than one house.
“Those with cartel tendencies will not use proxies to acquire as many units as possible,” Ichung’wah said.
In the harmonised draft, the houses will target those earning between Sh20,000 and Sh140,000 per month.
This is a bold move to allow people in the lower cadre to own homes under the project.
The senators, in improving the Bill, also made it mandatory that only the National Housing Board will handle any transfer of the housing units.
“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 legislation indicates.
This means that those who benefit from affordable housing and would want to sell their units will first seek the consent of the Board.
Under the new law, Kenyans who make voluntary savings to the scheme will be able to redeem the same if they fail to get a house.
They will only need to apply for withdrawal by issuing 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 harmonised legislation reads.
“The person may apply to the Board for approval of issuance of an affordable mortgage to develop a rural affordable housing unit.”