The affordable housing levy was expected to pass into law following yesterday's sitting of the National Assembly.
Now 1.5 per cent of every worker's salary will be added to PAYE while the employer will pay an additional 1.5 per cent.
This is not popular but it is a noble cause to build 250,000 low cost homes per year.
Workers will be able to take out their savings for a deposit on a home purchase or reclaim it after seven years.
Flats will sell for between Sh840,000 and Sh5.76 million. There will be a 10 per cent deposit and then preferential mortgages with rates as low three per cent for social housing repayable over 30 years (working out at Sh4,800 per month for a two-bedroom 30 sqm apartment with a deposit of Sh126,000).
This is definitely affordable, even for the poorest, but can the government afford it? It sounds too good to be true. The state will have to provide additional finance, especially if mortgage interest rates are below the rate of inflation. This huge cost will not be fully covered by the housing levy.
Government should share its financial analysis for the affordable housing scheme if it wants to wholehearted buy-in from Kenyans.
Quote of the day: "You believe in God... Do you believe your cause is blessed by God?"
Jonas Savimbi
The Angolan rebel leader was klled on February 22, 2002