Affordable housing is essential for every Kenyan citizen today. The Kenyan constitution dictates that the state should take legislative measures to ensure that there is adequate and available housing for every Kenyan.

Among the key aspiration of the President’s big four agenda is to deliver five hundred thousand affordable homes by 2022 to ensure most Kenyans own a home. To achieve this, there is a suggestion to introduce a payment plan to the National Housing Corporation (NHC) commonly known as “The Fund.”

Contribution

The Kenyan government has directed all employers to deduct a 1.5 percent from their monthly income to contribute to the housing levy starting May. Employers in all organizations are required to deduct and remit the amount by 9th of each subsequent month.

Employers and workers shall contribute 1.5 percent of their monthly income not exceeding KES 5000. Other people such as non-citizens and those who are not in formal employment are required to contribute about KES 200 every month.

Benefit of the housing levy

The government focus is on the 2.5 million salaried Kenyans who are expected to generate about KES 57 billion an year including an additional amount from voluntary contributors. Local and international developers have expressed interest in putting up one million units to help the government achieve this goal. The government expects to expand the project to other regions.

Individuals earning above KES 100, 000 will be refunded their contribution plus interest after 15 years of contribution. Contributors will be allowed to use their savings as collateral when securing mortgages. Employees who earn below KES 50, 000 will get housing under the tenant purchase scheme while those who earn over KES 50, 000 will qualify for a seven percent mortgage payable within 15 years.

Other benefits of this housing levy fund include:

  • Individuals will be able to purchase a home under an affordable housing scheme.
  • In case you don’t get a house, the contribution will be transferred to a pension scheme. In this case, another person under the scheme will benefit or get it as cash to self, spouse or a dependent child.

Conclusion

The government requires every employer to deduct and remit the levy together with other payroll statutory deductions. The regulations indicate that failure to adhere to this directive will attract various penalties for non-compliance. Concerning refund, those who will not get a house from this plan will get a refund after retirement.