The Affordable Housing Bill, 2023
Status Timeline
Proposed
Active now
Public Review
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Debate
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Executive
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Final
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1.5% Affordable Housing Levy Imposed
Imposes a levy of 1.5% on the gross salary of an employee or the gross income of any person not subject to the employee levy. Employers are obligated to deduct this amount from employees' gross salaries and remit it alongside a matching 1.5% employer contribution by the ninth working day of the following month (Section 4 & 5).
Establishment of the Affordable Housing Fund
Establishes a dedicated Fund managed by the Affordable Housing Board. The Fund's sources include the levy collections, National Assembly appropriations, voluntary contributions, and investment income. Up to 2% of the collections may go to the Kenya Revenue Authority as the collector, and up to 2% to the Board for administration costs (Section 8, 9 & 11).
Three Categories of Housing Units Defined
Classifies affordable housing into three distinct tiers:
- Social Housing Unit: Plinth area of at least 18 square metres, targeted at individuals with a monthly income below KSh 20,000.
- Affordable Housing Unit: Plinth area of at least 30 square metres, targeted at individuals earning between KSh 20,000 and KSh 149,000.
- Affordable Middle Class Housing Unit: Plinth area of at least 80 square metres, targeted at individuals earning above KSh 149,000 (Section 2).
Fines of Up to KSh 10 Million for Misappropriation
Imposes strict financial penalties for the misuse of Fund assets. Any person who misappropriates or misapplies Fund assets faces a fine of up to KSh 10 million, imprisonment for up to five years, or both. Additionally, a mandatory fine equal to two times the benefit received or loss suffered will be applied (Section 44).
Mandatory 1.5% Affordable Housing Levy Imposed
Under Section 4, a levy of 1.5% is imposed on the gross salary of an employee or the gross income of a person whose income is not subject to the levy under employment. Under Section 5, employers are obligated to deduct this amount from the employee's gross salary and remit it alongside a matching 1.5% employer contribution to the collector by the ninth working day of the following month.
Establishment of the Affordable Housing Fund and Board
The Bill establishes the Affordable Housing Fund (Section 8) and a corporate Affordable Housing Board (Section 14). The Board will consist of a non-executive Chairperson appointed by the President, several Principal Secretaries, representatives from the Council of County Governors, COTU, the Federation of Kenya Employers, and three independent members. The Board's primary mandate is to manage the Fund and coordinate the implementation of affordable housing projects.
Three Categories of Affordable Housing Defined
Section 2 defines distinct housing categories to serve different income levels:
- Social housing unit: Plinth area of at least 18 square meters, targeting persons with a monthly income below KSh 20,000.
- Affordable housing unit: Plinth area of at least 30 square meters, targeting persons with a monthly income between KSh 20,000 and KSh 149,000.
- Affordable middle class housing unit: Plinth area of at least 80 square meters, targeting persons with a monthly income over KSh 149,000.
KSh 10 Million Fine for Fund Misappropriation
To safeguard the levy collections, Section 44 introduces a penalty for any person who misappropriates or misapplies funds or assets of the Fund. Offenders face a fine not exceeding KSh 10 million, imprisonment for up to five years, or both. Additionally, a mandatory fine equal to two times the amount of the benefit received or loss suffered will be charged.
Bill No.
Bill No. 75 of 2023
Gazette No.
Supplement No. 236 of 2023
Background
The Affordable Housing Bill, 2023 seeks to operationalise Article 43(1)(b) of the Constitution of Kenya, which guarantees every person the right to accessible and adequate housing and to reasonable standards of sanitation. The Bill provides a comprehensive legal framework to facilitate the funding, construction, and allocation of housing units to address the national housing deficit.
Key Amendments
The Bill makes consequential amendments to several existing statutes in its Second Schedule:
- The Employment Act (No. 11 of 2007): Repeals Section 31B and 31C, which previously governed housing levy provisions under employment terms.
- The Income Tax Act (Cap. 470): Amends Section 15(2) to make the Affordable Housing Levy payments tax-deductible for businesses. It also amends Section 30A to grant resident individuals who pay the levy a housing relief.
- The Kenya Revenue Authority Act (No. 2 of 1995): Amends the First Schedule to designate the Affordable Housing Act, 2024 as one of the laws administered by the Kenya Revenue Authority (KRA).
New Obligations
- Employers: Must deduct 1.5% from their employees' gross monthly salary and contribute an equivalent 1.5% matching amount. The total 3% must be remitted to the KRA by the ninth working day of the following month.
- Affordable Housing Board: Formed to manage the Affordable Housing Fund, develop five-year and annual affordable housing investment programmes, and coordinate the optimal utilisation of funds.
- Applicants for Housing Units: Individuals seeking housing allocation must make an application to the Board accompanied by a requisite deposit, proof of identification, KRA PIN, and a tax compliance certificate. Beneficiaries must pay an interest rate or administration fee on a reducing balance as prescribed by the Cabinet Secretary.
Penalties
- Unpaid Levy: Employers who fail to remit the levy are liable to a penalty equivalent to 2% of the unpaid funds for every month the sum remains unpaid.
- Misappropriation of Funds: Any person who misappropriates or misapplies monies or assets of the Fund commits an offence and is liable to a fine not exceeding KSh 10 million, or imprisonment for a term not exceeding five years, or both. They are also subject to a mandatory fine equal to two times the amount of the benefit or loss.
- Other Offences: Failing to provide information, giving false or misleading information, or unauthorised access to documents carries a fine of up to KSh 10 million, imprisonment for up to five years, or both.
Transitional Provisions
- Any regulations under the previous Housing Fund Regulations of 2018 are revoked.
- All monies held by the National Housing Corporation under the 2018 Regulations must be transferred and deposited into the newly established Affordable Housing Fund.
- The National Housing Corporation must provide a record of all previous contributions to the administrator of the Fund to ensure individual contributor accounts are updated.
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