The Affordable Housing Bill, 2023
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New 1.5% Matched Affordable Housing Levy
Under Section 4 and 5, the Bill imposes an Affordable Housing Levy at a rate of:
- 1.5% of the gross salary of an employee, matched by an equivalent 1.5% contribution from the employer.
- 1.5% of the gross monthly income of a person whose income is not salaried.
- Remittances must be paid to the collector by the ninth working day of the subsequent month.
Establishment of the Affordable Housing Fund
Section 8 establishes the Affordable Housing Fund, managed by a newly created Board. Section 11 details how these funds must be allocated:
- 30% to the National Housing Corporation for affordable housing programmes.
- 30% to slum upgrading, maintenance, and rehabilitation.
- 36% to the State Department responsible for affordable housing.
- Up to 2% to the collector and up to 2% to the Board for administration costs.
Loan Interest Rates Capped at 3% and 9%
The Bill establishes three housing categories: social housing (monthly income below KSh 20,000), affordable housing (monthly income KSh 20,000–149,000), and market housing (monthly income over KSh 149,000). Section 36 caps the reducing-balance loan interest rates at:
- Up to 3% (or an equivalent administrative fee) for social housing and affordable housing units.
- Up to 9% (or an equivalent administrative fee) for affordable market housing units.
KSh 10 Million Fine for Fund Misappropriation
Section 40 introduces penalties to safeguard the Fund's assets. Anyone who misappropriates funds, falsifies application documents, or makes unauthorized disclosures of applicant data faces:
- A fine not exceeding KSh 10 million,
- Imprisonment for a term not exceeding 5 years, or both.
- In addition, Section 7 imposes a 3% monthly penalty on employers who default on remitting the levy.
Bill No.
No. 75 of 2023
Gazette No.
Supplement No. 236 of 2023
Sponsor
Kimani Ichung'wah
Background
The Affordable Housing Bill, 2023 seeks to provide a comprehensive legal framework to actualize Article 43(1)(b) of the Constitution of Kenya, which guarantees every person the right to accessible and adequate housing. The Bill establishes the Affordable Housing Fund and the Affordable Housing Board to manage and allocate resources gathered from the new Affordable Housing Levy, aiming to facilitate affordable housing schemes across all counties.
Key Amendments
The Bill amends the Employment Act, 2007 by repealing:
- Section 31B: Repeals the previous legislative framework governing the Affordable Housing Levy under the Employment Act.
- Section 31C: Repeals the previous employer obligations associated with the levy under that Act.
These changes consolidate the administration of the housing levy entirely under this standalone legislation.
New Obligations
The Bill introduces several significant obligations for individuals, employers, and administrators:
- Levy Imposition (Section 4 & 5): Imposes a levy of 1.5% on the gross salary of employees, which must be matched by a 1.5% contribution from employers. A 1.5% levy is also imposed on the gross income of non-salaried individuals. Employers must deduct and remit these funds to the collector by the ninth working day of the subsequent month.
- Allocation Requirements (Section 11): The Board must allocate monies from the Fund to specific agencies: 30% to the National Housing Corporation, 30% to slum upgrading, 36% to the State Department of Housing, up to 2% to the collector, and up to 2% for board administration.
- Eligibility and Deposits (Section 30 & 31): To qualify for an affordable housing unit, an applicant must be a Kenyan citizen of at least 18 years of age holding a national identity card. The application must be accompanied by a deposit of at least 10% of the unit's value, a KRA PIN certificate, and an ID copy. Preference is given to marginalized persons, vulnerable groups, youth, women, and persons with disabilities.
Penalties
Strict penalties are introduced to ensure compliance and prevent financial malpractice:
- Levy Default (Section 7): Any person who fails to remit the levy by the due date faces a penalty of 3% of the unpaid amount for each month or part thereof that the amount remains unpaid.
- Misappropriation and Fraud (Section 40): Any person who misappropriates Fund assets, provides false or misleading information, or makes unauthorized disclosures of application details commits an offence. Upon conviction, the individual is liable to a fine not exceeding KSh 10 million, imprisonment for a term not exceeding 5 years, or both.
Transitional Provisions
Section 43 outlines the transitional measures:
- Any payment made or action taken under the repealed sections (31B and 31C) of the Employment Act, 2007 is deemed to have been paid or taken under this Act.
- Any commitment or obligation on the National Government regarding affordable housing that arose under an Act of Parliament prior to this Bill will be deemed a commitment or obligation made under this Act.
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