National Assembly Majority Leader Kimani Ichung’wa has presented the Affordable Housing Bill 2023 to address the issues that led the High Court to declare the housing levy unconstitutional in November.
Non-salaried Kenyans to pay Ruto's housing levy in new Affordable Housing Bill
The Affordable Housing Bill 2023 has expanded the collection of the housing levy to include Kenyans in the informal sector
One key focus of The Affordable Housing Bill 2023 is addressing the discrimination identified by the court.
Non-salaried Kenyans roped into housing levy
The court deemed it unfair to impose the 1.5% housing levy solely on salaried Kenyans.
The proposed bill aims to rectify this by expanding the base to include non-salaried Kenyans, encompassing those whose income isn't easily traceable by the Kenya Revenue Authority.
According to the bill, the levy is set at a rate of 1.5% of:
(a) the gross salary of an employee; or
(b) the gross income of a person received or accrued, not subject to the Levy under paragraph (a).
In simple terms, part (b) implies that the 1.5% levy applies to the gross income of individuals not formally employed.
The bill mandates Kenyans to pay the housing levy no later than the ninth working day after the month in which the gross salary was due or the gross income was received or accrued.
KRA empowered to continue collecting the housing levy
Addressing another concern, the 3-judge bench had invalidated the housing levy regarding its collection authority.
The Ministry of Lands had assigned the Kenya Revenue Authority (KRA) to collect the levy, a move criticized by the judges.
The proposed Affordable Housing Bill 2023 seeks to remedy this by allowing the CS in charge of the affordable housing program to appoint KRA as the collector.
Affordable Housing Fund
Another correction proposed by the bill relates to the absence of a dedicated fund for depositing the levy.
Currently, since July, the housing levy has been channeled into the national government consolidated fund, the primary account for all government funds.
This setup hampers tracking whether the housing levy serves its intended purposes.
The new bill introduces the Affordable Housing Fund to be overseen by a board and CEO.
Additionally, the Affordable Housing Bill 2023 suggests imposing a penalty of Sh10 million or a jail term not exceeding 5 years, or both, for anyone found misappropriating the proceeds of the housing levy.
Eligibility and criteria for collecting the funds
The bill also outlines eligibility criteria and the application process for acquiring a house, categorizing homes into three groups:
- Social Housing: Targets those with an income of Sh20,000 and below.
- Affordable Housing: Intended for those earning between Sh20,000 and Sh149,000.
- Affordable Market: Designed for those earning more than Sh150,000.
One of the key requirements to purchase a house is a deposit of at least 10% of the value of the house.
Kenyans will also be given loans to purchase a house, to be repaid as per the period agreed.
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