Tax cuts, refunds & other details you should know about new Affordable Housing Act

This legislation introduces a range of measures aimed at supporting access to housing for Kenyan across various income brackets.

Let's delve into the key provisions outlined in the Act.

President William Ruto signed the Affordable Housing Act 2024 into law on March 19, 2024. President William Ruto signed the Affordable Housing Act 2024 into law on March 19, 2024. Pulse Live Kenya

Tax cuts, refunds & other details you should know about new Affordable Housing Act

Tax cuts

The Act introduces a 15% Affordable Housing Relief for employees, as stipulated under Section 30A of the Income Tax Act.

This relief is capped at Ksh9,000 per month or Ksh 108,000 per annum, offering financial respite to eligible residents who are actively engaged in affordable housing schemes.

To qualify for the tax breaks, Kenyans will be required to be active savers on Boma Yangu.

According to the Affordable Housing Act, 2024;

A resident individual who relief satisfies the Commissioner that in a year of income that the person-

(a) is eligible to make an application under an affordable housing scheme;

(b) has applied and is awaiting the allocation of a house under an affordable housing scheme; and

(c) is saving for a purchase under an affordable housing scheme approved by the Cabinet Secretary in charge of housing, shall for that year of income be entitled to a personal relief in this Act referred to as the affordable housing relief.

President William Ruto signed the Affordable Housing Act 2024 into law on March 19, 2024. President William Ruto signed the Affordable Housing Act 2024 into law on March 19, 2024. Pulse Live Kenya

Eligibility Criteria for House Allocation

Prospective applicants seeking house allocations must meet specific criteria as outlined in the Act.

This includes providing proof of deposit, possessing a valid KRA PIN along with a tax compliance certificate, and submitting copies of their national identity card or incorporation certificate for corporate entities.

Instead of the previous 10% deposit, the deposit required shall be dependent on the contributions.

Voluntary Savings for Housing Deposit

The Act empowers eligible Kenyans to make voluntary savings towards the deposit required for housing allocations.

Section 52 of the Act outlines the procedures for such savings, including the establishment of separate bank accounts and the withdrawal process.

It is important to note that 1.5% salary deductions are not considered as part of one's contributions.

President William Ruto signed the Affordable Housing Act 2024 into law on March 19, 2024. President William Ruto signed the Affordable Housing Act 2024 into law on March 19, 2024. Pulse Live Kenya

Savings and contributions will be channeled through Boma Yangu after application, which requires a Sh200 fee.

Savings refunds

The administrator of the Affordable Housing Fund shall issue an account number to each person making a voluntary saving.

A person who has made a voluntary saving and has not been allocated an affordable housing unit may withdraw their savings by issuing ninety days' written notice to the agency for refund with any accrued interest.

Kenyans who opt to use saving to build their own houses

For those opting for the mortgage route to construct housing units in rural areas, both voluntary savings and the land on which construction takes place will serve as collateral.

Regulation of ownership and sale of units

Ownership of affordable housing units will be regulated by the Affordable Housing Board, with stringent measures in place to prevent unauthorized sales.

Consent from the Board is mandated for any transfer of ownership, ensuring transparency and accountability in property transactions.

President William Ruto signed the Affordable Housing Act 2024 into law on March 19, 2024. President William Ruto signed the Affordable Housing Act 2024 into law on March 19, 2024. Pulse Live Kenya

Categorization of Affordable Housing Units

The Act categorises affordable housing units into tiers based on income levels.

These tiers include social housing for low-income earners below Sh20,000, affordable housing for individuals with monthly incomes between Sh21,000 and Sh149,000, and affordable middle-class housing for those earning above Sh150,000.

Penalties for Arrears on Housing Levy

To incentivize compliance and deter defaulters, the Act imposes penalties for arrears on the housing levy.

Defaulters will be subject to a penalty of 3% of the unpaid amount, underscoring the government's commitment to revenue collection for housing initiatives.

Roles of Public Institutions and Private Sector Participation:

The Act delineates the roles of public institutions in housing development while preserving opportunities for private sector participation in the supply of goods and materials.

Establishment of the Affordable Housing Fund

Central to the Act is the establishment of the Affordable Housing Fund, tasked with the design, development, and maintenance of affordable housing, institutional housing, and associated infrastructure.

Oversight and Accountability Measures

The board can allow the Affordable Housing Fund to borrow as well as make investments.

Section 15 of the Act provides that the board shall submit the annual investment programme to the Cabinet Secretary who will then submit the programme to Parliament.

The penalty for misappropriation of Affordable Housing Funds has been set at Sh20 million fine or imprisonment of a term not exceeding ten years, or both has been retained.

President William Ruto inspecting the Bomet Affordable Housing Project on Saturday, March 16 2024 Pulse Live Kenya

Devolved units will have County Rural and Urban Affordable Housing Committees in each county.

Their mandate will be, in consultation with the board, developing a framework for the attainment of affordable housing in the county

Any allocation of land held by the county government(s) towards affordable housing will have to go through public participation.

Check it out here!

Tax cuts, refunds & other details you should know about new Affordable Housing Act

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