Government affordable housing levy to start in May

The government is set to start deducting 1.5% from Kenyan’s salaries
to fund affordable housing program. The Ministry of Transport, Infrastructure,
Housing, Urban Development, and Public works in liaison with the Kenya Revenue Authority
ordered employers to start deductions by March 9.

Voluntary contributions are also acceptable at a minimum of Ksh
200 per month.

The Principal Secretary of Housing and Urban Development and
the KRA commissioner signed a notice that read in part, “Employers are required
to deduct and remit the levy together with other statutory levies from both the
employer and employee by the 9th of each succeeding month.”

The levy targets every formal worker in a plan to build half
a million houses by 2022.

According to the gazette regulations anyone who refuses to
follow the order commits an offence and is liable for a 2year jail term or a
fine not exceeding sh10,000, or both.

Self-employed people can also remit money as voluntary contributors
paying Sh200 per month. Kenyans will have to contribute money for five years
before accessing low cost houses. After that, employees will qualify to get
funds for a mortgage at a 7per cent annual interest.

“Contributions by individuals shall only be accessed for
purposes of offsetting housing loans, security for a mortgage or housing
development after five years of uninterrupted contribution and shall attract
such an annual return as may be determined by the corporation.”