I intend to construct a commercial building in Kiambu following influx of businesses as devolution continues to take root. I am, however, concerned that there is a new levy that should be paid to the National Construction Authority since this may eventually increase my investment cost. Kindly advise whether the levy is legal and how much I would be required to pay for the same. What would be the repercussions should I choose to ignore the levy and construct towards avoiding extra hidden costs?
The National Construction Authority (NCA) imposed a levy of 0.5 per cent of the value of any commercial or residential building whose value exceeds Sh5 million. For instance, an investor who wants to construct a building whose value is Sh10 million will pay Sh50,000 construction levy.
The levy is in line with provisions of Section 31 of the National Construction Authority Act that the charge should not exceed 0.5 per cent of the value of the building.
According to the NCA Regulations 2014 that passed the law, every owner must notify the authority and give details of any project contract awarded to a contractor for purposes of the levy.
The National Construction Authority should also notify the owner of the amount of levy payable within 14 days of the notification and this should be paid before construction begins.
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According to the Regulations, NCA may suspend, cancel or revoke registration of a contractor who starts construction of a building whose owner has not paid the levy.
The Authority is mandated to issue prospective owners with a compliance certificate as proof that they have settled the levy.
Developers are required to register their projects with the Authority within 30 days of awarding a contract to a contractor. The registration forms are available on the NCA website.
According to the NCA Act, the Authority has powers to undertake and commission research in the construction industry and register contractors and regulate their professional undertakings.
Mandate
It is also mandated to promote and ensure quality assurance, initiate and maintain an information system in the construction industry.
Other statutory roles include providing, promoting, reviewing and coordinating construction industry training and accrediting skilled construction workers.
Last year, NCA started fresh registration of contractors in a bid to weed out quacks who invaded the sector.
It directed construction firms in building, civil, mechanical, electrical and specialist works to register afresh to help prepare the first register of contractors in the country.
The vetting and registration was meant to crack down on impostors blamed for poor workmanship and bending of rules seen in collapse of buildings, bridges and incomplete projects.
According to the NCA, this registration will help guarantee public safety by locking out shady contractors and quacks.
The registration fees ranges from Sh10,000 to Sh50,000 depending on the category and class while annual practice license renewal will cost between Sh5,000 and Sh10,000.
The new law further requires at least one director or partner of a firm applying for registration to hold technical qualifications, skills and experience.
