In a ceremony at State House, Nairobi, on Tuesday, President William Ruto assented to the controversial Affordable Housing Bill making it a mandatory contribution for every Kenyan.
This now means that Kenyans will continue paying the housing levy with a 1.5 percent tax from both the employer and the employee and a 1.5 percent turnover tax for those in informal sectors.
This, according to the government will offer Kenyans a chance to own or rent decent homes, boost the economy, and offer employment opportunities.
Initially, the Bill only applied to those in the formal sector. However, after a court order, the government included everyone to ensure fairness and a balanced contribution.
According to Housing Principal Secretary, Charles Hinga, the order by the court was "a brilliant idea" as those in consultancy and other professions were initially not included, while their earnings are quite high.
Speaking on Spice FM on Wednesday, Hinga said that the government now will use Kenya Revenue Authority (KRA) pins to collect the taxes.
Those in informal sectors and those whose salaries are not paid monthly will be required to pay 1.5 percent of their gross income every month.
However, just like those in the formal sector, the income will be used to categorize which type of home one can own or rent.
"It is the responsibility of KRA to ensure that everyone pays. So, if for instance, you are in consultancy, you are on the KRA's radar. Essentially you have to calculate what your gross income is per month, apply the 1.5 percent, and remit it to KRA as the levy. This means that anytime you have an income a percentage of it goes to KRA," said Hinga.
According to the PS, once the registration and the payments have been made, the houses will be allocated according to one's gross income.
Those earning Sh20,000 and below will automatically be entitled to a social house, which Hinga says has been divided into three categories depending on the number of rooms.
For one to move into a one-room house, they will be required to pay Sh3,200 per month for up to 30 years after which the house will be theirs.
Those who would want to move into a two-bedroom house or a three-bedroom house will be required to pay Sh4,800 or Sh6,400 respectively.
These homes are only available to people earning a gross income of Sh20,000 and below and are all single rooms.
Taxpayers earning between Sh20,000 and Sh150,000 will be allowed to own or rent homes depending on the number of bedrooms in the house.
A one-bedroom, Hinga says, will be available for Sh5,200 while a two-bedroom and three-bedroom will go for Sh10,400 and Sh15,600 respectively.
According to the PS, earners under this class can get a mortgage of 6 percent which is fixed and is paid for a maximum of 30 years after which, they will own the house.
The third category of earners are those who earn over Sh150,000 per month.
Their homes will be mid to high-end market units which will be spacious and master ensuite.
For this category, the homes available will only be two and three bedrooms which will go for Sh31,300 and Sh41,800 respectively.
Their mortgage interest rate will be 9 percent.
According to Hinga, the government has also introduced another category- rural housing. Kenyans who wish to set up homes in rural areas can access loans through the housing fund to build these houses.
"There is also rural housing. So, if you want to go and build your home in rural areas, you can be able to get a loan to go and build it," he said.
Further, to avoid overcrowding, the government will come up with structures managed by a Housing Board (yet to be formed) that will categorically state the criteria for owning a home and prioritization of marginalized groups in the community.
However, before all of that happens, Hinga advises Kenyans to register themselves to the Boma Yangu platform under e-Citizen, as that will allow the government to properly plan when setting up these homes.
The Housing levy was approved by both houses with a few amendments made, among them the 10 percent mandatory deposit when applying for a home which many Kenyans complained was high.
