Make State's low-cost houses truly affordable

President William Ruto lays a foundation stone for the construction of the 2,384-unit Lumumba Estate Affordable Housing Project in Kisumu Central, Kisumu County. [PCS]

One of President William Ruto’s pet projects, the Affordable Housing Programme, appears to be running into trouble at every turn. The Affordable Housing Levy caused a ruckus when it was introduced by the Finance Act of 2023, becoming one of the most contested clauses of a Finance Act before the levy was regularised by the Affordable Housing Act of 2024. It has now emerged that there are no enough takers for the thousands of units that the government has built. 

Due to different factors including high prices, perceived or real, of the units or the undesirable conditions that Kenyans must fulfil to be eligible, the houses appear not to attract much interest. This is despite home ownership being up on the list of aspirations of many Kenyans. Recent reports show that the government is struggling to offload the completed houses and has sold just a handful of the about 103,000 homes completed since September 2022. 

The affordable houses that have been built by the Kenya Kwanza Administration add to those that were built during the Jubilee administration.

Perhaps it is time to rethink the sale of these houses if the government wants to succeed in its quest to improve the living conditions of Kenyans, especially in urban areas and in increasing home ownership.

It should consider lowering the threshold for Kenyans to get these houses, including by lowering their prices. This is not impossible as the government will not suffer any pecuniary losses considering that the houses are built with taxpayers' money through the Affordable Housing Levy. 

In addition, the government should consider giving some of these houses free of charge to needy Kenyans, including those displaced from their homes in different circumstances. Among them are those who were rendered homeless after their houses were brought down in the ongoing clean-up of the Nairobi River.

All said and done, a different and friendlier approach to disposing of the houses should be put in place considering that the government is not looking to make profits from the sale of the houses, and construction will not stop as it has an easy access to funds through the Affordable Housing Levy.

The levy guarantees the state an adequate supply of funds for the construction of houses, perhaps even more than it can spend. A recent report by the Controller of Budget showed that while the government collected Sh54 billion in its first year of implementation, absorption stood at about a third of the amount.

Collections through the levy at 1.5 per cent on employees’ gross salary, which is then matched by employers also at 1.5 per cent are expected to grow to Sh70 billion over the current financial year, according to the budget documents that the National Treasury published earlier this year, then to Sh78 billion over the 2025/26 Financial Year and hit Sh89 billion over the 2026/27 Financial Year.

In total, the levy is expected to raise more than Sh500 billion which will be used to build over 363,000 affordable homes over the next 10 years. This will guarantee the government adequate funds. The government, therefore, has no reason not to make these houses truly affordable.