Impact of the Finance Bill 2024 on housing and settlement in Kenya

Another proposal is the deletion of Section 54 of the Affordable Housing Act, which prevented owners of affordable housing units from selling their units without prior written consent of the Affordable Housing Board. If enacted, this will streamline property transactions, fostering a more fluid housing market. However, it may result in the abuse of the affordable housing scheme, where some people acquire the houses cheaply and sell them in the open market for profit.

The Bill, however, brings into the tax net the income of the National Housing Development Fund (NHDF) as well as amounts withdrawn from the NHDF to purchase a house by a contributor who is a first-time homeowner. These two proposals may hinder affordable housing accessibility, thereby undermining the constitutional provisions on accessibility to housing. The proposal to tax withdrawals from the fund will negatively impact the government’s push to have potential homeowners start saving early in anticipation of owning a house in the future.

Another proposal that may have an adverse effect on the housing sector is the introduction of VAT on various financial services. If the proposal is adopted, it is expected that the cost of financial services, including mortgages, will rise, leading to higher homeownership costs.

A positive proposal in the Bill for the housing sector is the removal of the excise duty rate on cement clinkers, which was at the higher of KES 1.5 per kg or 10% of the value. Cement clinker is a raw material used in the production of cement. The exemption of cement clinker from excise duty is expected to reduce the price of cement, leading to enhanced construction activities. The Bill has also proposed to reduce the export and investment promotion levy on cement clinker from 17.5% to 10% of the customs value, a move that would further boost the construction industry.

Successive governments have prioritized housing, as evidenced in initiatives such as Kenya's Vision 2030 and the Big Four Agenda. Despite these efforts, challenges like financing, land access, and bureaucracy have hindered progress.

Under the current government regime, housing and settlement is one of the core pillars in the Bottom-Up Economic Transformation Agenda. Through the Affordable Housing Programme (AHP), the government targets to support the provision of at least 250,000 affordable houses to Kenyans every year.

Some of the Finance Bill proposals highlighted reflect the government’s attempts to promote affordability, stimulate construction, and streamline property transactions in the housing sector. The affordable housing initiatives, as evidenced by the Affordable Housing Programme and legislative interventions, also signal a positive stance toward resolving the housing crisis. However, challenges persist, requiring continued implementation efforts to achieve housing rights for all Kenyans.