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Many Kenyans are seeking to understand the distinction between the Housing Levy salary deductions and the contributions required for homeownership under the programme.
While both are part of the government's housing agenda, they serve very different purposes.
In recent days, Lands and Housing Cabinet Secretary Alice Wahome has clarified that the Affordable Housing Levy is a tax, not a savings scheme.
From a Savings Model to a Tax
When the Housing Levy was first introduced through the Finance Bill of 2023, it proposed a 3% deduction from employees’ salaries.
The original plan allowed contributors to access their funds after a minimum of seven years, catering to those not interested in acquiring houses.
However, following public opposition, Parliament amended the proposal, reducing the deductions from 3% to 1.5% and redefining them as a tax rather than a savings scheme.
Additionally, the enactment of the Affordable Housing Act 2024 mandated the Kenya Revenue Authority (KRA) to collect the funds.
How Kenyans Can Purchase Affordable Housing Units
While the Housing Levy is a mandatory deduction that finances the construction of affordable homes, owning a house under the AHP is a separate process requiring direct participation from interested buyers.
The government has established a structured process for those who wish to own homes under the programme.
Registering on the Boma Yangu Platform
Prospective homeowners must begin by registering on the Boma Yangu portal, the official government platform for housing applications.
To register, individuals need to provide:
National ID number
KRA PIN
Contact details
Save a minimum of Sh200
Making Contributions Toward Homeownership
After registration, buyers must start making voluntary contributions to their Boma Yangu accounts.
These contributions are separate from the Housing Levy deductions and serve as personal savings toward purchasing a home.
Contributions can be made through:
Direct bank deposits
Mobile money transfers (e.g., M-PESA)
Payroll deductions (for those who opt-in)
The more a person contributes, the higher their chances of securing a home, as allocation is based on savings commitment and ability to pay.
Once an individual saves at least 10% of the house’s value, they become eligible to bid and enter a purchase plan.
Financing Options for Home Purchase
Once allocated a unit, buyers must either pay in full or secure financing through various options:
Outright Purchase
For those who can afford it, an upfront full payment allows immediate ownership transfer.
Tenant Purchase Scheme (TPS)
This government-backed plan allows individuals to:
Move into their allocated home
Pay monthly instalments over 20–30 years
Gain full ownership upon completing the payments
TPS is designed to make homeownership more affordable, as monthly payments function similarly to rent but ultimately lead to ownership.
Mortgage through Financial Institutions
Buyers can also apply for mortgages from banks or SACCOs, with government-backed loans offering lower interest rates compared to traditional mortgages. The Kenya Mortgage Refinance Company (KMRC) provides affordable mortgages at rates below the market average.
Signing the Purchase Agreement and Moving In
Once financing is secured, buyers sign a purchase agreement with the government or a designated developer, finalising the ownership process. They can then move into their new home and begin making payments under their selected financing option.
With the first 4,888 homes set for handover, Kenyans who have actively contributed and followed the process will soon benefit from the Affordable Housing Programme, bringing homeownership within reach for many.
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