The Affordable Housing Bill 2023 has sailed through the Senate, after 27 senators voted to pass the law, compared to 10 who opposed the bill on Tuesday, March 12.
Given that the National Assembly had already passed the bill, the new proposed law is set to be transmitted to President William Ruto for assent.
The government rushed to pass the new bill, setting the stage for the return of the housing levy months after the High Court termed it unconstitutional in December 2023.
The new bill sought to cure the concerns highlighted by the High Court in its ruling.
In January, the government was stopped from collecting the housing levy.
However, on February 20, National Assembly Majority Leader Kimani Ichung'wa promised President Ruto that the new proposals would be fast tracked to enable the government resume collecting the housing levy as early as March.
“Usually, many corporations both private and public process their payrolls after the 15th of the month, so we hope by 15th of March, your Excellency, you will have assented to the new Affordable Housing Bill,” he said.
Non-salaried Kenyans roped into housing levy
The court deemed it unfair to impose the 1.5% housing levy solely on salaried Kenyans.
The proposed bill aims to rectify this by expanding the base to include non-salaried Kenyans, encompassing those whose income isn't easily traceable by the Kenya Revenue Authority.
According to the bill, the levy is set at a rate of 1.5% of:
(a) the gross salary of an employee; or
(b) the gross income of a person received or accrued, not subject to the Levy under paragraph (a).
In simple terms, part (b) implies that the 1.5% levy applies to the gross income of individuals not formally employed.
KRA empowered to collect the housing levy
Addressing another concern, the 3-judge bench had invalidated the housing levy regarding its collection authority.
The Ministry of Lands had assigned the Kenya Revenue Authority (KRA) to collect the levy, a move criticized by the judges.
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The proposed Affordable Housing Bill 2023 seeks to remedy this by allowing the CS in charge of the affordable housing program to appoint KRA as the collector.
Affordable Housing Fund
Another correction proposed by the bill relates to the absence of a dedicated fund for depositing the levy.
Currently, since July, the housing levy has been channeled into the national government consolidated fund, the primary account for all government funds.
This setup hampers tracking whether the housing levy serves its intended purposes.
The new bill introduces the Affordable Housing Fund to be overseen by a board and CEO.
Additionally, the Affordable Housing Bill 2023 suggests imposing a penalty of Sh10 million or a jail term not exceeding 5 years, or both, for anyone found misappropriating the proceeds of the housing levy.