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Government to collect Sh73B through Housing Affordable Housing levy

The government is set to collect over 73 billion shillings annually through the housing levy, once the Finance bill court cases are over, to enable the construction of over 200,000 affordable housing units every year across the country.

Through the already enacted Finance Act 2023 that is unfortunately embroiled in court battles, the government has capped a 1.5 percent employee contribution matched with an equal contribution from the employer towards the ambitious housing plan.

The housing plan is a key priority project that will provide decent houses to Kenyans at an affordable payment plan as well as creating millions of job opportunities to the youths, Jua-Kali sector and Small and Medium Enterprises.

According to State Department for Housing and Urban Development Principal Secretary [PS] Charles Hinga, the collected levy will guarantee large-scale construction of affordable houses to address the increasing annual demand of 250,000 units against a supply of only 50,000 units.

Hinga said the affordable housing plan will help address the mushrooming of informal settlements that is home to over 6.5 million Kenyans and match the annual rapid urbanisation rate of 4.4 percent.

The PS while addressing the Affordable Housing Symposium delegates in Naivasha said, currently, the government is undertaking over 46,000 housing units across the country with another 31,000 units set to be launched this year.

In addition, the PS said the government has already allocated Sh1 billion to undertake construction of 200 affordable housing units in each constituency with 29 projects set to begin through Public – Private Partnerships [PPPs].

To this end, the government has rolled out several interventions to lower the cost of houses including provision of free land, zero- rated the cost of infrastructure, multiple exemptions of taxes and lower cost of financing.

However, Hinga said they are currently engaging sector players to address the rising cost of construction materials occasioned by high inflation which has affected the cost of steel and cement.

The PS said, the government through National Industrial and Training Authority [NITA] is set to assess and certify qualified Jua-Kali artisans to enable them to benefit from job opportunities as well as partner with technical institutions to offer requisite training.

“The housing agenda will create over 2 million direct and indirect jobs and contribute Sh48.3B on average spend on labour costs in housing,” projected data shows.

So far, the government has enacted several policies on housing to streamline the sector including the National Housing Policy [2004], National Slum Upgrading and Prevention Policy [2016] and the National Building and Maintenance Policy of 2013.

The government has capped the prices of the affordable units at one million shillings for one bedroom unit, two million shillings for a two bedroom and Sh3 million for a three-bedroom unit with affordable monthly payments of up to 30 years.

Additionally, the social housing unit’s prices are capped at Sh600,000 for one roomed unit, one million shillings for two –roomed units and Sh1.4 million for a three roomed unit to be paid for 25 years at a fixed rate of three percent.

Hinga said the government has also adopted the use of modern technology on housing and enhanced governance systems towards project implementation and on issuance of units to be undertaken through the Boma Yangu Platform.

The roll out of the affordable housing projects has seen the cost of units go down from the average of Sh11 million in 2017 to the current average of three million shillings more so in urban areas.

The government also seeks to increase the mortgage uptake among Kenyans from the current 30,000 to one million as a result of reduced cost of financing.

By Erastus Gichohi

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