Why housing levy is good
The planned Housing Fund has been supported by the Ministry of Lands and Housing, which claims it is intended to support Kenyans in their efforts to purchase homes.
Zachariah Njeru, the Lands Cabinet Secretary, stated before a Senate Standing Committee on Saturday that it was well known that the traditional home finance institutions avoided the majority of Kenyans because they lacked the necessary financial clout.
The CS stated that the “mandatory deductions are intended to create a long-term financing mechanism for the housing fund” while speaking before the Senate Standing Committee on Roads, Transportation, and Housing.
Mr. Njeru emphasized that the deductions will not result in any loss for employees while being joined by Principal Secretary Charles Hinga and other senior staff members.
In a statement issued by his office following the meeting with the Senate team in Naivasha, Mr. Njeru stated that “the deductions will be made at the rate of 3% of the employee’s salary, which will then be matched with another 3% from the employer.”
Why housing levy is good
According to him, Kenyans who donate to the fund are anticipated to purchase homes under the AHP (affordable housing program).
The CS stated that there is opportunity for those who want to build their own homes to obtain inexpensive finance and that the fund has an opt-out provision for those who are close to retirement and are ineligible for affordable housing.
Additionally, he added, “contributions to the housing fund will earn a return based on the fund’s performance on an annual basis so that, upon exit, those who choose not to participate receive a return on their savings.”
He added that people who are saving for a home will also receive a tax break.
“We provided for an affordable housing relief that allows a tax relief of Sh8,000 per month as homebuyers save towards a home, to ease the burden of saving and balancing monthly household needs,” added the CS.
The committee wanted further information on the long-term housing finance plan, the National Housing Fund, the affordable housing program, and the housing policy.