CS Njeru Advocates for 3% Housing Levy: Benefits for Kenyans Explained
The Ministry of Lands and Housing defended the proposed Housing Fund, stating that it was intended to assist the majority of Kenyans in acquiring their own homes.
Saturday, Lands Cabinet Secretary Zachariah Njeru told a Senate Standing Committee that the majority of Kenyans were rejected by traditional home financing institutions because they lacked the necessary financial strength.
The CS, speaking to the Senate Standing Committee on Roads, Transportation, and Housing, stated that “mandatory deductions aim to create a long-term financing mechanism for the housing fund.”
Mr. Njeru, accompanied by Principal Secretary Charles Hinga and other senior staff, emphasized that the deductions will not result in a loss for the employees.
“The deductions will be equal to 3% of the employee’s salary, which will be matched by the employer,” Mr. Njeru said in a statement regarding the meeting with the Senate team in Naivasha.
According to him, Kenyans who contribute to the fund must purchase homes through the Affordable Housing Programme (AHP).
The CS stated that the fund has an opt-out provision for those nearing retirement and those ineligible for affordable housing and that those wishing to build their own homes can access inexpensive financing.
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“Furthermore, contributions to the housing fund will earn a return based on the fund’s annual performance, so that those who opt out will receive a return on their savings,” he said.
He also mentioned that those who are saving for homeownership will receive a tax break.
“To ease the burden of saving and balancing monthly household needs, we have provided an affordable housing relief that allows homebuyers to receive a monthly tax credit of Sh8,000 while saving for a home,” said the cabinet secretary.
The committee inquired about the housing policy, the concept of the affordable housing program, the National Housing Fund, and the long-term housing finance scheme.
CS Njeru added that the housing policy has been in effect since the 1990s, to provide housing for the poor, promote slum upgrading, research low-cost building materials, and establish a housing development fund through budgetary allocations and the support of development partners.
“I am pleased to report that the portal has registered 300,000 members who have voluntarily saved over Sh2 billion,” the Cabinet Secretary said.
The AHP land bank currently consists of 524 sites across 47 counties, totaling over 700 acres.
Locally, the government has implemented AHP with the 200 affordable housing units per constituency initiative, which will be funded by the National Assembly and county governments to stimulate local economic growth.
The CS informed the committee that the housing fund will provide more affordable and accessible financing through a National Tenant Purchase Scheme or a rent-to-own program for homebuyers in lower income brackets.
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“The housing fund will seek to offer participants mortgage terms between 20 and 30 years, with targeted interest rates between 3% and 7%,” he added.
In Pangani, Nakuru County, and Buxton Point, Mombasa, 9,935 units of affordable housing are currently under construction.
Thirty-one thousand units are project-contracted and ready for launch, 31,000 for Makongeni, and 1,000 for Thika.
During Labour Day celebrations on May 1, President William Ruto proposed that civil servants contribute three percent of their monthly pay to the housing fund, causing an uproar.
Geoffrey Kaituko, the principal secretary for labor, informed civil servants that the government is doing everything possible to improve their welfare.
CS Njeru Advocates for 3% Housing Levy: Benefits for Kenyans Explained
