Housing Levy and Kenya’s Housing Market

The Kenyan government’s decision to dust off the housing levy in 2023 has sent ripples through the property market. But will this be a much-needed downpour on an arid landscape or a downpour that floods the wrong areas? Let’s dive into the potential impact of the levy on affordability, property prices, and the overall health of the housing sector.

The Rationale Behind the Levy

The levy aims to raise funds dedicated to increasing affordable housing access. This could take the form of government-backed mortgages, subsidies for developers building low-cost units, or investments in infrastructure around new housing projects. In theory, by increasing supply and providing financial aid, the levy should make buying a home a more realistic dream for many Kenyans.

The Price Pendulum: Up or Down?

The impact on property prices is a double-edged sword. Increased government investment in affordable housing could increase the supply of lower-priced units, pushing overall market prices down. However, the levy might deter some developers, leading to a short-term decrease in overall supply and potentially causing a temporary price hike. The long-term effect on prices will depend on how efficiently the levy funds are utilized.

Affordability: A Brighter Future?

The actual test of the levy lies in its ability to make homeownership a reality for more Kenyans. If the levy translates into readily available mortgages and genuinely affordable housing units, it will be a win for many. However, if the funds get bogged down in bureaucracy or projects with limited reach, it could further strain affordability, especially for those already struggling.

A Cause for Optimism, But Vigilance Is Key

The reintroduction of the levy could be a game-changer for Kenyan housing. However, its effectiveness hinges on transparent management of the funds and a clear focus on projects that genuinely address affordability. Kenyans should watch how the levy is implemented, ensuring it delivers on its promise of a more inclusive housing market.

This is just the beginning of the conversation. For further insights, check out industry experts’ discussions and follow updates on how the levy unfolds. 


How does house levy work in Kenya?

The housing levy in Kenya works by deducting 1.5% of an employee’s gross salary. The funds collected are intended to contribute to the Affordable Housing Scheme, aimed at addressing the housing shortage in the country.

How much is housing levy in Kenya?

This levy is set at 1.5% of an employee’s gross salary.

Is housing levy an allowable deduction?

Yes, the housing levy in Kenya is an allowable deduction. Payments for houses purchased under the Affordable Housing Scheme are eligible for relief against income tax.

What is the housing situation in Kenya?

The housing situation in Kenya is characterized by a shortage of affordable housing options. The introduction of this levy aims to address this issue by making it easier for citizens to purchase affordable homes.


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