Amidst legal turmoil, Kenya’s Affordable Housing Initiative faces a pivotal moment as collections under the mandatory housing development levy reach KSh 26.8 billion. The Parliamentary Budget Office (PBO) reports this milestone for the past six months ending December 2023, indicating significant progress towards funding government-backed affordable housing projects.
However, challenges persist as collections fall short of the targeted KSh 63.2 billion set by the State Department for Housing and Urban Development for the fiscal year ending June 2024. With an average monthly collection of KSh 4.47 billion, concerns arise regarding meeting the ambitious monthly target of KSh 5.26 billion.
The legality of the housing levy has been contested in court. Initially deemed unconstitutional by the High Court in November, collections were allowed to continue until January 10 pending appeal. Subsequently, the Court of Appeal intervened on January 26, halting further collections. Parliament now seeks recourse in the Supreme Court of Kenya.
Criticism also surrounds the Affordable Housing Bill 2023, aimed at providing a legal framework for the levy. The PBO highlights significant gaps in the legislation, raising concerns about potential legal risks for the government, particularly regarding contractual obligations with property developers for ongoing projects should the levy remain nullified.
These legal uncertainties cast a shadow over the future of affordable housing projects and the government’s financial stability in fulfilling its contractual commitments. With housing pivotal to Kenya’s development agenda, stakeholders await clarity on the levy’s fate and its implications on the nation’s housing landscape.
Photo (Construction Kenya Showcase Writer)
By: Montel Kamau
Serrari Financial Analyst
6th February, 2024
