Kenya’s housing levy collections have surpassed government projections, with the Kenya Revenue Authority (KRA) reporting total receipts of Ksh73.2 billion for the financial year ending June 2025.
This amount is Sh10 billion above the National Treasury’s target of Ksh63.2 billion, marking a 115.82 percent achievement of the set goal.
The surge reflects improved compliance and enforcement of the monthly 1.5 percent deduction on employees’ gross pay, which employers are mandated to match.
The government’s firm stance on levy compliance has faced criticism over its legality and fairness, but the increased collections indicate growing acceptance and adherence.
Despite the strong inflows, the absorption of funds into housing projects has been gradual due to the phased nature of construction activities.
Consequently, nearly half of the proceeds have been invested in Treasury bills to safeguard the funds and generate additional returns while awaiting deployment.
A report presented to Parliament by the State Department of Housing and Urban Development revealed that over Ksh30 billion of the levy funds remained unspent and held in short-term government securities.
The Affordable Housing Board, which manages the fund, defended this approach, emphasizing that investing the money in Treasury bills ensures the funds remain productive and secure, generating extra revenue to support more housing units.
The 2024/25 collections represent a 35.06 percent increase from the Sh54.2 billion collected in the previous year, which had narrowly missed its target.
The initial deductions were briefly halted in early 2024 after courts ruled the levy unconstitutional for excluding informal sector workers.
This led to the enactment of the Affordable Housing Act 2024, which expanded the levy’s scope to include informal workers and ring-fenced the funds for housing projects only.
Despite the legislative progress, challenges remain in collecting from the informal sector, which constitutes over 80 percent of Kenya’s workforce.
Authorities are working with KRA to improve self-declaration mechanisms and broaden the contributor base.
The Treasury has set an ambitious target of Sh95.84 billion for the current financial year, reflecting the government’s commitment to scaling up affordable housing delivery.
Source: Business Daily
Written By Ian Maleve
