The Kenya government’s affordable housing initiative faced a major legal challenge when, on November 28, 2023, the High Court of Kenya ruled that the affordable housing levy, which had been implemented under the Finance Act 2023, was unconstitutional

Following an appeal by the government to the Supreme Court contesting the ruling of the High Court, the Supreme Court subsequently ordered the government to cease collecting the housing levy until a definitive decision on the case was made.

In response to this legal development, the government introduced the Affordable Housing Levy Bill in parliament. The aim was to address and rectify the deficiencies highlighted by the High Court in nullifying the housing levy.

After undergoing public participation, the Bill was assented to by the President on 19 March 2024, thereby becoming an Act of Parliament. The Kenya Revenue Authority (KRA) has been designated as the collecting agent for the Affordable Housing Levy (AHL), with all employers required to deduct and remit contributions from 19 March 2024.

Some of the key changes introduced by the Act.

Persons Liable to Contribute for Affordable Housing Levy

Previously, only employed individuals were mandated to contribute at a rate of 1.5% of their monthly gross salaries, with employers matching this contribution. The new Act extends this requirement to include individuals who are not employed but earning an income, who must now also contribute at a rate of 1.5% of their gross income received or accrued.

Claim of Relief

Resident individuals who can demonstrate having paid the Affordable Housing Levy in a given year of income are eligible to claim relief at a rate of 15% of the amount contributed, up to a maximum of KES 9,000 per month (KES 108,000 per annum).

Voluntary Savings

The Act permits individuals to make voluntary savings to the fund for the purpose of being allocated an affordable housing unit. In the event of non-allocation, these savings can be withdrawn with a 90-day written notice.

Penalty for Non-Contribution

A penalty of 3% per month is stipulated for any unpaid levy amount beyond the due date, an increase from the previous rate of 2%.

Eligibility Criteria for affordable Housing

The Cabinet Secretary responsible for matters relating to affordable housing is expected to develop regulations that will outline the eligibility criteria for the allocation of a housing unit. These regulations will guide the allocation process based on the income earned by the individual.

Administrative issues pertaining to AHL

The Act establishes the Affordable Housing Board, tasked with overseeing the development of affordable housing, institutional housing, and associated social and physical infrastructure in Kenya.

Contributions prior to commencement of the Act

All contributions made before the Act’s commencement are now vested in the newly established Affordable Housing Levy Fund.


The re-introduction of the Affordable Housing Levy in Kenya calls for immediate implementation in the payroll month of March 2024. Organisations that had not factored in the employer contributions in their annual financial plans will need to plan accordingly.

Contributors should also be on the lookout for the regulations and guidelines that will outline the eligibility criteria for the allocation of a housing unit

If you have any questions about the foregoing, please get in touch with a member of our tax service team.

  • [spcd_display]