A BREAKDOWN OF THE AFFORDABLE HOUSING ACT 2024

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Now onto today’s topic;

The Affordable Housing Act, 2024 marks a major step in Kenya’s efforts to make housing more accessible and affordable to its citizens. Enacted to provide a clear legal framework for implementing the government’s affordable housing agenda, the Act establishes structures for funding, development, and allocation of affordable housing units. 

The Affordable Housing Act, 2024 was assented to on March 19, 2024. The Act's overall purpose is to give effect to Article 43(1)(b) of the Constitution regarding the right to accessible and adequate housing and reasonable standards of sanitation. 

KEY PROVISIONS OF THE ACT

 1. AFFORDABLE HOUSING FUND

This is a large, established fund (the Fund) run by the Affordable Housing Board. Its purpose is to pay for the design, development, and maintenance of affordable homes, institutional housing, and things like roads and water connections (social and physical infrastructure) that go with them. Sources for the Fund include the Levy, gifts, grants, donations, appropriations by the National Assembly, and voluntary contributions.

2. THE CONTRIBUTIONS (THE LEVY)

 The main source of money is the Affordable Housing Levy. The rate is one point five percent (1.5%) of the gross salary of an employee. For anyone whose income is not salary-based, the Levy is imposed at 1.5% of their gross income. 

3. ELIGIBILITY

To be allocated an affordable housing unit, a person (a natural person) must meet specific criteria that will be detailed later in regulations. Importantly, a person is eligible for only one affordable housing unit. The types of houses are determined by your monthly income:

  • Social housing unit: If your monthly income is below twenty thousand shillings.
  • Affordable housing unit: If your income is between twenty thousand and one hundred and forty-nine thousand shillings.
  • Affordable middle-class housing unit: If your income is over one hundred and forty-nine thousand shillings.

4. IMPLEMENTATION MECHANISM

The Affordable Housing Board is responsible for coordinating the use of the Fund. They must develop a five-year affordable housing investment programme, outlining proposed projects. The Board can enter agreements with national government agencies, public institutions (for institutional housing), or private institutions and persons to carry out the development and construction. The Fund may also provide low interest loans for the acquisition of these units.  

COMPLIANCE

1. Employers: Your boss must do two things: deduct the 1.5% from your salary, and then pay a matching amount (another 1.5%) themselves. This combined 3% must be remitted (paid) to the KRA no later than the ninth working day after the end of the month.

2. Employees/Other Persons: If you are supposed to pay the Levy and you don't pay on time, you face a penalty equal to three per centum (3%) of the unpaid amount for every month it is late.

3. Developers (Private Companies): If the Board chooses to partner with a private company to build houses, the Board must first publicly advertise this intention and invite bids (tenders) in at least two national newspapers.  

IMPACT ON KENYANS AND THE ECONOMY

1. Workers/Employees: You automatically contribute 1.5% of your gross salary to the Fund. You can also make voluntary savings into the Fund to help raise the deposit needed for a house later. If you save voluntarily but don't get a house, you can withdraw your savings with accrued interest (after 90 days' notice).

2. Employers: They have a compulsory cost: they must match the employee's 1.5% contribution.

3. Homeowners (Potential): If you are successful in applying, the Fund helps you buy the unit by offering low interest loans. If a project is built where a slum currently sits, the people who live there now must be offered the first right of purchase for a unit in the newly built project.

4. Housing Sector and Economy: The projects are designed to boost local business. When houses are built, the Board must ensure that, wherever possible, they use locally available materials. They also have to make sure that the labour (workers) is sourced from the local communities. If a project is near a college or university, the students there should get internships or practical experience on the construction site.

WHAT THIS MEANS MOVING FORWARD

The primary goals of the Affordable Housing Act, 2024, are to fulfill the Constitutional right to adequate housing and to establish a consistent way to fund and implement affordable housing projects across the country.

Kenyans should expect the continued development of affordable housing projects across all counties. Crucially, the Board must develop a five-year investment program and submit it to Parliament. The Cabinet Secretary, in consultation with the Board, must also develop regulations prescribing vital details, including the criteria for housing unit eligibility, requisite deposits, and the interest rate or administration fee for any loans issued under the Act. 

In conclusion, the Affordable Housing Act, 2024 provides a clear legal framework for implementing Kenya’s affordable housing programme. It defines how housing projects will be funded, managed, and accessed, supporting the right to adequate housing under the Constitution. 

 

Catch you in the next blog!

 

Disclaimer- The information provided is for general informational purposes only and should not be considered as professional advice. Please consult a qualified professional for specific guidance. 


REFERENCES 

Affordable Housing Act, No. 4 of 2024 (Laws of Kenya). 

 

 

 

 

 

 

 

 

 

 

 

 

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