Connect with us

Hi, what are you looking for?


Employers, employees to start paying 1.5pc levy for housing fund in May

The Housing Fund Levy is designed to finance the Affordable Housing Scheme under the Big 4 Agenda with Employers are expected to submit the deductions to the National Housing Development Fund (NHDF) every month.

NAIROBI, Kenya, Apr 16 – Employers will be required to deduct 1.5 percent of an employees salary towards the Housing Fund by the 9th of every month starting on May 2019. 

A notice by the Principal Secretary Housing and Urban Development Charles Hinga states that the employer will also contribute 1.5 percent for each employee.

“Both the employer and the employee shall each contribute 1.5% of the employee’s month basic salary, provided that the sum of the total monthly contributions shall not exceed five thousand shillings,” states the directive that came into effect after it was added in the Finance Act 2019.

“The employers are required to deduct and remit the levy together with other statutory levies from both the employer and employee by the 9th of each succeeding month together with other payroll statutory deductions.”

The Housing Fund Levy is designed to finance the Affordable Housing Scheme under the Big 4 Agenda with Employers are expected to submit the deductions to the National Housing Development Fund (NHDF) every month.

KPMG Kenya tax partner Peter Karanja explained that 2.4 million Kenyans who earn below Sh100,000 per month are eligible for a mortgage under the affordable housing scheme, leaving out 77,000 high-earning employees who nevertheless will make the monthly contributions.

“Based on the 2017 Statistical Index from the Kenya National Bureau of Statistics, the country’s wage bill in 2016 was Sh1.6 trillion. This means that the government can potentially collect Sh48 billion annually from the levy. Of this, Sh24Billion is collections from the employers which goes to subsidise affordable housing while the balance is contributors’ funds which will go towards the cost of the house or is refundable at the end of 15 years,” said Karanja.

In case of ineligibility for a home under the scheme, a contributor’s levy can be transferred to a pension scheme, to another person under the affordable housing scheme or cash out after exit.

Failure to remit the contributions on time attracts a penalty of 5 percent of the contributions payable by the employer for each month or part thereof that the amounts remain unpaid.

The contributions are set to deliver President Uhuru Kenyatta’s ambitious Big Four Agenda which promises to deliver 500,000 houses in five years among other promises.

Advertisement. Scroll to continue reading.

Currently, Kenya requires more than 250,000 housing units every year to meet demand. This is against the annual average of 50,000 units delivered by the government and private developers per year.

Click to comment

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...


NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...


NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...


NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...


NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...