The Affordable Housing Board delivered less than 2,000 units for occupation in the year ended June 2025, making up a small fraction of the 200,000 homes the government aims to build annually under President William Ruto’s flagship project.
Fresh data shows that 1,795 finished units were put on market in the period, with 93 percent of those houses being snapped against a 50 percent target set by the Board.
The sluggish pace of actual construction contrasts with the performance of the housing levy; the 1.5 percent mandatory deduction on monthly pay that employers are required to match.
Just three projects were completed in the year under review, comprising 1,080 units in Nairobi’s Mukuru and 110 units in Homa Bay which were both fully occupied, while 605 houses at Bondeni in Nakuru got an occupancy rate of 80 percent.
The report adds that the target for potential homeowners was missed, with 292,326 Kenyans registering on the Boma Yangu portal against a target of 565,800.
“Target [on affordable housing access was] over achieved. More people than anticipated purchased the completed houses. Target (of potential home owners was) not achieved. Fewer people than anticipated registered on Boma Yangu,” the Board wrote in Sector Budget Proposal Report for FY 2026/27 submitted to the National Treasury.
The numbers reveal a massive shortfall in overall delivery of affordable units in the second year of implementation of Dr Ruto’s signature project, with the output representing less than a percentage of the annual goal of 200,000 units.
The Sh73.2 billion collected in the year to June represented a 35 per cent rise from the Sh54.2 billion realised in the first full year of the levy to June 2024, when collections narrowly missed the Sh54.6 billion target following a three-month suspension of deductions after courts declared the initial framework unconstitutional.
Despite the robust inflows, disbursement to construction projects has lagged, owing to the phased nature of approvals and development timelines for building of the houses.
A report tabled in Parliament in May by the State Department for Housing and Urban Development, showed that more than Sh30 billion in proceeds from the housing levy was unspent at the time and had been placed in Treasury bills.
This means nearly half of the collections had been temporarily parked in short-term government securities ranging from three to 12 months as the Board awaited the readiness by the projects to absorb the cash.
“It is not prudent even as government to have money lying idle in an account.
“The money is safe, fully invested in government securities and the accounts we are operating are Central Bank of Kenya accounts, which have full sight of the government on every expenditure,” the Board acting Chief Executive Sheila Waweru said in an interview early this year.
“So we are able to put the money in Treasury bills as a manager of the [affordable housing] fund and it brings in additional money, say Sh2 billion, and that enables us to put up more units. This is a measure for prudent management of the fund.”
The housing levy is a central pillar of the broader affordable housing rpoject, which seeks to provide housing solutions across income segments. The segments are social houses for those earning below Sh20,000 a month, affordable units for workers earning between Sh20,000 and Sh149,000, and middle-income affordable housing for those with salaries above Sh149,000.
The Treasury has set a more ambitious levy collection target of Sh95.84 billion for the financial year ending June 2026, banking on expanded coverage and stronger enforcement.
The Affordable Housing Act 2024 ring-fenced housing levy funds to be spent on building of houses under a special fund, to avoid diversion to other projects in the past where cash meant for stabilisation of fuel prices were, for example, spent on road projects.
The Act also cured the defects identified by the courts and expanded the levy to include workers in the informal sector. The government is, however, yet to roll out a structured mechanism for collecting contributions from the informal sector, which accounts for more than 80 percent of Kenya’s labour force.
