Economy

Minimum housing levy cut to Sh200

housing

An affordable housing project in Ngara, Nairobi. FILE PHOTO | NMG

Workers wishing to own homes under the State's affordable housing plan will contribute as low as Sh200 per month after the levy was made voluntary.

Under the amendments are contained in the National Housing Development Fund (NHDF) Regulations 2020, the actual monthly contribution will depend on the income band of the beneficiary.

Social housing scheme is available to members who earn up to Sh19,999 per month, with low-cost housing benefiting those in the Sh20,000 and Sh49,999 monthly income bracket. Members with monthly incomes of between Sh50,000 and 149,999 will benefit from State-backed affordable mortgage loans.

The new regulations set to be tabled before Parliament for adoption come five months after the State gave up its bid to make it mandatory for every worker to contribute 1.5 percent of his or her gross salary to the NHDF after sustained campaign by employers who were not match the levies.

“Every member shall contribute a minimum of Sh200 per month to NHDF and the contributions shall be immediately credited to the member’s individual account as provided for under Regulation 9,” say the proposed regulations published by the Housing ministry.

The proposed regulations further state that a deceased member’s contribution shall be paid to the dependents, if the member dies.

The deceased member’s contribution payable will also be equal in value to the member’s National Housing Development Fund Account and interest accrued, according to the proposed regulations.

“Subject to any other written law, a benefit payable by NHDF upon the death of a member shall not form part of the assets in the estate of a member,” say the proposed regulations.

President Uhuru Kenyatta last December directed the Treasury and the Ministry of Housing to make the necessary changes to the Housing Fund Levy and table them before Parliament for adoption.

The levy was a key plank of the President’s ambitious Big Four Agenda to provide 500,000 affordable houses by 2022, but court cases stalled its implementation.

Under the Finance Act 2018, workers were supposed to contribute 1.5 percent of their basic salary monthly – provided the total contributions do not exceed Sh5, 000 – to the NHDF.