President William Ruto has announced plans to propose reforms to the Affordable Housing Levy law, to give contributors greater flexibility by allowing them to access affordable home loans of up to Sh5 million.
This move is intended to help contributors offset existing mortgages and make their path to homeownership more manageable, he explained.
“I am pleased to announce today that we shall be proposing to Parliament a reform to the law that will allow any contributor to access an affordable home loan of up to Sh5 million at a single-digit interest rate, applicable toward any housing unit in the market,” President Ruto.
“These reforms will ensure that every shilling contributed to the Housing Levy works for the contributor, whether through access to affordable housing, home loans, or mortgage relief.”
The President, who was speaking during the 62nd Madaraka Day celebrations in Homa Bay on June 1, 2025, outlined the proposed changes aimed at ensuring that contributors directly benefit from the levy.
This, he said, is in recognition and appreciation of the sacrifice made by “patriotic Kenyans through their contributions to the Housing Levy”.
Homa Bay affordable housing project in this photo taken on May 29, 2025.
Photo credit: George Odiwuor | Nation
After the passing of the Finance Bill 2023, the Affordable Housing Levy was initially introduced as a mandatory contribution to finance the government’s affordable housing projects.
It morphed into a string of court battles and confusion on whether it was a tax or levy or contribution before it became a mandatory contribution for the salaried.
The Kenya Human Rights Commission (KHRC) and Katiba Institute had on April 11, 2024, filed a case to halt what they termed as “unlawful housing levy deductions” towards the housing project.
The MPs had on February 21, 2024, approved the Affordable Housing Act of 2024, which allowed the government to deduct 1.5 per cent of employees' monthly gross salary and similar amounts from employers for the houses, “a project marred by controversies and coercion”, KHRC said.
However, over time, it has been implemented and managed more like a tax, with some contributors feeling constrained by how their payments could be accessed or used.
The reform can be seen as a response to calls from Kenyans who have expressed frustration with the limited options for accessing the funds they contribute.
Currently, the levy funds primarily support government housing projects, but many contributors who have existing mortgages or wish to purchase homes on the open market have found it difficult to benefit directly.
By enabling contributors to use the funds as home loans, the government aims to create a more flexible system that supports individual homeownership journeys.
This approach could also stimulate the housing market by allowing access to affordable financing beyond the government’s own housing developments.
Homa Bay affordable housing project in this photo taken on May 29, 2025.
Photo credit: George Odiwuor | Nation
“These reforms will ensure that every shilling contributed to the Housing Levy works for the contributor, whether through access to affordable housing, home loans, or mortgage relief,” President Ruto added.
This proposed reform signals a significant shift in the way Kenya’s housing finance system operates, potentially increasing access to affordable credit and accelerating homeownership for many.
If successful, this reform could redefine the Affordable Housing Levy’s role from being seen merely as a tax to a valuable savings and financing tool that directly empowers contributors in their quest for homeownership.
The Kenya Kwanza government, Dr Ruto said, is on course to delivering 150,000 housing units under the Affordable Housing Programme, which have been under construction since September 2022, with 11,000 units already completed.
Beyond providing dignified shelter, “this transformative programme is driving job creation, having already generated over 250,000 jobs,” President Ruto explained. “It is nothing short of a nation-building revolution — uplifting lives, growing businesses, and redefining the future of work and urban living in Kenya.”
Workers carry building materials at the new Mukuru Housing Estate Phase 1, Nairobi, on May 27, 2025.
Photo credit: Wilfred Nyangaresi | Nation
In Homa Bay County, he said, he had handed over keys to the first occupants of 110 affordable housing units at the Boma Yangu Housing Estate. Last week, handed over keys to the first 1,080 social housing units in Mukuru Estate, Nairobi.
“A little over two years ago, many were sceptical when we said that ordinary Kenyans could begin owning homes through a rent-to-own model using the same amount they paid in rent. Today, that bold promise is being fulfilled,” Dr Ruto said.
