Follow the Payslip: Kenya's KSh 205B Housing Levy Pays for Far More Than HomesFollow the Payslip: Kenya's KSh 205B Housing Levy Pays for Far More Than Homes

Before anyone picks a side, it helps to know where the money actually goes. This explainer follows one shilling from your payslip to a building site, using the government's own collection records and the latest parliamentary review of the programme. The short version: the levy has raised more than KSh 205B ($1.59B) since 2023, but it pays for far more than the flats you see in adverts, and it covers only a fraction of what the programme says it needs.

The 1.5% on a KSh 50,000 payslip

The rules come from the Affordable Housing Act, 2024, which took effect on 19 March 2024. KRA's public notice on the levy sets out how it works: employees pay 1.5% of gross monthly salary, employers pay a matching 1.5%, and people who earn income outside a payroll pay 1.5% of their gross income.

The money is due by the ninth working day after the month ends, and late payment attracts a penalty of 3% for every month it stays unpaid.

Take Wanjiru, a hypothetical accountant earning KSh 50,000 ($385) a month before deductions.

• Her employer deducts KSh 750 ($5.78) from her pay.
• The employer adds its own KSh 750, so KSh 1,500 ($11.56) goes in each month, or KSh 18,000 ($139) a year.
• Since December 2024, the levy she pays has been deductible when her income tax is worked out, under changes set out in KRA's PAYE amendment notice. At her pay level the top slice of her income is taxed at 30%, so her income tax falls by about KSh 225 ($1.73).

So the real hit to Wanjiru's take-home pay is closer to KSh 525 ($4.05) a month than KSh 750. The difference is income tax the government chose not to collect. Her employer's KSh 750 is a business cost that is also tax-deductible for the company.

From iTax to the Affordable Housing Fund

Your employer does not send the levy to a housing agency directly. It declares the amount on the monthly PAYE return on iTax and pays it through KRA, which then passes the money on to the Affordable Housing Fund. The Affordable Housing Board, a state body set up under the Act, oversees how the Fund is used.

Here is the part most people miss: the levy is pooled. It is not a personal savings account with your name on it, and paying it does not by itself reserve you a house. The Act allows one affordable unit per person, allocated under regulations, and lets people who want a home make separate voluntary savings with the Fund towards a deposit.

The Board publishes monthly collection figures. Its housing levy collection statement shows KSh 171.38B ($1.32B) collected between August 2023 and January 2026. The first months were collected under the Finance Act, 2023, before the High Court struck that version down in November 2023 and Parliament passed the 2024 Act.

KSh 205B in, and where it went

Year by year, the collections have grown with the payroll:

The first two years match the Board's own statement. The full total of KSh 205.7B ($1.59B), and the 2025/26 figure, come from the Parliamentary Budget Office's 2026 Budget Watch report, as reported by The Star. Housing Principal Secretary Charles Hinga has put average collections at about KSh 6B ($46M) a month.

The same report shows development spending of about KSh 198B ($1.53B) by the end of June 2026, split across four very different kinds of project:

• Affordable housing: about KSh 118B ($910M)
• Social housing and slum upgrading: about KSh 40B ($308M)
• Social and physical infrastructure linked to the estates: about KSh 22B ($170M)
• Institutional and student housing: about KSh 18B ($139M)

In other words, roughly two shillings in five spent so far went to something other than the affordable homes the levy is named after. That is allowed: the Act says the Fund pays for affordable housing and the social and physical infrastructure linked to it, as well as institutional housing.

The KSh 1.8T bill behind the levy

The bigger story is the size of the promise. The parliamentary review counts 1,186 projects with a combined estimated cost of KSh 1.8T ($13.9B). By June 2026, total spending stood at only about 11% of that cost, and 176 projects had stalled, meaning more than 12 months with no progress. Most of the stalled ones, 91, are institutional and student housing.

For the current financial year, ongoing projects need KSh 228.3B ($1.76B), but only KSh 110B ($848M) has been provided, leaving a gap of KSh 118.3B ($912M). Even at KSh 79B a year, the levy alone would take nearly 20 years to cover the KSh 1.56T ($12.0B) still unfunded, before any cost increases. PS Hinga has himself acknowledged that the levy cannot finance the target of 200,000 homes a year on its own.

Delivery has been slow so far. Business Daily reported in November 2025 that 1,795 finished units had been put on the market by June 2025, though 93% of them had sold. Large public projects falling behind their spending is not unique to housing, as the lagging rail and bus rapid transit projects show.

Buying a unit: income bands and deposits

If you want a house from the programme, the Act groups units by monthly income: social housing for those earning below KSh 20,000 ($154), affordable housing for KSh 20,000 to KSh 149,000 ($1,149), and affordable middle-class housing above that. Applications run through the government's Boma Yangu platform.

Buyers still need a deposit and then pay through a mortgage or a tenant-purchase arrangement, and with average bank lending rates near 14.4% even after September's record bank lending, the cost of that finance matters as much as the price tag.

The court rulings and the 2027 vote

Legally, the levy is on firmer ground than ever. On 25 September 2026, a five-judge Court of Appeal bench dismissed 42 consolidated appeals against the Affordable Housing Act, rejecting arguments that it was discriminatory or passed without proper public participation. A further challenge at the Supreme Court is still possible.

Politically, it is wide open. Scrapping it would need Parliament to repeal or amend the Act, and any government would then have to decide who finishes the projects already started and with what money. Keeping it means living with a deduction that raises billions but, on today's numbers, cannot pay for the programme by itself.

Either way, every argument you hear from now to the election comes down to three numbers worth remembering: KSh 750 on a KSh 50,000 payslip, about KSh 79B a year collected, and a KSh 1.8T programme it is meant to help build.