Court of Appeal Upholds Housing Levy in Major Ruling

The Court of Appeal has upheld the Affordable Housing Act, clearing the way for the continued collection of the 1.5 per cent Affordable Housing Levy.

A five-judge bench dismissed 42 appeals challenging the law and ruled that the legislation establishing the Affordable Housing Programme is constitutional.

The legal challenges were brought by several petitioners, including Busia Senator Okiya Omtatah and Dr Magare Gikenyi, who had questioned the constitutionality of the law and the housing levy.

The petitioners had raised concerns about issues including public participation, constitutional rights, devolution and the use of public resources in the housing programme.

The Affordable Housing Act was signed into law in March 2024 after an earlier legal challenge to the levy introduced through the Finance Act 2023.

Under the current framework, employees contribute 1.5 per cent of their gross salary, while employers make a matching 1.5 per cent contribution toward the housing programme.

The Court of Appeal's latest decision means the government can continue implementing the programme and collecting the levy under the 2024 law.

The ruling comes as the Affordable Housing Programme faces financial challenges. A recent Parliamentary Budget Office report indicated that 176 projects had stalled because of delayed payments to contractors, with the programme facing a KSh118.3 billion funding gap.

Housing Principal Secretary Charles Hinga has also said the levy raises about KSh6 billion every month but is not enough on its own to finance the government's target of constructing 200,000 housing units annually.

The latest court decision therefore provides legal backing for the levy as the government continues looking for additional ways to finance and complete affordable housing projects across the country.