Kenya's Finance Act 2023 introduced a housing levy of 1.5 percent of gross pay, matched by employers, to fund the government's affordable housing programme. The High Court struck the levy down in November 2023, and Parliament reimposed it through the Affordable Housing Act 2024, which the High Court and then the Court of Appeal upheld. Treasury records cited by the Nation put collections at more than Sh206 billion over three financial years, while official counts of completed homes remain far below the government's stated targets.
As of 31 October 2026 the levy is collected by KRA under the Affordable Housing Act 2024, which the Court of Appeal upheld on 25 September 2026. Searches found no report of a Supreme Court appeal against that judgment by 31 October.
President William Ruto assented to the Finance Bill 2023 at State House, Nairobi. Section 84 introduced a housing levy of 1.5 percent of gross pay, cut from a proposed 3 percent and changed from a savings scheme into a tax, according to Citizen Digital.
Justice Mugure Thande suspended implementation of the Finance Act 2023 until a mention on 5 July, on an application by Busia Senator Okiya Omtatah and six others, a day before the law was due to take effect.
The Court of Appeal lifted the conservatory orders that had suspended the Finance Act 2023. Employers were then required to deduct 1.5 percent of gross monthly salary from employees, add a matching 1.5 percent and remit both by the ninth working day of the following month, according to the law firm Afriwise.
A three-judge bench of Justices David Majanja, Christine Meoli and Lawrence Mugambi declared section 84 of the Finance Act 2023 unconstitutional. The court found the levy lacked a comprehensive legal framework, discriminated by applying only to people in formal employment, and that KRA had no statutory authority to collect it. It barred the respondents from collecting the levy.
The High Court allowed a stay of its judgment until 10 January 2024 to allow an appeal, according to KPMG.
Justices Lydia Achode, John Mativo and Mwaniki Gachoka dismissed applications by the National Assembly and others to suspend the High Court judgment pending appeal. The court said public interest favoured waiting for the appeal, and KPMG said employers were no longer required to deduct the levy.
Speaker Moses Wetang'ula and the National Assembly filed a notice of intention to appeal to the Supreme Court against the whole of the 26 January Court of Appeal ruling, according to NTV and Kenyans.co.ke.
Employers and employees paid Sh26.8 billion in housing levy in the six months to December 2023, against a target of Sh63.2 billion for the year to June 2024, according to Parliamentary Budget Office disclosures reported by Business Daily.
The Senate passed the Affordable Housing Bill with amendments that gave county governments a role, and the National Assembly then agreed to the Senate amendments, avoiding mediation, according to The Star and Citizen Digital.
President Ruto signed the Affordable Housing Act 2024 at State House, Nairobi. It reimposes a levy of 1.5 percent of gross salary on employees with a matching employer contribution, extends it to other income earners, and section 60 deems payments made under the voided Finance Act provision to have been made under the new Act.
The Kenya Revenue Authority said that as the collector under the new Act, employers must deduct 1.5 percent of gross salary from 19 March 2024, remit an equal employer amount, and that other people earning income in Kenya must pay 1.5 percent of gross income.
A bench of Justices John Chigiti, Olga Sewe and Josephine Mong'are declined to suspend the Affordable Housing Act while petitions against it were heard, saying it would be against the public interest, and ordered the cases heard on priority.
In consolidated appeals the Court of Appeal declared the entire Finance Act 2023 unconstitutional over public participation and procedure. It treated the challenge to the section 84 housing levy as moot, a finding the Supreme Court later upheld.
The Supreme Court issued a conservatory order suspending the Court of Appeal judgment on the Finance Act 2023 until it decided the consolidated appeals, SC Petitions 31, 32 and 33 of 2024.
Justices Olga Sewe, John Chigiti and Josephine Mong'are dismissed six petitions, including ones by Senator Okiya Omtatah and the Katiba Institute. They found adequate public participation and held that the levy is not discriminatory and does not undermine devolution. The petitioners said they would appeal.
The Supreme Court set aside the Court of Appeal finding that the whole Finance Act 2023 was unconstitutional, while upholding that sections 76, 78 and 87 were invalid. It agreed that the question over the section 84 housing levy was moot.
Under the Tax Laws (Amendment) Act 2024, effective 27 December 2024, employees' housing levy payments became an allowable deduction from taxable employment income and the earlier affordable housing relief ended, according to a KRA public notice.
About Sh88.7 billion had been collected by December 2024, with Sh46 billion invested in Treasury bills rather than spent on construction, The Eastleigh Voice reported. Money254, citing the Nation, gave Sh46 billion in Treasury bills in February 2025 and Sh4.2 billion in interest earned by June 2025.
The Kenya National Bureau of Statistics Economic Survey 2025 said 1,655 government-built housing units were completed in 2024, down from 3,357 in 2023, according to Business Daily. KBC later reported the same 2024 figure from the 2026 survey.
President Ruto handed over 1,080 social housing units at the New Mukuru estate in Nairobi, part of a planned 13,248-unit development, according to KBC.
KRA collected Sh73.2 billion in housing levy in the year to June 2025, above the Treasury target of Sh63.2 billion and up about 35 percent from Sh54.2 billion in the year to June 2024, Business Daily and The Eastleigh Voice reported, the latter citing Treasury records.
The Eastleigh Voice#The Affordable Housing Board put 1,795 finished units on the market in the year to June 2025 and sold 93 percent of them, against a target of 50 percent, Business Daily reported.
Appeals against the High Court ruling upholding the Affordable Housing Act were assigned to a five-judge Court of Appeal bench, according to the Nation and The Standard. The Standard named the government, Senator Okiya Omtatah and the Katiba Institute among the parties appealing.
President Ruto handed keys to about 4,500 new homeowners in phase two of the Mukuru project, according to The Star. Capital FM later quoted Housing PS Charles Hinga as saying 4,500 completed units were handed over on 18 December.
Housing PS Charles Hinga said more than 262,913 units were under construction across all 47 counties, and Affordable Housing Board data cited by Capital FM put registrations on the Boma Yangu housing platform at more than one million, Capital FM reported.
Supplementary budget documents tabled by Treasury Cabinet Secretary John Mbadi raised the projected housing levy collection for the year to Sh97 billion from Sh95 billion, according to Business Daily.
The Auditor-General issued its report on the Affordable Housing Board for the year to June 2025 on 4 March 2026. An audit of the Affordable Housing Fund found thousands of taxpayers paying income tax but not the levy, and KRA lacked powers to act against defaulters, Business Daily reported.
The Kenya National Bureau of Statistics said the State Department for Housing completed 6,738 units worth Sh7.2 billion in 2025, with 205,311 units under construction at December 2025. It said 96.3 percent of a Sh79 billion housing budget was used in 2024/25, up from 32.6 percent the year before.
Housing Fund Board chair Jeremiah Simu told MPs that some employers deducted the levy without remitting it, Money254 reported. Money254 and Business Daily said more than Sh100 billion had gone unpaid or been evaded, without naming who made the estimate, and Money254 said the State Department for Housing asked Parliament to let KRA recover unpaid contributions as it does unpaid taxes.
Amendments in the Finance Act 2026, effective 1 July according to Money254, give KRA power to recover unpaid levies collected on behalf of government, Business Daily reported. Money254 said the powers include ordering banks to surrender funds and deactivating PINs, while Kenyans.co.ke said KRA had not responded to such claims and its own guide did not mention them.
Former Deputy President Rigathi Gachagua said in an interview with Meru media that he would abolish the housing levy if elected in next year's election and turn completed units into government housing for public servants, Capital FM reported.
Treasury records cited by the Nation show levy collections of Sh54.16 billion in 2023/24, Sh73.20 billion in 2024/25 and Sh79.10 billion in 2025/26, below the Sh97 billion projection. The Treasury's fourth quarter review shows the State Department for Housing spent Sh129.96 billion on development in 2025/26, with its total spending at 89.4 percent of target.
Housing PS Charles Hinga told the Nation that the Affordable Housing Fund had no money invested in Treasury bills, which he linked to faster procurement and spending on projects.
A five-judge bench of Justices Wanjiru Karanja, Patrick Kiage, Aggrey Muchelule, Weldon Korir and George Odunga dismissed 42 consolidated appeals against the October 2024 High Court ruling, according to The Star and Kenyans.co.ke. The appeals had sought to have the Act declared unconstitutional and refunds ordered, the Nation reported. The court upheld KRA as collector and the retrospective section 60, Citizen Digital reported, but said the Commission on Revenue Allocation should have been consulted before Parliament passed the Bill, a point it could not resolve because the commission was not a party.
The Affordable Housing Fund board did not attend a meeting of the National Assembly Special Funds Accounts Committee on Auditor-General findings for the year to June 2025, the Nation reported. The findings cited a lack of title deeds for ongoing projects worth Sh53.87 billion.
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Capital FM · capitalfm.africa Citizen Digital · citizen.digital Money254 · money254.co.ke Kenyans.co.ke · kenyans.co.keLast updated 31 October 2026. Spotted an error? See corrections. Every event links to the record it comes from. Allegations are attributed to whoever made them.