Central Organisation of Trade Unions
Henry Rotich
Jacqueline Mugo
Ministry of Lands
National Assembly
National Housing Development Fund
State House
The Federation of Kenya Employers
Uhuru Kenyatta

State housing scheme members get 15pc tax relief after Uhuru nod

Home buyers under the proposed affordable housing scheme are set for a 15 per cent relief on their gross monthly earnings after President Uhuru Kenyatta approved changes to the law on Wednesday.

Mr Kenyatta signed an amendment to the Income Tax Act, creating a new Affordable Housing Relief section, which will enable homeowners servicing a mortgage under the proposed State-sponsored scheme to get the additional tax relief.

First time home buyers will also be exempted from stamp duty, equivalent to four per cent of the value of the property, after the president also signed changes to the Stamp Duty Act into law.

“Amendments to the Stamp Duty Act also include provisions to allow the Collector of Stamp Duties to refer a valuation of property for the purpose of Stamp Duty to a registered and practising valuer,” a statement from State House’s press office said.

“The amendment to the Stamp Duty Act is intended to fast track valuations at the Ministry of Lands.”

The Housing and Urban Development ministry plans to facilitate private developers to build at least 500,000 affordable houses by 2022 in partnership with the 47 counties, the authorities which manages public land.

The government will service public land by sponsoring water, sewerage and electricity connection to about 7,000 acres of land, earmarked for the ambitious project, to attract private developers to build the houses.

About Sh18.4 billion has been allocated for this purpose in this financial year’s budget, with further funds set to come from the proposed National Housing Development Fund.

Employees will contribute 0.5 per cent of their monthly salary (to a maximum of Sh5,000) to the fund, with employers matching the contributions.

Treasury secretary Henry Rotich plans to enforce the proposed contributions from January 1 through the Finance Bill 2018, which is before the National Assembly for approval.

The Federation of Kenya Employers (FKE) and the Central Organisation of Trade Unions (Cotu) have, however, raised concern over the governance structures of the fund.

“We are not opposed to the plan to build affordable houses. It is how the government wants to do it which is our problem,” FKE executive director Jacqueline Mugo said on July 2.

“It (0.5 per cent of monthly salary) is a lot of money to an individual employee and yet it may not achieve the desired end (owning a house).”

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