Court of Appeal rejects challenges to the housing levy but raises concerns about whether the programme adequately reaches Kenya’s poorest citizens.

Kenya’s Court of Appeal has upheld the Affordable Housing Act and the mandatory housing levy, giving President William Ruto’s affordable housing programme a major legal boost.

A five-judge bench dismissed appeals challenging the constitutionality of the legislation and rejected requests for refunds of housing levy payments already collected from workers and employers.

The appeals followed an earlier High Court decision that upheld the Affordable Housing Act.

The case involved more than 40 petitions challenging different aspects of the law, including the housing levy, public participation, taxation, devolution and the role of the Kenya Revenue Authority in collecting the levy.

Court Upholds Constitutional Basis

The appellate court found that the Affordable Housing Act was connected to the constitutional right to accessible and adequate housing.

The judges relied particularly on Articles 21 and 43 of Kenya’s Constitution, which require the State to take legislative, policy and other measures towards progressively realising social and economic rights.

Article 43 includes the right of every person to accessible and adequate housing and reasonable standards of sanitation.

The court therefore rejected the argument that the legislation should be declared unconstitutional simply because some taxpayers considered the levy burdensome or disagreed with the government’s policy approach.

The judges held that taxation used to enable the State to meet its constitutional obligations cannot automatically be regarded as unconstitutional.

Employees And Employers Pay 1.5% Each

The housing levy requires employees and employers to contribute 1.5 per cent each based on an employee’s gross monthly salary.

The levy has been one of the most contested elements of Ruto’s affordable housing programme.

Among those who challenged it was Nakuru-based surgeon Dr Magare Gikenyi, who argued that the scheme compelled employed Kenyans to finance housing projects from which they might never personally benefit.

The appellants also challenged the levy on grounds including alleged discrimination against salaried workers and what they described as unlawful deprivation of property.

The Court of Appeal rejected those arguments.

The judges found that the differentiation involved in collecting the levy did not amount to unfair discrimination and could fall within affirmative action contemplated under Article 27(6) of the Constitution.

Court Rejects Devolution Challenge

Another major issue before the court was whether the national government had improperly taken over housing responsibilities belonging to county governments.

The appellants argued that housing is a devolved function and that Parliament had transferred county responsibilities to the national government through the Affordable Housing Act.

The appellate court rejected that interpretation.

Instead, the judges held that housing is a shared function requiring cooperation between Kenya’s national and county governments.

The court said the legislation provides a framework for combining national and county resources to address the country’s housing needs.

The ruling therefore preserves the Act’s framework for cooperation between the two levels of government.

Court Raises Concern Over Poor Kenyans

Although the court upheld the legislation, the judges raised concerns about the way the affordable housing programme is structured.

The bench observed that the programme appeared to focus significantly on people who have the financial capacity to purchase or develop homes.

The court noted that applicants for housing units are required to provide proof of a deposit, which could exclude some of the poorest Kenyans from benefiting from the programme.

The judges warned that safeguards would be necessary to ensure the programme reaches the people for whom the constitutional right to housing is intended.

The court also warned against the possibility of political interests influencing the distribution of affordable housing benefits.

However, the judges concluded that these concerns did not make the Affordable Housing Act unconstitutional.

They held that the Act represented one of the measures available to the State to progressively realise the constitutional right to housing, even if the legislation did not fully satisfy every constitutional expectation.

Public Land Provisions Also Upheld

The appellants also challenged provisions concerning the use of public land for affordable housing projects.

The court declined to invalidate the legislation on the basis of possible future violations.

The judges stressed that the National Land Commission retains its constitutional role in the allocation of public land.

They said any allocation of public land without the approval of the National Land Commission would be unlawful.

The court therefore distinguished between the legality of the legislation itself and the possibility that individual government actions could later violate constitutional or statutory requirements.

Government Welcomes Legal Backing

The Kenyan government had urged the Court of Appeal to uphold the Affordable Housing Act.

Through the National Housing Corporation, the government argued that the constitutional right to housing requires coordinated action between national and county governments.

The appellate ruling now leaves the government’s legal framework for collecting the housing levy and implementing the programme intact.

The decision also follows continued government investment in affordable housing projects across Kenya.

Recent government figures cited by Kenya’s Interior Principal Secretary Raymond Omollo indicated that approximately 10,000 affordable housing units had been completed, with about 8,000 already occupied, while the government was considering additional financing mechanisms for the programme. 

At the same time, the government has been working to regularise land arrangements involving some affordable housing projects. The Standard reported on September 24 that authorities had begun engaging original landowners, including counties and national institutions, to address ownership issues affecting project sites. 

What The Ruling Means

The Court of Appeal’s decision means the Affordable Housing Act and the housing levy remain legally operative following the challenges considered by the appellate court.

The ruling does not, however, remove the concerns identified by the judges about access to the programme, particularly for Kenyans with limited financial resources.

It also does not mean that every future implementation decision under the Act would automatically be lawful. The court specifically maintained the constitutional role of the National Land Commission in public-land allocation.

The judgment therefore provides legal backing for the overall housing framework while leaving implementation questions open to scrutiny.

For the Ruto administration, the decision preserves one of its major policy programmes and the revenue mechanism supporting it.

For opponents of the levy, the ruling represents a setback to efforts to have the deductions declared unconstitutional and recover funds already collected.

The court’s concerns over affordability and access also place continued attention on whether the programme can reach lower-income households while complying with Kenya’s constitutional obligation to progressively realise the right to accessible and adequate housing.

The post Kenya Court Upholds Ruto’s Affordable Housing Act And Levy appeared first on Housing TV Africa.

…….A KSh1.76 trillion affordable housing pipeline is facing financing challenges, with hundreds of projects reportedly stalled or progressing slowly.

Kenya’s ambitious affordable housing programme is facing a major funding squeeze that could delay projects and increase construction costs, according to recent government and parliamentary budget assessments.

President William Ruto’s administration has set an ambitious target of delivering about 200,000 affordable housing units annually as part of its broader housing and urban development agenda.

However, the scale of financing required to sustain the programme has emerged as a major challenge.

The affordable housing pipeline has an estimated value of about KSh1.76 trillion, equivalent to roughly $13.6 billion, while government budget and oversight reports indicate that implementation has fallen behind planned targets.

Recent assessments by Kenya’s Parliamentary Budget Office identified a financing gap of more than KSh118 billion and reported that 176 affordable housing projects had stalled. 

Housing Programme Faces Financing Pressure

The funding challenge comes as Kenya attempts to expand affordable housing construction while operating under significant fiscal constraints.

The African Development Bank’s 2026 Kenya Country Focus Report said the country faces constrained fiscal space, elevated debt-service obligations and growing development financing needs.

The bank estimated Kenya’s annual development financing requirement at about $14.2 billion and projected a financing gap of approximately $12.5 billion by 2030.

It identified housing, infrastructure, climate resilience and job creation among the areas affected by the broader financing challenge. 

The housing programme therefore faces competition for limited public resources at a time when the government is also dealing with debt-servicing obligations and other development priorities.

Billions Already Spent on Programme

Government expenditure data show that substantial resources have already been committed to the housing programme.

A recent report from Kenya’s Office of the Controller of Budget showed that cumulative expenditure on the affordable housing project had reached approximately KSh188.36 billion by June 30, 2026.

The total estimated value of the programme was put at about KSh1.758 trillion, with implementation expected to run through June 2032. 

The figures show the difference between the resources already deployed and the much larger amount required to complete the overall pipeline.

The Controller of Budget’s assessment also highlighted implementation challenges.

During the 2025/26 financial year, only 1,836 housing units were completed and handed over, while another 1,380 units were described as substantially complete but awaiting handover.

At the same time, more than 103,000 units were under construction, while tens of thousands of additional units were at various stages including procurement, contract signing, site handover and preliminary works. 

Annual Target Remains Ambitious

The government’s annual target of 200,000 units represents a substantial increase in housing construction capacity.

Kenya has identified affordable housing as one of the major pillars of its Bottom-Up Economic Transformation Agenda.

The programme is intended not only to provide lower-cost homes but also to stimulate construction activity, generate employment and support businesses involved in building materials, transport, manufacturing and related services.

The Kenyan Parliament has described the housing programme as a key component of efforts to reduce the country’s housing deficit and promote employment through construction. 

However, official budget documents and implementation reports indicate that funding and project execution remain important constraints.

A 2025 Parliamentary Budget Office assessment had already noted that the affordable housing programme was not fully absorbing resources mobilised through the Affordable Housing Fund.

The assessment said some funds were either idle in the fund or invested in government securities, while only a fraction of units in the programme were scheduled for completion at that point. 

Government Continues to Defend Programme

Despite concerns over financing and implementation, President Ruto has continued to defend the affordable housing programme.

During a September 14, 2026 engagement in Kisumu, Ruto said his administration had deployed KSh44 billion toward the construction of 12,000 housing units, 20 markets and 12,000 hostel beds in the city.

He also said the wider programme had created employment opportunities for about 1.1 million people.

Ruto argued that stopping the programme would affect both housing delivery and employment in the construction sector. 

The government has also continued to allocate significant funds to housing in its annual budgets.

For the 2026/27 financial year, Kenya’s National Assembly approved KSh138.2 billion for the housing sector, including KSh50 billion specifically for the Affordable Housing Programme.

Parliament said the allocation was intended to accelerate housing delivery while creating employment opportunities for young people across the construction value chain. 

Financing Model Under Pressure

Kenya’s housing programme relies on a combination of public funding, the Affordable Housing Fund, private-sector participation and other financing mechanisms.

The government has sought to expand the Housing Fund and increase access to mortgage financing as part of its broader housing strategy.

Its 2026 Budget Policy Statement said the government planned to scale up the Housing Fund, expand the Boma Yangu affordable mortgage product and partner with financial institutions to provide long-term, lower-cost mortgages.

The government also planned to provide KSh1 billion in rural housing loans to underserved communities. 

The financing structure means that continued progress depends not only on government budget allocations but also on the ability to mobilise private capital and ensure that available funds are released and deployed efficiently.

Project Delays Could Increase Costs

Delays in construction can create additional financial pressure because projects that remain unfinished may require higher funding as construction costs rise.

The Parliamentary Budget Office has warned more broadly that delayed fund releases, weak coordination, unresolved policy and legal issues, inadequate monitoring and growing outstanding obligations can undermine the implementation of government programmes. 

For affordable housing, prolonged delays could therefore widen the gap between the programme’s original financial estimates and the eventual cost of completing projects.

The challenge is particularly significant given the size of the pipeline and the government’s annual construction target.

Housing Demand Remains High

The funding problems come against the backdrop of substantial demand for affordable housing in Kenya.

The government has positioned the programme as a response to the shortage of decent and reasonably priced housing, particularly for low- and middle-income households.

Beyond homeownership, the programme is also linked to urban renewal, informal settlement upgrading and the development of supporting infrastructure.

The government’s housing strategy therefore extends beyond individual housing units to include markets, hostels, urban infrastructure and other facilities.

Kenya’s 2026/27 budget also allocated resources to informal settlement improvement and other housing-related programmes. 

Funding Will Determine Next Phase

The latest figures underline the scale of the challenge facing Kenya’s affordable housing programme.

With a pipeline estimated at about KSh1.76 trillion and a reported financing gap exceeding KSh118 billion, securing sustainable funding will be central to completing stalled projects and maintaining construction momentum.

Government officials continue to defend the programme’s economic and social objectives, while parliamentary and budget oversight reports have highlighted financing and implementation weaknesses.

The immediate challenge is therefore not simply the number of homes planned but the government’s ability to mobilise, release and effectively deploy the capital required to complete them.

As Kenya moves deeper into the implementation of its housing agenda, the availability of financing and the pace of project execution will remain key indicators of whether the programme can meet its stated targets.

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According to the KNBS, the sector shrank by over two percent in 2024, ending an 11-year streak of steady growth. This decline came even as the government rolled out its plan to build 200,000 affordable housing units annually.

The KNBS report shows that construction costs have gone up. Prices for materials, fuel, and labour all rose in 2024. For instance, the price of a 50-kg bag of cement jumped to between Sh720 and Sh1,250, depending on the brand a 15 to 30 percent increase from the previous year.

As a result, cement consumption dropped by 7.2 percent, falling from 9.2 million tonnes in 2023 to 8.54 million tonnes in 2024. Loans to the sector also decreased, with commercial bank lending falling from Sh602.7 billion to Sh528 billion.

“These statistics show that when the government started deducting the levy, it reduced the money circulating in the economy,” Nyoro said. He added, “People who used to send Sh5,000 home for small building projects or to support family can no longer do so.”

Nyoro reminded the public that the levy was first introduced as a refundable contribution. However, it was later changed into a mandatory tax. He believes the economy would perform better if this money remained in people’s pockets.

“One would expect the construction sector to grow under the housing project. Instead, we are seeing a slowdown,” he said.

In terms of jobs, the sector employed 223,400 people in 2024, down slightly from 226,000 in 2023.

Despite challenges, the government continued to invest in infrastructure. The length of bitumen roads grew from 23,000 km in 2023 to 24,900 km in 2024. Superhighways also expanded from 157 km to 365 km, driven by projects like the Dongo Kundu Bypass and the Kipevu Link Road.

Treasury CS John Mbadi, speaking in the Senate on June 5, admitted that the levy had sparked frustration among workers. He said the government would consider reviewing the policy. Nyoro welcomed this move but said the levy should be scrapped altogether.

Nyoro also spoke about the education sector. He warned that budget cuts could reverse gains made by the free education programme started by the late President Mwai Kibaki.

While addressing parents at Mumbi Grounds, he criticised the recent Sh5.9 billion cut from the Sh11 billion allocated for national exams. These exams include KCPE, KCSE, and KPSEA.

“I heard the CS say parents may start paying part of the exam costs. But families in Kiharu are already struggling with fees,” he said. “We must take education seriously if we want our nation to grow.”

Nyoro also raised concerns over Kenya’s rising national debt. He noted that the debt has grown from Sh8.7 trillion in 2022 to Sh11.5 trillion in 2025.

“That means the government is borrowing more than Sh1 trillion each year. This is putting a huge burden on ordinary Kenyans,” he said.

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