Government mulls overhaul of housing levy as workers decry payslip pressure

The government is considering a shake-up of the Affordable Housing Levy, following persistent uproar from workers who say the mandatory salary deductions have become a strain on their pay cheques.

Treasury CS John Mbadi, appearing before senators on Wednesday, confirmed that conversations are underway to rework the levy’s structure, which has been in place since 2023 as part of President William Ruto’s housing agenda.

“There is a discussion on seeing how to restructure it because it has a lot of serious benefits, in my view," Mbadi told the plenary.

"But at the same time, individual employees with payslips have complaints that cannot be ignored."

The levy, set at 1.5 per cent of a worker’s gross salary, matched by an equal contribution from the employer, has remained compulsory for all salaried individuals in the formal sector.

This brings the total monthly remittance to 3 per cent of gross income for every employee.

Since its rollout under the current administration, the policy has been met with vocal resistance, especially among middle-income earners, who argue that their already-stretched take-home pay is being further eroded.

Mbadi assured legislators that the Treasury is not ignoring the outcry and hinted at possible adjustments to the contribution model.

“A lot of restructuring is going on, and more pronouncements will come in due course,” he said.

The Affordable Housing Levy was introduced to fund the construction of low-cost housing across the country, a cornerstone of the current administration’s vision to tackle Kenya’s urban housing crisis.

However, discontent among formally employed Kenyans has fuelled public debate, with critics demanding transparency and flexibility in how the funds are handled.

The government now faces the challenge of preserving its housing development goals while addressing the anxieties of a taxed workforce eager for relief.