In a bid to have more Kenyans access better housing, President William Ruto has announced that he will champion a constitutional reform to have Kenyans access up to Ksh5 million in low-interest loans for mortgages.
Speaking at the 62nd Madaraka Day celebrations in Homa Bay, the President revealed that this would not only help those seeking to be first-time homeowners but also those already grappling with mortgages.
"I am pleased to announce today that I shall be proposing to Parliament a reform to the law that will allow any contributor to access an affordable home loan of Ksh5 million at a single-digit interest rate, applicable to any housing unit in the market," he stated.
"This facility will also enable contributors to offset existing mortgages, offering greater flexibility in their housing journey, allowing many to significantly ease their home financing costs."
This comes just days after the first 1,080 Kenyans received keys to occupy units at Mukuru Kwa Reuben, Nairobi, where residents will rent-to-own the units, a scheme that could take 30 years.
During his Madaraka speech, President Ruto further highlighted that he had overseen the handing over of 110 more housing units at the Boma Yangu housing estate in Homa Bay.
On March 19, 2024, the housing levy deductions took effect, leading to a 1.5 per cent deduction for all employees on their gross salary and an equal amount from the employer.
However, Kenyans who make these contributions are entitled to a housing tax relief of 15 per cent of the amount deducted.
Introduced to reduce the burden on taxpayers who contribute to the levy, the maximum annual relief one can get is Ksh108,000, an equivalent of Ksh9,000 per month.
Starting in late 2024, deductions for the Housing Levy, Social Health Insurance Fund (SHIF), and post-retirement medical funds were treated as deductible expenses when calculating taxable income.
This meant that they would be subtracted from an employee's gross salary before determining the Pay-As-You-Earn (PAYE) tax, thereby reducing the overall tax liability.
The relief allowed for thicker pockets for taxpayers, as previously these statutory deductions were still subjected to PAYE, effectively taxing employees twice on the same income.
