The Dual Impact of the Housing Levy in Kenya – Opinion

Is the housing levy a good thing or a bad thing? In this article, we look at some of the advantages and disadvantages of this government program.

The Dual Impact of the Housing Levy in Kenya

The topic on the Housing Levy has remained a hot one since the beginning of last year, dominating conversations across Kenya.

As part of one of his agenda, H.E., President William Ruto announced his proposal of the housing levy where every employed Kenyan would be mandated to contribute 1.5% of their monthly salary.

READ ALSO: Understanding the National Housing Development Fund Kenya

However, amid the country’s soaring cost of living, the levy met strong resistance due to its potential impact—further reducing incomes already burdened by escalated taxes and high living expenses.

He clarified that beyond addressing affordable housing, his vision aimed to generate employment opportunities for the nation’s youth. During a Sunday service at a church in Karen, he emphasized, “It wasn’t so much about the houses, it was so much about the jobs for the young people of Kenya.

Despite the President’s efforts of sharing his vision and outlining the benefits of the housing levy, a lot of Kenyans still do not share in this vision. This skepticism stems from the overburdened pay slip caused by the increase in taxes- causing a lot of economic pressure.

READ ALSO: Pricing of The Affordable Housing Houses By The Government of Kenya

Additionally, the country’s opposition has been very relentless in voicing their dissatisfaction of the new levy, a bizarre action, as it contradicts their own campaign manifesto which advocated for the same housing levy. Most Kenyans however, are in support of their (opposition) sentiments.

Is the Housing Levy a good or bad thing?

To be able to properly evaluate something and make a conclusion of whether it is beneficial or not, it’s important to thoroughly examine its advantages and disadvantages. While direct deduction of income seems disadvantageous, an in depth analysis will reveal the many advantages of the levy.

READ ALSO: KMRC’s Affordable Mortgage Options for Middle-Income Buyers

Beyond providing shelter, the housing levy will see the growth of affordable housing which will, in one way or another, play a major role in eradicating informal settlements. Research has shown that the main disadvantage of informal settlements, is that, they are a breeding ground for criminal gangs and activities.

The Dual Impact of the Housing Levy in Kenya

Affordable housing will solve this problem, since a lot of people will be able to move into well planned and safe neighborhoods.

Additionally, the levy will greatly stabilize housing for the mid to lower spectrum. The effect of this levy will stabilize the market rates given that the real estate market is quite overpriced. The housing levy’s advantages also extend to job creation, aligned with President Ruto’s target of building 250,000 houses annually.

READ ALSO: Rising Cost of Living in Kenya: Impact on Real Estate and Everyday Life

As we are well aware, construction is a big driver of economies. As such, the construction of multiple houses per year will spur growth in related businesses and propel manufacturing, amplifying opportunities.

It will also foster informal ventures such as artisans that deal with fixtures such as doors, windows, iron sheets, paints, furniture, etc. Food vendors, popularly known as vibandas, will also greatly benefit as they will sprout up around the construction sites to sell food affordable to the construction workers.

Conclusion

Change, is not the most easily embraced of things and especially if the change is one that negatively impacts people’s finances. However, it is always important to consider the end goal in every situation. In my opinion, Kenyans stand to benefit immensely from the housing levy.

Besides homes, it will greatly stimulate trade, which will foster growth in both the formal and informal sectors in the country. This will potentially reduce the rate of unemployment, significantly lowering crime rates and most importantly the economy will thrive. That said, sacrificing immediate desires paves the way for a brighter future. Small sacrifices often lead to significant outcomes.

READ ALSO: Boma Yangu Project – Affordable Housing Program in Kenya

Lulu Kiritu
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