Housing Fund: A look into what Ruto's administration is proposing

Kenyans are aware of the proposed Finance bill 2023 which among other issues has proposed the controversial Housing fund, which proposes that the employer and employees each contribute 3% respectively into the housing fund.

The bill has caused an uproar from the opposition led by Raila Odinga. 

President William Ruto. His administration has come under sharp criticism from the opposition and a section of Kenyans over the affordable housing law (photo courtesy)

What the bill states;

The bill which is an ammendment of the Employment act 2007, introduces a new section 31B which states that;

An employer shall pay to the National Housing Development Fund, established under Section 7 of the Housing Act in respect of each employee,

a) The employer's contribution of 3% of the employee's monthly basic salary,

b) The employee's contribution of 3% of employee's basic salary.

Provided that the sum of the employer and employee's contribution shall not exceed 5K a month.

How the employees will benefit 

The employees are expected to benefit as follows;

a) For employees who qualify for affordable housing, the contribution accrued to the employees shall be used to finance the purchase of a home under the affordable housing scheme or,

b) for employees who are not eligible for affordable housing upon the expiry of 7 years from the date of the start of making the contribution or after the attainment or retirement age or whichever is earlier, they can be able to;

i) transfer of their contribution to a retirement benefit scheme, or pension scheme,

ii) transfer their contribution to any person registered and eligible for affordable housing under the National Housing Development Fund,

iii) transfer their contribution to their spouse, their dependant, children or,

iv) receive their contribution in cash.

The cash payment option shall be subjected to tax at prevailing rates. The returns of the contributions shall be based on the returns of the fund.

The employers are to remit the contribution of both the employer and employees to the National Housing Development Fund before the ninth day of the following month after the deduction was made.

Regulations

The Cabinet Secretary in charge of housing and the cabinet Secretary responsible for finance shall come up with regulations prescribing the qualifications to participate in the affordable housing scheme.

Coming into effect of the law

The law will come into effect after the regulations by the cabinet secretaries in charge of housing and finance are adopted.

The ammendments are contained in the finance bill 2023 currently tabled at the National Assembly for consideration.