More than Sh206 billion has been raised for President William Ruto’s affordable housing programme in three years, with the government now looking beyond payroll deductions to completed homes as it seeks to keep the multibillion-shilling construction drive going.
Treasury figures show that the housing development levy generated Sh206.46 billion between the 2023/24 and 2025/26 financial years. Collections stood at Sh54.16 billion in 2023/24, increased to Sh73.20 billion in 2024/25 and reached Sh79.10 billion in 2025/26.
The money has been raised jointly from employees and employers through matching contributions, with each side contributing 1.5 per cent of an employee’s pay.
Despite the strong collections, the government did not fully meet its three-year target. Treasury had projected cumulative receipts of Sh212.78 billion, leaving actual collections Sh6.32 billion lower than expected, equivalent to a 2.97 per cent shortfall.
The biggest improvement came in the second year. Collections increased by 35.16 per cent from Sh54.16 billion to Sh73.20 billion in 2024/25, beating the Sh63.20 billion target by Sh10 billion.
The performance was weaker in the following year despite collections reaching a new high. Treasury had set a Sh95 billion target for 2025/26, but only Sh79.10 billion was collected, leaving a Sh15.90 billion deficit.
This represented a 16.74 per cent shortfall against the target, while the annual growth rate slowed to 8.06 per cent compared with the 35.16 per cent increase recorded the previous year.
The levy’s first year was affected by a three-month court suspension after judges ruled that the charge was unconstitutional because it covered only people in formal employment.
The government later introduced the Affordable Housing Act, 2024, paving the way for collections to resume from March 2024. The new framework widened the reach of the levy to include workers in the informal, or jua kali, sector.
The changes came as the housing programme was expanding across the country. According to the 2026 Economic Survey, more than 205,000 housing units were under construction by December last year, with the projects carrying an estimated value of nearly Sh500 billion.
Affordable housing projects accounted for 138,474 units valued at Sh385.83 billion. Another 53,350 units, valued at Sh81.8 billion, were being developed under the social housing category for lower-income households.
Institutional housing accounted for a further 12,709 units worth Sh28.6 billion. The category targets public servants, police officers and members of the Kenya Defence Forces, while the government plans to extend the programme to student housing.
The State is also relying on the sale of completed houses to bring additional money into the programme. Under the current pricing structure, affordable one-bedroom homes cost between Sh1.5 million and Sh2.1 million, while two-bedroom units are priced from Sh2 million to Sh2.5 million.
Three-bedroom affordable apartments cost between Sh3 million and Sh3.3 million. For workers earning Sh150,000 or more each month, houses are offered at market rates, with two-bedroom units costing between Sh2.4 million and Sh4.3 million and three-bedroom homes going for between Sh3.6 million and Sh5.76 million.
Social housing is offered at lower prices. One-room units cost between Sh640,000 and Sh840,000, while two-room houses range from Sh960,000 to Sh1.26 million. Three-room units are priced between Sh1.28 million and Sh1.68 million.
The tenant-purchase arrangement allows occupants to pay for their homes through monthly instalments before eventually taking ownership.
Buyers currently pay a 10 per cent deposit, although President Ruto announced on May 1 that the amount would be cut to five per cent to make it easier for more people to buy completed units and speed up sales.
The shift towards housing sales is expected to reduce pressure on the levy as the programme moves into its next stage. The government wants income from completed units to help pay for additional construction instead of relying entirely on payroll contributions.
Housing PS Charles Hinga linked the expected increase in programme spending to projected earnings from house sales and higher levy receipts.
"Expenditure on affordable housing is projected to spike in FY2027/28 as the Sh360 billion projection includes funds expected to be realised from projected housing sales and increased levy collections, Mr Hinga said in May
The government expects housing levy collections to rise to Sh110 billion in the financial year ending June 2027, providing another major source of funding as thousands of units move towards completion and sale.