Affordable Housing in Kenya: The Government's Housing Programme, Levy, and What It Means for Kenyans

Kenya faces a housing deficit of over two million units, with the gap growing by approximately 200,000 homes annually as only 50,000 new units are developed each year—predominantly in the high-end market that remains out of reach for most citizens. To address this crisis, the government has made affordable housing a centrepiece of its economic agenda, enacting the Affordable Housing Act 2024, imposing a mandatory housing levy on all employed Kenyans, and targeting the construction of 250,000 units every year. Yet implementation has faced significant challenges, with the Boma Yangu registration platform attracting fewer than 300,000 registrations by mid-2025 despite over KES 81 billion in government investment.

The Scale of Kenya's Housing Crisis

Kenya's housing shortage is one of the most pressing socioeconomic challenges facing the country. The annual demand for new housing units far outstrips supply, particularly in the low and middle-income segments where the need is greatest. Rapid urbanisation—with Kenya's urban population growing at approximately 4 per cent annually—has created enormous pressure on housing stock in Nairobi, Mombasa, Kisumu, and other major towns, pushing millions into informal settlements where living conditions are often inadequate.

According to the Kenya Permanent Mission to UN-Habitat, approximately 61 per cent of urban households in Kenya live in informal settlements characterised by overcrowding, poor sanitation, insecure tenure, and limited access to basic services. In Nairobi alone, areas like Kibera, Mathare, and Mukuru house hundreds of thousands of residents in densely packed structures that fail to meet minimum habitation standards. The disconnect between housing supply and demand is driven by high construction costs, expensive land, limited access to mortgage financing, and regulatory bottlenecks that slow development.

The Affordable Housing Act 2024

The Affordable Housing Act 2024 was assented to by the President on 19th March 2024, establishing the legal framework for Kenya's most ambitious housing initiative. The Act creates the Affordable Housing Fund, which finances the design, development, construction, and maintenance of affordable housing, institutional housing, and associated social and physical infrastructure across the country.

The Act classifies housing into three categories based on the income levels of target beneficiaries. Social Housing targets individuals earning up to KES 20,000 per month (approximately $155), offering the most subsidised units for Kenya's lowest-income earners. Affordable Housing serves those earning between KES 20,000 and KES 149,000 per month ($155 to $1,157), representing the broad middle class. Affordable Market Housing caters to earners above KES 150,000 per month, providing quality housing at below-market rates for upper-middle-income households.

Under President William Ruto's housing programme, Kenyans will pay between KES 840,000 and KES 5.76 million for low-cost homes, depending on the unit size, location, and housing category. These prices represent a significant discount compared to open-market rates, particularly in Nairobi and other major urban centres where comparable units can cost several times more.

The Housing Levy: How It Works

The most controversial element of the affordable housing initiative is the mandatory housing levy, imposed at a rate of 1.5 per cent of an employee's gross salary, with a matching 1.5 per cent contribution from the employer. The levy came into effect on 19th March 2024 under Sections 4 and 5 of the Affordable Housing Act, and applies to all employed persons in Kenya regardless of whether they intend to purchase an affordable housing unit.

The Kenya Revenue Authority (KRA) collected KES 73.2 billion in housing levy receipts during the 2024/25 financial year, surpassing the KES 63.2 billion target set by the National Treasury and achieving 115.82 per cent of the projected collection. The Treasury projects levy collections to rise to KES 78 billion in the 2025/26 fiscal year as compliance improves and the formal employment base expands.

Contributors to the housing levy are entitled to apply their accumulated contributions toward the purchase of an affordable housing unit. Those who do not purchase a unit can claim a refund of their contributions after 15 years. The levy also qualifies for tax relief—contributors can claim a maximum tax relief of KES 9,000 per month (equivalent to 15 per cent of the levy contribution up to a ceiling), reducing the effective cost of the deduction for employees.

Boma Yangu: The Digital Platform

The Boma Yangu platform serves as the official online marketplace for the Affordable Housing Programme, connecting homebuyers, developers, financiers, and small and medium enterprises involved in the housing value chain. Through Boma Yangu, eligible Kenyans can register their interest in purchasing affordable housing units, track available projects, and manage their applications.

However, the platform has faced significant uptake challenges. By June 2025, fewer than 300,000 Kenyans had registered on Boma Yangu to express interest in purchasing units—representing just 0.5 per cent of Kenya's estimated 53.3 million population and falling far short of the government's target of 565,800 registrations. This shortfall has raised questions about the programme's design, public awareness efforts, and whether the housing units on offer truly match the needs and financial capacity of the target population.

Projects Under Construction and Completed

As of 2024, the Affordable Housing Programme had completed 1,189 units, with an estimated 730,062 housing units reported to be under construction or in various stages of development by both government and private sector partners. The programme includes projects in multiple locations across the country, with notable developments in Nairobi (Park Road, Starehe, and Mavoko), Kisumu, Nakuru, Mombasa, and several county headquarters.

The government has partnered with private developers and international organisations to accelerate delivery. Public-private partnerships (PPPs) are central to the strategy, with the government providing land, infrastructure, and regulatory support while private developers handle construction. International partners including the World Bank, UN-Habitat, and bilateral development agencies have provided technical assistance and financing to support programme implementation.

Challenges and Criticisms

The affordable housing programme has faced sustained criticism from multiple quarters. The mandatory housing levy generated significant public opposition when first proposed, with the Federation of Kenya Employers and trade unions raising concerns about its impact on both employers and employees, particularly in a challenging economic environment with high cost of living. Legal challenges filed in the courts questioned the constitutionality of the levy, though the programme ultimately survived judicial scrutiny.

Affordability remains a fundamental concern. Critics argue that even the lowest-priced units at KES 840,000 are beyond the reach of many low-income Kenyans who earn below the minimum wage. The requirement for mortgage qualification, documented income, and formal employment effectively excludes the informal sector workers who constitute the majority of Kenya's workforce and who face the most acute housing needs.

Construction quality and delivery timelines have also drawn scrutiny. Some early affordable housing projects have been criticised for small unit sizes, poor finishing, and inadequate social amenities. The gap between announced targets—250,000 units per year—and actual delivery of approximately 1,189 completed units highlights the enormous implementation challenges the programme must overcome to achieve its stated goals.

The Path Forward

Despite the challenges, Kenya's affordable housing initiative represents a necessary response to a genuine crisis. The successful collection of over KES 73 billion in levy revenue demonstrates the potential to mobilise significant resources for housing development. The key challenge lies in translating these financial resources into actual housing units that meet the needs of Kenya's growing urban population while ensuring affordability, quality, and accessibility for the lowest-income earners who need housing most urgently.