The government’s plan to securitise future inflows from the Affordable Housing Levy to raise about KSh 100 billion has triggered renewed political confrontation, with leaders sharply divided over the cost, legality, and long-term impact of the flagship housing programme.
The proposal, which seeks to convert expected future payroll deductions into upfront financing, is designed to plug a KSh 118 billion funding gap in the 2026/27 affordable housing budget. The programme requires about KSh 228 billion against an allocation of KSh 110 billion, forcing policymakers to explore alternative financing models to sustain construction momentum.
Gachagua escalates criticism, calls levy a “burden on workers”
Former Deputy President Rigathi Gachagua has emerged as one of the most vocal critics of the housing levy, arguing that it amounts to an unfair strain on workers already struggling with high living costs.
Gachagua, who has pledged to scrap the levy if he wins the presidency in 2027, has accused the government of “raiding payslips” through multiple statutory deductions, including housing, SHA and NSSF contributions.
“There was a time when a payslip meant dignity in Kenya. Now 30 to 40 per cent of workers’ wages are gone through deductions,” he said in a recent labour forum address.
He has further questioned the transparency of the housing programme, alleging that billions collected from workers lack clear accountability in terms of project implementation and beneficiary allocation.
In earlier remarks, Gachagua also dismissed the levy as unnecessary, insisting that government should reconsider its approach to financing housing and instead explore alternative models that do not reduce workers’ disposable income.
Ruto defends levy as jobs and housing engine
President William Ruto has consistently defended the housing levy, describing it as a transformative development tool that is simultaneously addressing Kenya’s housing shortage and unemployment crisis.
Speaking at various public forums, the President has dismissed critics of the levy as engaging in “populist politics,” insisting that the programme has already created hundreds of thousands of jobs in construction and related sectors.
“We still have politicians who think you can make populist comments, saying they are going to stop the affordable housing levy to protect pay slips,” Ruto said recently.
He has maintained that the housing agenda is central to his economic blueprint, arguing that affordable housing units are being delivered at low monthly contributions, with some Kenyans expected to own homes from as little as KSh 3,800 per month.
Ruto has also signalled willingness to adjust the legal framework of the levy following court challenges, while insisting that the programme must continue.
Ruto allies and government officials back securitisation plan
Government allies have also defended the securitisation proposal, arguing that front-loading future levy collections is necessary to accelerate housing delivery.
Senior administration figures have warned that scrapping or weakening the levy would stall construction projects and reverse economic gains tied to job creation in the housing sector.
Ruto’s allies have further described opposition to the levy as politically motivated, accusing critics of undermining a programme that is already benefiting thousands of workers and young people.
Legal battles and court uncertainty persist
The housing levy continues to face legal challenges, with courts at different times suspending, reinstating, or allowing continued collection pending determination of constitutional petitions.
Recent appellate rulings have maintained the status quo in some instances, effectively allowing deductions to continue while substantive cases are heard.
Petitioners argue that the levy is discriminatory and unconstitutional, while also raising concerns about transparency, fairness, and public participation in its introduction.
The legal uncertainty has added another layer of complexity to the securitisation proposal, which would effectively commit future governments to repaying debt using payroll-based deductions.
Critics warn of long-term fiscal strain
Beyond political opposition, economists and governance analysts have warned that securitising the levy could lock Kenya into long-term repayment obligations, reducing fiscal flexibility for future budgets.
Labour organisations and employers have also raised concerns that the levy increases the cost of formal employment, potentially discouraging job creation and squeezing household incomes further.
Civil society groups have meanwhile called for stronger oversight mechanisms to ensure accountability in the allocation of housing units and use of collected funds.
Housing agenda at a crossroads
Despite the controversy, the housing programme remains a central pillar of the government’s development agenda. However, the widening financing gap has forced policymakers to consider more aggressive funding models, including borrowing against future levy inflows.
