Mandatory Housing Fund Deductions to Begin in May

Workers in the formal sector will start contributing the mandatory 1.5 per cent of their gross salaries towards the affordable housing scheme. The Kenya Revenue Authority and the Ministry of Transport, Infrastructure, Housing, Urban Development and Public works directed employers to forward the housing fund deductions by the 9th of every month. The scheme requires both the employer and employee to each contribute 1.5 per cent of the employee’s monthly basic salary, if the sum of the total monthly contributions shall not exceed Sh5000.

Self-employed persons can opt into the scheme as voluntary contributors, paying Sh200 a month; Sh100 for administration and Sh100 as a benefit. Members wishing to increase their contributions are free to do so by the amount they want which will be credited to their personal account.

Regulations that have been gazetted warn that any person who fails, neglects or refuses to register under this regulation commits an offence and shall, upon conviction, be liable to imprisonment for a term of two years or a fine not exceeding ten thousand shillings or to both.

Each member of the housing fund will have an individual account to be known as the Housing Fund Credit. It will be set up and maintained by the National Housing Corporation (NHC) and all contributions made to the fund shall be credited to it.

In order to get access to the low-cost houses, Kenyans will have to contribute to the proposed fund without fail for at least five years. After that period, they will then qualify to get mortgage funds at 7 per cent annual interest rate, as per to draft regulations.

About voluntary contributors, Section 3 of the housing fund regulations reads, “Contributions by individuals shall only be accessed for purposes of offsetting housing loans, security for a mortgage or housing development after five years of uninterrupted contribution and shall attract such an annual return as may be determined by the Corporation.”