Employee deductions to the national housing fund hit legal snag

A plan by the government to commence monthly deductions on employees salaries towards the National Housing Development Fund (NHDF) beginning March this year has hit a legal snag.

According to Housing Principal Secretary Charles Hinga, a case filed by the Central Organization of Trade Unions (COTU), challenging the establishment of the fund for the construction of affordable housing units across the country is yet to be concluded.

Speaking to Citizen Digital on the sidelines of a ministerial workshop to sensitize counties on the low cost housing initiative on Thursday, Mr. Hinga said despite reaching an out-of-court settlement to end the row with the Ministry, COTU is yet to file its application to legally end the outstanding dispute in the labour courts.

“Even after an out the court settlement is reached, there still remains a whole process involving the filing of an application to relinquish the row which is yet to take place. We expect COTU to make its submission around March the 11th,” said the Housing PS.

Hinga said the NHDF draft regulations remain on the floor of the National Assembly and at the delegation stage.

The realization of the affordable housing initiative, through the housing levy, is further compounded by a court injunction acquired by the Federation of Kenyan Employers (FKE) at the start of January which brought to a halt, the creation of an advisory board to the NHDF.

The deadlock leaves the private sector and counties as the only entities with the financing capacity to drive the affordable housing agenda to this point, with 24 of the 47 devolved units reaching an agreement with the Ministry of Transport, Housing and Infrastructure to put up at least 2000 low cost housing units every year.

The private sector has meanwhile, delegated the largest potential for the finance of the low-cost housing initiative, with the Housing State Department confirming the receipt of pledges closing in on Ksh. 3 trillion from private developers.

The execution ball has seemingly moved to the private sector’s court as the government remains keen on partnering the sector to bring the affordable housing initiative into full fruition.

To fully tap onto opportunities presented by the sector, the Housing Ministry is mulling the creation of an act warranting developers to mandatory allocate at least 30 percent of their total development undertakings to low cost housing.

“Even if you build good-looking settlements in high end neighborhoods, if we don’t make provisions for middle and low income earners working in such residents, we will create another slum. We need to establish a way of reaching the low-cost housing dream while putting a stop to the proliferation of the decrepit housing units,” PS Hinga added.

Capped at a high of Ksh. 2500 and a minimum Ksh. 200 with the room for additional-voluntary contributions, the housing levy — if successful — is expected to raise a total of Ksh.48 billion annually to aid the financing of the low-cost and social housing initiative.