Housing levy standoff: Gov't told to seek alternative sources of funding

The joint committees of Finance and Housing of the National Assembly have concluded the exercise of collecting views from the public on the controversial Affordable Housing Bill, 2023.

The two committees are set to hold a session with the Ministry of Housing on Wednesday to harmonise the views before retreating to draft their final report that will be debated in Parliament.

Being the 12th and last public participation exercise by the joint committees, Tuesday's session was dominated by conversation revolving around alternative ways the government can raise money for the project without burdening an already heavily taxed population.

“The biggest question is we all agree there is a deficit for houses and the houses that exist in the market are not affordable to many people that earn much less and we agree we must intervene and you propose that we have a fund that you contribute, then I benefit from the fund, this means the same people that have access to mortgages have access to the funds, this means people that are at the bottom of the pyramid who are not able to raise that money, we again have a continuous problem,” said Finance committee Chairman MP Kuria Kimani.

“We believe the challenge of affordable housing is big and we don’t think it can be solved by a singular decision, not introduce a housing levy and think it will work, it requires a cocktail,” Kenya Association of Stock Brokers and Investment Banks CEO Willy Njoroge said.

ICPAK Chairman Philip Kaikai added: “The idea is good but why can’t we put it in a way that it is a slum upgrading project? In my county Kakamega, people stay in homes as opposed to apartments, going around the country putting up homes yet we have Kawangware and Kibera where you could put homes and they rent cheaply.”

Tax lawyer Robert Kamwara, on his part, stated: “We would wish that there is proper public participation so that people know the benefits so that they can contribute willingly.”

Owing to the court’s declaration of the financing element of the affordable housing programme as unconstitutional, the committee went shopping for options that would facilitate funding, and a proposal on the utilisation of a real estate investment trust was floated.

“How do you propose other sources of funding to this housing other than what is in the Bill because you seem to be targeting the money collected without increasing the cake,” said Finance Committee Vice Chair Benjamin Lang'at.

NSE‘s Strategy, Risk and Compliance Chief Officer David Irungu opined, “From us at the NSE we have Ksh.1.6 trillion trading in shares and Ksh.4.6 trillion where we are doing government stock…we are looking at the real estate investment trust actually being able to surpass the equity shares, the Ksh.4.6 trillion is government stock, we represent the face that would be there to help government raise these funds.”

“Farmers, where I come from, would realise their income at the end of the farming period, employees are PAYE, how do we bring the two on board so that we bring all Kenyans on board so that we address the issue That why have I contributed while somebody else enjoys the house?” Kesses MP Julius Ruto posed.

Mr. Njoroge added: “It appears we are shooting ourselves in the foot…we are trying to create a stock of houses then saying let us tax whoever is providing the funds, the private sector is interested in providing affordable housing, these taxes that make it difficult can we do away with them.”

Once again the proposal in the Bill to allocate money to the National Housing Corporation was questioned.

“We find this confusing and unrealistic…NHC has its own source of revenue and its own way of accounting, and by taking 30% of the money there, we will be assisting NHC raise revenue while hitting employees hard to raise the money…we are proposing that that be abolished,” said Kamwara.

MP Kimani added: “I find your thinking on NHC unique that the 30% allocation NHC being a commercial entity means employees of NHC will be contributing money to their employer without having a benefit of it.”

Representatives of the Technical University of Kenya pleaded with the committee to consider students as part of the beneficiaries.

“Let’s not just look at the common mwanachi, can we focus on students that get through rental at an affordable rate…that is our prayer,” they said.

The committee will hold a session with the housing ministry on Wednesday.