New Provisions to Allow Withdrawal of Housing Levy Contributions

The Kenyan government is moving to reframe the Affordable Housing Levy as a flexible savings vehicle, a tactical shift intended to manage public skepticism and provide an exit ramp for contributors. According to Housing Principal Secretary Charles Hinga, the state will now allow contributors to withdraw their funds under specific conditions, effectively aligning the mandatory deduction with the characteristics of a personal investment.

This policy pivot comes as the administration seeks to restore confidence in a programme that has faced significant legal and fiscal hurdles since its inception. By introducing mechanisms for withdrawal, the State Department of Housing is attempting to shift the narrative from a mandatory tax to a savings scheme where contributors can see the growth of their individual accounts.

Under the updated framework, the decision to permit withdrawals is partly an effort to demonstrate that the collected funds are liquid. This is particularly relevant as the State Department of Housing has been engaged in discussions with the National Treasury regarding the management of these funds. As of March 2026, billions of shillings collected under the levy remain tied up in Treasury Bills, a situation that has occasionally impacted the cash flow for ongoing construction projects.

The Affordable Housing Act originally provided for voluntary savings to be withdrawn after a 90-day written notice if a contributor was not allocated a house. However, these latest changes appear to broaden the scope of how mandatory contributors interact with the fund. The government expects that providing a clear, low-risk path to either homeownership or fund recovery will silence critics who have labeled the levy as an unconstitutional drain on gross salaries.

President Ruto has previously maintained that the levy is a critical pillar for national development and job creation in the construction sector. The programme has already seen the launch of thousands of units across the country, though the pace of delivery has been a point of contention for many taxpayers. The locals in various regions where projects are situated have expressed mixed feelings, ranging from optimism about new infrastructure to concerns over the long-term accessibility of the units.

In addition to the withdrawal provisions, the government has recently implemented other measures to ease the burden on low-income earners. This includes a waiver of the upfront deposit for those earning 20,000 shillings or less. Previously, a 5% deposit was a mandatory requirement for house allocation, which acted as a barrier for many in the informal sector.

The state remains committed to the target of providing decent housing while ensuring the fund remains sustainable. For many contributors, the ability to withdraw funds offers a level of financial security that was previously missing from the legislative framework. It remains to be seen how the National Treasury will manage the potential liquidity demands if a significant number of contributors opt for refunds rather than housing units.

Construction activity under the programme continues in several counties, with the government emphasizing that the levy funds are strictly protected for housing and related infrastructure. The introduction of the Public Participation Bill 2025 is also expected to standardize how future changes to such schemes are communicated to the public, ensuring more transparent engagement between the state and the taxpayers.