Pay & working terms · 3 min read
Affordable housing levy in Kenya: the 1.5% on your salary
What the affordable housing levy is, how much comes off your pay, what your employer must add, when it is due and how it affects PAYE.
The affordable housing levy appears on every formal payslip in Kenya. It is set by the Affordable Housing Act, 2024, now Cap. 177A of the Laws of Kenya. Here is how it is calculated, what your employer owes on top, and what the Act says about who can benefit from the Fund it pays into.
1.5 per cent of gross salary, matched by the employer
Section 4 of the Affordable Housing Act imposes the levy at 1.5 per cent of an employee's gross salary, or of the gross income of a person whose income is not salary.
Section 5 requires the employer to deduct the employee's 1.5 per cent and to remit an equal amount of its own. The employer's share is not taken from your pay.
Gross salary KSh 25,000: employee levy KSh 375, employer adds KSh 375. Gross salary KSh 40,000: employee levy KSh 600, employer adds KSh 600. Gross salary KSh 100,000: employee levy KSh 1,500, employer adds KSh 1,500.
When it is due and what happens if it is late
The levy is payable to the collector not later than the ninth working day after the end of the month in which the salary was due (section 4(3)). KRA collects it alongside PAYE.
If it is paid late, a penalty of 3 per cent of the unpaid amount is due for each month or part of a month it stays unpaid (section 7).
The levy and PAYE
KRA's notice on the Tax Laws (Amendment) Act, 2024 lists the affordable housing levy among the amounts deductible when working out taxable employment income from December 2024. Payroll subtracts it before applying the PAYE bands, so it reduces your PAYE slightly.
Who can get a house from the Fund
The levy goes into the Affordable Housing Fund, which finances affordable and institutional housing (sections 8 to 10). Section 48 says a person is eligible for allocation of one affordable housing unit if they meet the criteria set in regulations. Paying the levy alone does not allocate you a house.
The Act treats voluntary savings differently from the levy: a person who saves voluntarily and has not been allocated a unit may withdraw the savings with interest after giving ninety days' written notice. Ask through official channels before relying on any claim about refunds of the levy itself.
Checks for your payslip
- The levy should be 1.5 per cent of your gross pay for the month, not of basic pay only.
- The employer's matching 1.5 per cent may appear for information, but it must not be deducted from you.
- Keep payslips showing the deduction. If you suspect it is not remitted, ask HR in writing.
Sources and further reading
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Frequently asked questions
How much is the housing levy in Kenya?
1.5 per cent of gross salary, deducted from the employee, plus an equal 1.5 per cent paid by the employer (Affordable Housing Act, sections 4 and 5).
Is the housing levy deducted before PAYE?
Yes. KRA's notice on the Tax Laws (Amendment) Act, 2024 lists it as deductible when working out taxable employment income.
When must my employer remit the levy?
Not later than the ninth working day after the end of the month. Late payment attracts a penalty of 3 per cent a month.
Does paying the levy give me a house?
No. Section 48 says allocation depends on eligibility criteria set in regulations.