Why the Housing Levy May Stay on Your Payslip Long After 2027

The government wants to borrow Sh100 billion by using future Affordable Housing Levy collections as security, a process called securitisation. This means the 1.5% deduction from workers’ payslips would be tied to repaying investors who buy the bond.

The plan is meant to close a Sh118 billion funding gap in the affordable housing programme, helping the State raise large sums upfront rather than waiting for levy money to trickle in slowly. The target is one million housing units by 2027, with 250,000 built annually.

What It Means for Kenyans
The biggest implication is that the levy could become a near permanent fixture on payslips. Once future collections are pledged to repay bondholders, the deduction cannot be scrapped until investors are paid in full. This is because securitisation binds the State, not just the current administration, so any successor government would inherit the obligation.

With many treasury bonds running longer than ten years (the maximum presidential term), workers may keep paying the levy well beyond President Ruto’s time in office, regardless of who wins the next election.

This lands at a difficult moment when combined statutory deductions, now including the housing levy, have pushed total payslip cuts to between 40 and 45 percent of gross pay, higher than in many Western countries where high taxes at least fund robust health, education, and welfare systems. Which ends up eroding purchasing power in an economy that runs largely on consumer spending.
The levy is also part of a wider pattern.

The government has already securitised the Sports Fund (Sh44.79 billion for Talanta Stadium) and the Tourism Fund, with road and railway levies next in line. But the Housing Levy stands out because it hits every salaried worker’s monthly pay directly.