Ruto’s new plan offers cheap mortgages for Kenyan homebuyers
President William Ruto has proposed a new law to allow Kenyans paying the housing levy to access home loans of up to KSh5 million (about $38,000) at low interest rates.
The announcement came during the 62nd Madaraka Day celebrations in Homa Bay.
Ruto said the plan would make it easier for contributors to buy homes and help those already repaying mortgages to reduce their costs.
“I will propose a legal change in Parliament to allow contributors to access a KSh5 million affordable home loan at a single-digit interest rate, for any housing unit in the market,” the President was quoted by Kenyans.co.ke as saying.
He added that the loan could also be used to clear existing mortgages, giving people more flexibility in managing their housing expenses.
The proposal follows the recent handover of the first 1,080 homes in Mukuru Kwa Reuben, Nairobi, under a rent-to-own scheme.
Tenants will pay for up to 30 years to own the homes. In Homa Bay, Ruto also oversaw the handover of 110 units under the Boma Yangu affordable housing project.
Kenya’s housing levy, introduced in March 2024, requires employees to pay 1.5% of their gross salary, matched by the same amount from employers.
In return, contributors get a housing tax relief of 15% of the total amount deducted, with a maximum relief of KSh108,000 ($820) each year, or KSh9,000 ($68) per month.
From late 2024, the housing levy and other statutory deductions, including the Social Health Insurance Fund and post-retirement medical fund, have been treated as deductible expenses when calculating taxable income.
This change means these contributions are no longer taxed twice, which lowers the final amount workers owe under the Pay-As-You-Earn (PAYE) tax system.
The government says these reforms aim to make housing more affordable and ease the tax burden on ordinary Kenyans.
