Affordable Housing: New Bill Proposes KSh 10m Or 5 Years In Jail For Misappropriating Funds

• Individuals found guilty of misusing Housing Levy funds face a hefty fine of KSh 10 million, a jail term not exceeding five years, or both
• Employers failing to remit the Housing Levy could face a penalty of 3.0% of the unpaid amount each month in arrears
• Affordable Housing Bill 2023 also establishes a clear framework for levy collection, mandating the Treasury to empower the KRA for such collections

Elijah Ntongai, a journalist at TUKO.co.ke, leverages more than three years of expertise in financial, business, and technology research, providing profound insights into Kenyan and global economic trends.

The new Affordable Housing Bill 2023, tabled before parliament, has proposed penalties for anyone found misappropriating funds from the Housing Levy.

Under this new bill, individuals guilty of misusing the proceeds face a hefty fine of KSh 10 million, a jail term not exceeding five years, or both.

This measure is a stark departure from previous regulations, signifying a firm stance against mishandling the funds allocated for housing development.

The government seeks to assure Kenyans that the funds will be used for the intended purposes.

The need for the Affordable Housing Bill 2023 arose from a recent court ruling that deemed the previous levy, established under the Finance Act 2023, unconstitutional.

What are fines for non-compliance?

The bill also introduces more harrowing consequences for non-compliance with the levy payment.

Employers failing to remit the Housing Levy could face a penalty of 3.0% of the unpaid amount each month they did not remit the levy.

This is a significant increase from the previously established penalty of 2.0% under the Finance Act 2023.

KRA mandate

The court highlighted issues regarding the collection authority, citing discrepancies between the First Schedule of the KRA Act and the mandate vested in the Treasury, not the Lands Ministry, which had empowered KRA to collect the levy.

Section 7 of the Affordable Housing Bill 2023 aims to rectify these discrepancies and establish a clear framework for levy collection, emphasising the role of the Treasury in empowering the KRA for such collections.