In a landmark announcement during the 62nd Madaraka Day celebrations held in Homa Bay County, President William Ruto proposed a bold constitutional reform aimed at increasing access to affordable housing in Kenya. The reform will allow Kenyan citizens to obtain low-interest mortgage loans of up to Ksh5 million, as part of the government’s efforts to improve housing accessibility and ease the financial burden on aspiring and current homeowners.
Transforming Kenya’s Housing Sector Through Affordable Loans
President Ruto emphasized that the proposed legal framework will enable any Kenyan who contributes to the national housing scheme to access a single-digit interest rate mortgage. This initiative, according to the President, will apply to any housing unit available in the Kenyan real estate market, giving citizens broader options when selecting their ideal homes.
“I am pleased to announce today that I shall be proposing to Parliament a reform to the law that will allow any contributor to access an affordable home loan of Ksh5 million at a single-digit interest rate, applicable to any housing unit in the market,” President Ruto stated.
The reform is part of the government’s continued effort to roll out President Ruto’s Affordable Housing Programme, an initiative aimed at bridging Kenya’s housing gap by offering low-income earners dignified and sustainable living options.
Relief for Existing Mortgage Holders
Beyond first-time homeowners, the reform will also benefit Kenyans who are already servicing mortgages. President Ruto noted that the proposed mortgage facility will include options to refinance or offset existing loans, thereby reducing repayment pressure on many households.
“This facility will also enable contributors to offset existing mortgages, offering greater flexibility in their housing journey and allowing many to significantly ease their home financing costs,” he added.
Milestones in the Affordable Housing Programme
The President’s Madaraka Day address highlighted several achievements of his administration in the housing sector. Recently, 1,080 housing units were officially handed over to new occupants at Mukuru Kwa Reuben in Nairobi. The homes are part of the rent-to-own model, which allows residents to pay for their houses over time, with full ownership being realized over a 30-year period.
In addition to the Nairobi project, President Ruto presided over the handover of 110 housing units in Homa Bay under the Boma Yangu estate, reinforcing the government’s commitment to nationwide housing development.
These units are a product of ongoing public-private partnerships and demonstrate tangible progress in the government’s efforts to address Kenya’s housing crisis.
The Housing Levy: A Backbone for Housing Finance
The announcement comes in the wake of the Housing Levy, which took effect on March 19, 2024. Under the levy, all employed Kenyans contribute 1.5 per cent of their gross monthly income, with an equal contribution by the employer. The levy is part of the Finance Act, which aims to fund the affordable housing agenda.
Despite initial resistance, the levy now forms a critical part of Kenya’s long-term housing finance plan. Contributors to the Housing Levy also benefit from tax incentives.
Tax Relief and Deductions: A Financial Cushion for Workers
To reduce the tax burden on Kenyan workers, the government introduced a housing tax relief of 15 per cent of the total annual housing levy deductions, capped at Ksh108,000 per year (or Ksh9,000 per month). This move has helped lessen the immediate financial strain on contributors.
In a further boost to take-home pay, the government also made Housing Levy, Social Health Insurance Fund (SHIF), and post-retirement medical fund contributions deductible expenses when calculating taxable income. This reform, which started in late 2024, ensures that these statutory deductions are not subject to Pay-As-You-Earn (PAYE) tax, effectively shielding contributors from double taxation.
Previously, these deductions were included in the gross income before tax was calculated, meaning many workers were taxed twice on the same portion of their salary. The new deductions framework helps create more equitable tax practices and supports disposable income growth for employed Kenyans.
Empowering Kenyans Through Home Ownership
President Ruto has consistently highlighted that home ownership is one of the most significant forms of wealth and security for families. The government’s mission is to transition more Kenyans from renters to owners, enabling them to build generational wealth and achieve financial independence.
Through initiatives like Boma Yangu, affordable mortgage financing, and the rent-to-own model, the government is working to turn this vision into reality. The planned constitutional reform to enable access to low-interest loans up to Ksh5 million is a major step toward that goal.
The Affordable Housing Programme is not just a social initiative—it is also expected to stimulate job creation, spur local construction, and enhance urban planning, making it a cornerstone of the country’s Bottom-Up Economic Transformation Agenda (BETA).
What This Means for Kenyans
If Parliament passes the proposed reforms, eligible Kenyans will be able to apply for affordable home loans, which would:
- Provide financing of up to Ksh5 million
- Offer single-digit interest rates, significantly lower than commercial bank loans
- Enable beneficiaries to buy homes on the open market, not just within government schemes
- Allow refinancing of existing mortgages, reducing monthly repayment obligations
- Work in tandem with rent-to-own programs for those not ready for full home ownership
This marks a shift toward greater housing inclusivity, as previous housing schemes often catered to specific income groups or lacked financial flexibility.
Conclusion: A New Era for Kenya’s Housing Future
President William Ruto’s proposal to introduce a constitutional reform enabling access to Ksh5 million low-interest home loans represents a bold and strategic move in solving Kenya’s housing deficit. With housing projects already underway and the housing levy in place to sustain financing, the government is positioning itself as a proactive partner in empowering citizens through affordable and dignified living.
As the proposal heads to Parliament, Kenyans will be watching closely to see how the legislation unfolds. If approved, the reform could revolutionize housing accessibility, especially for lower- and middle-income earners—creating not only homes but hope.