Housing fund voluntary not mandatory-Govt clarifies

Ruto said the plan was to help more Kenyans purchase affordable housing units.

Piece by: MAUREEN KINYANJUI
News

• He noted that the salary deduction proposed to facilitate the Housing Fund would be voluntary and not mandatory for civil servants to contribute towards the fund.

• Hinga also noted that being a multi-generational fund, the state can allow one to pass to their children to continue paying.

State Department of Housing and Urban Development PS Charles Hinga speaks during the Senate Induction Retreat of Roads, Transportation and Housing at Nakuru on February 17, 2023.
Image: The-Star

Kenyans will now be contributing 3 percent of their income and kick-starting their journey of owning a house. 

This was announced by President William Ruto on Sunday as part of the plan to strengthen the Housing Fund to help more Kenyans purchase affordable housing units. 

"Every employee who contributes 3 percent, the law will compel their employer to also contribute 3 percent to the Housing kitty," he said. 

Mixed reactions from Kenyans followed as many questioned the mandatory housing ’tax’.

However, State Department for Housing and Urban Development Permanent Secretary Charles Hinga has shed light on how the Housing fund will work under the Kenya Kwanza government.

He noted that the salary deduction proposed to facilitate the Housing Fund would be voluntary for civil servants.

“It is voluntary and not mandatory for a civil servant. But we realize we didn’t explain to Kenyans at that level of in-depth,” he said.

"The President did not say we shall deduct the money tomorrow. He said that civil servants can elect to start contributions. If you contribute Sh10,000, the government gives you another Sh10,000 as your money," PS added.

Hinga noted that what President Ruto announced on Sunday was a plan which the government is building towards.

“As the government, we want to start what we call a participatory fund, the President said. As a government, we are still an employer and we want to start a participatory journey on housing,” he said

“In fact, Section 31 of the Employment Act imposes an obligation on every employer to provide homes to their employees close to where they work,” Hinga added.

Section 31 reads that: An employer shall at all times, at his own expense, provide reasonable housing accommodation for each of his employees either at or near to the place of employment, or shall pay to the employee such sufficient sum, as rent, in addition to the wages or salary of the employee, as will enable the employee to obtain reasonable accommodation.

Wading further into the housing fund, the PS said the government wants to rally everyone into the culture of saving.

Hinga referred to the housing fund as a national saving, whereas as a country, we are putting money together. On the housing funds, the PS noted that it will be multi-generational.

This means that the State will allow multi-general payment periods depending on one’s pocket thus the government will be patient to give one as much time as possible.

“Because the housing fund is not borrowed money but our own. It allows us to be able to structure this repayment based on the size of your pocket. If one can afford Sh2,000, within the housing fund, one will find a house where the government can finance the Sh2,000... We can allow you to pay for 30 years,” Hinga explained.

He also noted that being a multi-generational fund, the state can allow one to pass to their children to continue paying.

“That is how this national housing funding works. But we didn’t explain this to Kenyans in that level of detail,” Hinga said.

On the issue of those who are already homeowners, there is concern about why they are being forced to contribute to a fund. The PS noted that the government is rallying people into the culture of saving.

“So we are asking you to help us save the money to address the issue. It is our national goal that we will address the issue of housing,” he said.

Acknowledging that the demand for affordable housing is high yet the supply can be low, one can be refunded the amount they invested in the scheme.

Hinga noted that one will only be allowed to pull out of the after a period of seven years and get their full amount of money.

“If you have saved into the fund and chances are you miss a house, you have the right to pull out from the scheme. It is within your power to do that,” he said

One will get the full amount plus a return and can choose to use the money as they wish. However, it's not a guaranteed return.

Check out the latest news here and you are welcome to join our super exclusive Mpasho Telegram group for all the latest and breaking news in entertainment. We would also like to hear from you, WhatsApp us on +254 736 944935.