Why people paying 3% housing levy will not get all contributions after 7 years

 

On May 24, Housing Principal Secretary Charles Hinga unveiled the Affordable Housing Project's ideas and funding scheme.

Hinga stated to the journalists at State Housing that people who want to collect the money they have saved may only do so after making contributions for seven years, and they won't get the whole amount in their accounts.

Hinga claims that a portion of the donation will stay in the account to continue protecting the government against risky financial activity.

"You may only collect your share of the individual contribution after seven years if you choose to withdraw the funds you contributed. The money from your employer will still be in the pot." 

On Thursday, May 11, 2023, President William Ruto attended the official groundbreaking ceremony for the Lapfund Bellevue Park Residence Project in Nairobi.

"The employer's contribution is the one that safeguards the financial resources of the fund, so that if there are any liabilities of the fund, then we can maintain that particular amount of money," Hinga said.

He said that the Finance Bill of 2023's required housing charge commitment would give investors confidence that the government intends to build dwellings.

"It should be noted that you may now recover even the contribution made by your employer after 14 years.

"The bulk of Kenyans will pay Ksh1,000 or less, while the top earners will only pay Ksh2,500. As a result, when we as a nation put everything together, we are going to be able to get out into the housing market and tell investors that the government is offering land free of charge so that Kenyans may own homes, construct homes in large numbers, and then hand over the keys and go. They won't agree to develop if I don't have the housing money," said Hinga.

The Principal Secretary promised Kenyans that they would get around Ksh1 billion each month and that this sum would be utilised to reassure investors.

"I can now contact investors and inform them that, if the legislation remains in place, I will begin collecting revenue after three years.

"All my more than 200 investors want is an adoption plan," he said. All they are interested in learning is how to get what they paid back," says PS Hinga.

However, economist Brian Wachira commented on the issue and said that before the tax becomes law, many other conditions will be suggested, and the government's plans to close the 2.5 million housing shortage will take numerous forms.

"Some individuals favour the tax, contending that it is an essential step in resolving the nation's housing situation. Others reject the fee, claiming it is a tax on the poor and won't help solve the housing crisis, but it is obvious that the government is forcing this issue down the throats of many people," according to Wachira.

Wachira said that before submitting the plan, the administration of President William Ruto appeared to have compared it against Singapore, Mexico, Brazil, Nigeria, and China.

He also pointed out that some of the recommendations within would make it harder for residents to participate in the project, which, if correctly designed, may wind up helping plenty of people.

"To expect someone to wait 14 years to recover their investment is ridiculous. That is unrealistic and ought to be seen as a mistake."

"When selling a policy, you can't use arrogance to fail to influence individuals over their financial resources. It exhibits grave disdain," Wachira said.