Court Upholds Housing Levy As They Clear It For Implementation

The much-anticipated judgment on the Affordable Housing Act 2024 has delivered a significant victory for the Kenyan government, with a three-judge High Court bench dismissing petitions challenging the constitutionality of the housing levy. The bench, comprising Justices Ogla Sewe, John Chigiti, and Josephine Mong’are, ruled that the Affordable Housing Act, including its contentious levy provisions, is firmly within the bounds of the Constitution. This ruling signals a key development in the government’s push for affordable housing as a cornerstone of its development agenda.

One of the central issues in the consolidated petitions was the adequacy of public participation in the legislative process that led to the enactment of the Act. The petitioners argued that the law was rushed through Parliament without meaningful input from the public. However, the bench concluded that there had been sufficient public participation, noting that efforts were made to collect and incorporate the views of various stakeholders. This finding is significant because public participation is a critical constitutional requirement in Kenya, particularly for legislation with far-reaching socio-economic impacts.

Read Also: Top 8 Things You Must Know About The Affordable Housing Regulations Of 2024

The petitioners also claimed that the housing levy, which requires a deduction of 1.5% from employees’ gross salaries, matched by an equivalent contribution from employers, was discriminatory. They argued that it unfairly targeted salaried employees while leaving other segments of the population unaffected. However, the court rejected this argument, stating that the levy is not discriminatory since the Affordable Housing Act includes provisions for collecting similar contributions from non-salaried individuals, ensuring a broader and more equitable application of the law.

The ruling also upheld the constitutionality of the levy itself, with the bench finding that Section 4 of the Affordable Housing Act, which mandates the 1.5% deduction, does not violate any constitutional principles. In reaching this conclusion, the judges underscored the authority of Parliament to determine the structure, design, and administration of taxes, including the housing levy. This reaffirmation of Parliament’s role in shaping fiscal policy will likely have broader implications for other contested levies and taxes in Kenya.

Notably, the judges placed significant weight on the purpose and intent of the Act, arguing that the levy aligns with both national and international obligations to provide affordable housing. They pointed out that Kenya is a signatory to several international instruments, including the United Nations Sustainable Development Goals (SDGs), which prioritize affordable housing as a key development objective. The court’s decision thus framed the levy not merely as a tax but as part of a broader policy framework aimed at fulfilling Kenya’s international and constitutional commitments.

The timing of the remittance of the levy also came under scrutiny, with the petitioners challenging the constitutionality of the provision that requires deductions to be remitted to the housing fund by the 9th of each month. In their judgment, the judges ruled that this timeline is not unconstitutional, arguing that it provides clear guidelines to ensure timely contributions to the housing fund. They emphasized that such clarity is necessary to prevent delays in funding housing projects and to maintain the integrity of the program.

The petitioners’ argument that the Affordable Housing Act violates individual economic rights was also dismissed. The court ruled that the deductions, though mandatory, do not constitute an unconstitutional deprivation of property or earnings. Instead, the judges reasoned that the levy is a necessary means of achieving the larger societal good of affordable housing, which is enshrined in the Constitution as part of the right to adequate housing.

Read Also: David Mathu: Champion of Housing Innovation And Young African Business Leader

This judgment is a pivotal moment for the Affordable Housing Act, as it validates the government’s strategy to fund the ambitious housing project through a levy system. However, it also raises questions about the potential burden on employers and employees, especially in a challenging economic environment. While the levy is now deemed constitutional, it remains to be seen how businesses and workers will absorb the additional financial obligations. The government’s ability to effectively deploy the funds raised will be critical in maintaining public support for the program.

Despite the court’s ruling, the petitioners may still pursue further legal action, potentially escalating the matter to the Court of Appeal or even the Supreme Court. However, for now, the government’s victory in this case sets the stage for the full implementation of the housing levy, with deductions set to commence soon.

In the broader context of Kenyan governance, the ruling reflects the judiciary’s deference to Parliament on matters of taxation and fiscal policy. The decision also underscores the importance of adhering to constitutional processes such as public participation and the protection of socio-economic rights. As the housing levy begins to take effect, attention will now shift to the practical challenges of implementing the Affordable Housing Act and ensuring that the funds raised are used transparently and effectively to meet the housing needs of millions of Kenyans.

In conclusion, while the ruling represents a legal victory for the government, the success of the Affordable Housing Act will ultimately be judged by its ability to deliver on its promises. The court has cleared the legal hurdles, but the onus is now on the government to turn this legal win into tangible housing solutions for Kenyans. The ruling is a reminder that sound policy must not only pass legal tests but also resonate with the public and meet the practical needs of those it is designed to help. The coming months will be crucial in determining whether this ambitious housing program will live up to its potential.

Read Also: Ruto’s Housing Fund: A Sanctioned Crime Against Kenyans