In light of recent legal developments, Kenyans who contributed to the Affordable Housing Levy—introduced under the Finance Act 2023—may now be eligible for refunds. This blog outlines what you need to know about eligibility, refund procedures, and what lies ahead.
Background of the Housing Levy
In July 2023, the Kenyan government began deducting 1.5% of employees’ gross monthly salaries as an Affordable Housing Levy. Employers were required to match this amount, making the total monthly contribution 3%. These deductions were remitted to the Kenya Revenue Authority (KRA) and were intended to finance government-backed affordable housing projects.
However, the levy quickly drew criticism and legal challenges over its constitutionality, clarity, and implementation process.
Key Court Rulings
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November 2023: The High Court of Kenya ruled the housing levy unconstitutional, citing insufficient legal framework and lack of public participation.
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January–February 2024: The Court of Appeal upheld the High Court ruling and stopped further collections, prompting employers to begin refunding employees.
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February 2024: The Attorney General advised KRA to halt further deductions and remittances, including those made for January payrolls.
These decisions marked a major shift in statutory deductions and employer compliance across Kenya.
How Employers Responded
Following the ruling, many employers—including public universities and private companies—began issuing refunds. For instance, Jaramogi Oginga Odinga University refunded staff by the end of February 2024.
Employee unions like the Kenya Medical Practitioners, Pharmacists and Dentists Union (KMPDU) and the University Academic Staff Union (UASU) demanded immediate reimbursements and suggested refunds should include interest to account for the time value of money.
Who Is Eligible for a Refund?
You may be eligible for a refund if:
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You were formally employed in Kenya in January 2024.
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Your payslip shows a 1.5% housing levy deduction.
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Your employer had already remitted that amount to KRA before the court ruling was enforced.
Refunds are issued directly by employers, not KRA. Employees should follow up with their HR or payroll departments and keep payslips or payroll records as proof.
What About Refund Interest?
As of now, there is no official nationwide directive requiring employers to pay interest on refunded housing levy amounts. However, some unions and civil rights groups have argued that interest should be included. This may vary based on employer policies and ongoing legal interpretation.
Future of the Housing Levy
In 2024, the government reintroduced the housing levy under a revised Affordable Housing Act, designed to address previous constitutional gaps. The updated framework:
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Retains the 1.5% employee and employer contribution.
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Introduces a withdrawal clause: contributors who do not benefit from housing can request a refund after seven years, subject to tax.
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Clarifies administration and public participation requirements.
Notably, refunds for earlier (2023–Jan 2024) deductions remain under legal and administrative review, and may not be reissued under the new law.
What You Should Do Now
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Review your January 2024 payslip to confirm if the deduction was made.
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Contact your employer’s payroll or HR department to check refund status.
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Retain all documentation as proof of deduction.
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Monitor updates from KRA, Ministry of Lands, Public Works, Housing, or trusted legal sources for changes.
Stay Compliant with Expert Payroll Support
At FaidiHR, we support employers and employees across Kenya in navigating payroll law, statutory deductions, and legal compliance. Whether you’re adjusting payroll systems, issuing refunds, or preparing for future levy requirements—we can help.
Call: +254 702 339 699
Email: sales@faidihr.com
Let us help you manage refunds, automate compliance, and stay ahead of policy changes.