President William Ruto has unveiled plans to eliminate taxes on building materials used in the Affordable Housing project, an initiative aimed at making housing more accessible for Kenyan citizens. Speaking at the launch of a housing construction project in Mombasa County on November 3, 2023, President Ruto addressed the burden of taxes, particularly Value Added Tax (VAT), which has driven up the cost of home construction.
The removal of these taxes is part of President Ruto’s broader housing agenda, with the goal of reducing the overall cost of houses and making homeownership more affordable for Kenyans. This move is expected to have a significant impact on the housing market and provide opportunities for more people to own homes.
President Ruto emphasized that the elimination of these taxes would be a central component of the Affordable Housing Financing plan, which will be officially published by the Ministry of Lands in the coming weeks. This plan is designed to lay out the financial framework for affordable housing, ensuring that more Kenyans can realize their dream of owning a home.
While President Ruto is focused on reducing taxes for building materials, he also expressed a commitment to promoting local production. He noted that taxes on imported household materials and items would remain in place. This decision aligns with the government’s efforts to boost domestic production and reduce reliance on imports.
President Ruto stated, “I am going to remove taxes on all building materials used in affordable housing so that they can be accessed at a cheap price. We have agreed that we cannot continue to import the materials. That is why we have placed taxes on imported furniture.” This move highlights the government’s strategy to encourage the use of locally sourced building materials.
In addition to tax relief, the Affordable Housing Financing plan will also provide guidelines for mortgage rates tailored to different income groups within Kenya. Under this plan, homes in the social housing category, targeting low-income earners, will come with an affordable interest rate of 3 percent. Middle-class Kenyans will have access to housing at a 6 percent interest rate, while upper-class citizens can expect a 9 percent rate.
President Ruto further confirmed that the Cabinet had already approved this plan, underscoring the government’s commitment to delivering affordable housing solutions to its citizens. He stated, “We have the opportunity in our lifetime to change and transform Kenya through the affordable housing program.”
The Kenyan government aims to construct a substantial 200,000 houses annually, reflecting a robust commitment to addressing the housing needs of the country. With tax relief on building materials and a clear financial framework, the path to affordable housing becomes more attainable for many Kenyan families.
