How To Opt Out of the Housing Development Levy

June 7, 2023

Kenyans will have the option of opting out of the contentious Affordable Housing project by the government should the Finance Bill be passed into law.

The government plans to deduct a three percent levy from workers’ pay slips every month plus a similar contribution from employers towards the social housing project.

Housing and Urban Development Principal Secretary Charles Hinga notes that it will only be possible to sign out of the plan after seven years.

“If the Finance Bill 2023 is passed in its present form, one will be allowed to opt out of the Housing Development Fund contribution after seven years,” he said.

PS Hinga outlined four ways through which one can exit the Housing Development Fund contribution.

These are:

  1. Transferring one’s contributions to their registered retirement scheme, which is regulated by the Retirement Benefits Authority.
  2. Transferring the contributions to an individual who is registered and eligible for affordable housing under the National Housing Development Fund.
  3. Transferring the contributions to a spouse or dependents.
  4. Opting for a cash payout, in which case the amount withdrawn will be subject to taxation.

PS Hinga also explained that should an individual opt out, they would only be able to access their own contributions.

“Should one opt out after seven years (before attaining the retirement age), they will access only their contribution as an employee. The employer’s matching contribution will be retained in the fund and made available only after another 7 years (14 years in total),” he said.

The PS added: “Should one’s retirement age precede their seven years contributing to the fund, they will be allowed to access both their contribution and that of the employer upon exit.”

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