Kenya Supreme Court: Hears New Challenge to Affordable Housing Act 2024

• Peter Okiro has filed a petition with the Supreme Court challenging the Affordable Housing Act, 2024.
• This challenge follows a September 2026 Court of Appeal ruling that upheld the housing levy's constitutionality.
• The Supreme Court has set procedural timelines, including a virtual mention on December 4, 2026, but has not suspended the levy.
• The housing levy requires employees and employers to each contribute 1.5% of gross monthly salary.
• The Affordable Housing Act, 2024, was enacted in March 2024 after an earlier version of the levy was declared unconstitutional in November 2023.

It is important to note that these initial directions from the Supreme Court do not pass judgment on the merits of the appeal itself, nor do they suspend the ongoing collection of the existing housing levy.

The Supreme Court of Kenya is set to hear a new legal challenge concerning the government's affordable housing program, reigniting discussions about the constitutionality of the 1.5 percent housing levy. This development follows a decision by the Court of Appeal which had previously affirmed the tax. Peter Okiro has initiated this latest legal action, filing a petition of appeal against the appellate court's judgment that upheld the Affordable Housing Act, 2024. This sets the stage for another significant round of litigation regarding the government's primary housing financing initiative.

In procedural directives issued on November 11, the Supreme Court instructed Okiro to ensure the petition was served to the respondents by the close of business on the same day. The respondents are then required to submit their responses within 14 days of receiving the service. Okiro will subsequently have a seven-day window to file a rejoinder, should it be deemed necessary. A virtual mention for further directions in this matter has been scheduled for December 4, 2026. It is important to note that these initial directions from the Supreme Court do not pass judgment on the merits of the appeal itself, nor do they suspend the ongoing collection of the existing housing levy. Instead, they outline the necessary procedural steps as the court prepares to thoroughly examine the dispute.

The Supreme Court proceedings stem from a judgment delivered by the Court of Appeal on September 25, 2026. In that instance, a five-judge panel dismissed 42 consolidated appeals that had challenged the Affordable Housing Act, 2024. The appellate court ultimately upheld the legislation, concluding that the housing levy represented a legitimate exercise of the government's powers of taxation and served a valid public purpose. The judges also specifically rejected arguments contending that the levy infringed upon property rights, even though it mandates employees to contribute to a housing scheme from which they might not directly benefit.

The Court of Appeal's determination explicitly stated that "Taxation enacted through Parliament for a clear public purpose does not violate private property rights." Furthermore, the court emphasized that "The Affordable Housing Act seeks to respond directly to the constitutional imperative of providing accessible and adequate housing to citizens." The appellate judges also found that the differing collection mechanisms applied to workers in the formal and informal sectors did not constitute unconstitutional discrimination, thereby dismissing concerns that salaried employees were being unfairly targeted. The government had previously defended the legislation by asserting that Parliament had met all constitutional requirements for public participation through extensive nationwide consultations, stakeholder hearings, and the submission of both written and oral memoranda.

The origins of this contentious legal battle trace back to November 2023, when the High Court initially declared the housing levy, which was then introduced under the Finance Act, 2023, unconstitutional. The High Court's ruling cited a lack of an adequate legal framework and discriminatory practices against salaried workers as key reasons for its decision. This judicial setback prompted the government to introduce the Affordable Housing Bill. This bill subsequently gained presidential assent on March 19, 2024, officially becoming the Affordable Housing Act, 2024.

The newly enacted legislation established a comprehensive statutory framework designed for the collection and administration of the housing levy. Despite this new framework, a fresh wave of constitutional petitions emerged, challenging the revised Act. These subsequent petitions were dismissed by the High Court in October 2024. The appeals that followed these dismissals eventually culminated in the September 2026 ruling by the appellate court, which is now the subject of the current Supreme Court challenge. Under the provisions of the housing levy framework, employees are required to contribute 1.5 percent of their gross monthly salary, with employers matching this contribution with an equivalent 1.5 percent. Non-salaried earners are also subject to a 1.5 percent contribution based on their gross income, in accordance with applicable statutory provisions. This levy serves as a critical financing mechanism for President William Ruto's ambitious affordable housing program, which aims to broaden access to housing while simultaneously stimulating construction activity, fostering employment, and attracting investment within the built environment.

Compliance officers must continue to ensure their organizations comply with the 1.5% housing levy as per the Affordable Housing Act, 2024, but should monitor the Supreme Court's proceedings for any developments that could alter their obligations or necessitate adjustments to payroll and financial planning. Lawyers advising clients on employment law, taxation, or constitutional matters in Kenya should be aware of this ongoing litigation as it could set significant precedents regarding government taxation powers and constitutional rights.

Source: Original reporting via local news.