The Court of Appeal has upheld the Affordable Housing Act, 2024 as constitutional, dismissing 42 consolidated petitions that had sought to have the law, and the 1.5 per cent Housing Levy it created, struck down entirely.
A five-judge bench comprising Justices Wanjiru Karanja, Patrick Kiage, Aggrey Muchelule, William Korir and George Odunga delivered the ruling in Nairobi on Friday, September 25, 2026, finding no merit in the appeal and upholding the High Court’s earlier determination on most of the issues raised by the petitioners.
The judges declined to award costs, citing the public interest nature of the litigation. On the question of who collects the levy, the court upheld the appointment of the Commissioner General of the Kenya Revenue Authority as the collector, relying on the KRA Act’s provisions designating the Authority as the government’s agent for collecting and receiving revenue.
“We have considered the submissions made, and we agree with the respondents that since section 5 of the Kenya Revenue Authority Act as amended provides that the Kenya Revenue Authority is an agent of the government for purposes of the collection and receipt of all revenue and section 11 of the said Act,” the judgment reads.
The court rejected arguments that the legislative process behind the Act fell short of constitutional standards, agreeing with the earlier High Court finding that public participation had met the required threshold and that the levy did not unlawfully discriminate against salaried workers.
Judges specifically dismissed claims that the levy unfairly singles out formal-sector employees, and rejected a separate argument that housing falls exclusively within the mandate of county governments, ruling instead that it is a shared function between national and county government.
The bench also upheld Section 60 of the Act, which applies the law retrospectively to money collected under an earlier, since invalidated version of the levy, finding that petitioners had failed to demonstrate that retrospective application impaired any contractual obligation, stripped away an existing right, or otherwise breached a constitutional prohibition. As a result, appeals seeking refunds of those earlier deductions failed.
- KRA launches crackdown on Housing Levy defaulters
- High Court declares housing levy unconstitutional
- State cracks down on hustlers over unpaid housing levy
Even so, the bench was not uncritical of how the law came into being. The judges faulted the process used to enact it, finding that the Commission on Revenue Allocation (CRA) should have been given the opportunity to review the Bill and make recommendations before it was debated and passed by Parliament, a procedural finding that did not, however, go so far as to invalidate the Act itself.
The court separately addressed the use of public land for housing projects under the scheme, ruling that any such allocation requires prior approval from the National Land Commission (NLC).
Friday’s ruling delivers a decisive legal win for President William Ruto’s flagship housing programme, which has faced sustained opposition since its introduction from trade unions, civil society organisations and individual petitioners who argued the levy amounted to an unconstitutional tax imposed without adequate public participation.
The Kenya National Union of Teachers (KNUT) and the Kenya Medical Practitioners, Pharmacists and Dentists Union (KMPDU) had previously threatened industrial action over the deductions, arguing they eroded workers’ disposable income at a time of high inflation and multiple existing statutory deductions.
The judgment also comes with an important legal history lesson attached: the levy currently being deducted from salaries is not the same legal framework that courts struck down back in 2023, when the High Court had declared sections of the Finance Act, 2023 establishing an earlier version of the levy unconstitutional, prompting Parliament to pass the standalone Affordable Housing Act, 2024 specifically to cure those defects.
Under the current framework, both employers and employees are required to remit 1.5 per cent of an employee’s gross salary each, bringing the total contribution to 3 per cent of pay, a requirement that applies to anyone on a Kenyan payroll, including foreign staff.
The National Treasury expects to collect approximately $849 million (roughly Sh110 billion) through the levy in the year to June 2027. Lawmakers have separately flagged that 176 housing projects, about 15 per cent of ongoing construction under the programme, remained stalled as of June this year.
The ruling landed just moments after the same court dismissed a separate appeal by Busia Senator Okiya Omtatah challenging the construction of affordable housing units on county and ministry land, with the court finding that adequate public participation had taken place in that instance as well.
Appellant Magare Gikenyi, a surgeon among those who brought the case, told Bloomberg he intends to take the matter further, to the Supreme Court, Kenya’s final court of appeal, meaning the legal battle over the Housing Levy may not yet be entirely over even as the government secures its most significant court victory on the programme to date.
Email your news TIPS to Editor@nairobilawmonthly.com, and to advertise with us, call +254715061658 anytime of the day
