NAIROBI, Kenya, Nov 12 – The government’s affordable housing programme is facing a fresh legal challenge at the Supreme Court, reopening the debate over the constitutionality of the 1.5 per cent housing levy after the Court of Appeal upheld the tax.
Peter Okiro has filed a petition of appeal challenging the appellate court’s decision that upheld the Affordable Housing Act, 2024, setting the stage for another round of litigation over the government’s flagship housing financing programme.
In directions issued on November 11, the Supreme Court ordered Okiro to serve the petition on the respondents by close of business on the same day, with the respondents required to file their responses within 14 days of service.
Okiro will then have seven days to file a rejoinder, if necessary. The matter is scheduled for a virtual mention on December 4, 2026, for further directions.
The directions do not determine the merits of the appeal or suspend the existing housing levy. They set out the next procedural steps as the court prepares to consider the dispute.
The Supreme Court proceedings follow a September 25, 2026 Court of Appeal judgment in which a five-judge bench dismissed 42 consolidated appeals challenging the Affordable Housing Act, 2024.
The appellate court upheld the legislation, finding that the levy was a lawful exercise of the government’s taxation powers and that its collection served a legitimate public purpose.
The judges also rejected arguments that the levy violated property rights because it required employees to contribute towards a housing programme from which they might not directly benefit.
“Taxation enacted through Parliament for a clear public purpose does not violate private property rights,” said the court in its determination.
“The Affordable Housing Act seeks to respond directly to the constitutional imperative of providing accessible and adequate housing to citizens.”
The court further found that different collection mechanisms for formal and informal sector workers did not amount to unconstitutional discrimination, dismissing concerns that salaried employees were being unfairly targeted.
The government had defended the legislation, arguing that Parliament had fulfilled constitutional requirements on public participation through nationwide consultations, stakeholder hearings and the submission of written and oral memoranda.
The dispute has its origins in November 2023, when the High Court declared the housing levy introduced under the Finance Act, 2023 unconstitutional, partly because it lacked an adequate legal framework and discriminated against salaried workers.
The ruling prompted the government to introduce the Affordable Housing Bill, which subsequently became the Affordable Housing Act, 2024, after presidential assent on March 19, 2024.
The new legislation established a statutory framework for collecting and administering the levy, leading to a fresh set of constitutional petitions that were dismissed by the High Court in October 2024. The subsequent appeals culminated in the September 2026 appellate ruling.
Under the housing levy framework, employees contribute 1.5 per cent of their gross monthly salary, matched by an equivalent 1.5 per cent contribution from their employers.
Non-salaried earners are also subject to a 1.5 per cent contribution on gross income, subject to the applicable statutory provisions.
The levy is a central financing mechanism for President William Ruto’s affordable housing programme, which seeks to expand access to housing while supporting construction activity, employment and investment in the built environment.
However, the fresh appeal introduces another layer of legal uncertainty for a programme whose financing model depends on continued statutory deductions from workers and employers.
The December 4 mention will provide an opportunity for the Supreme Court to issue further directions on the handling of the appeal. No determination on the substantive constitutional questions has yet been made in the proceedings initiated by Okiro.
