Kenya’s 1.5% Affordable Housing Levy explained for diaspora landlords

The 1.5% Affordable Housing Levy is one of the most widely discussed and least clearly understood tax items in Kenya right now. Diaspora landlords keep asking us three things: do I pay it on rental income, what does it actually fund, and does it give me anything in return. Here is the precise answer for each.

What the levy is

The Affordable Housing Levy was introduced under the Affordable Housing Act 2024 (replacing earlier Finance Act provisions that were challenged in court). It is a 1.5% deduction at source from gross income, matched by a further 1.5% from the employer for employed persons, with the proceeds ringfenced to fund the Affordable Housing Programme (AHP).

Who pays it

• Employed Kenyans. 1.5% from gross monthly salary, matched by 1.5% from the employer. Total 3% goes to the Housing Fund. Deducted at source by the employer, no separate filing.
• Self-employed Kenyans (in a payroll-equivalent situation). 1.5% on gross monthly income, remitted directly to the Kenya Revenue Authority by the 9th of the following month.
• Non-resident individuals earning Kenyan payroll income. Pay on the same basis as resident employees on the salary portion. The employer remits.

What the levy does not cover

This is where most of the diaspora confusion lives. The levy applies to gross income from employment or self-employment. It does not currently apply to:

• Rental income (covered by the 7.5% Monthly Rental Income tax up to the threshold; see our MRI tax piece for that)
• Capital gains from property sales (covered by 15% CGT)
• Investment income (interest, dividends)
• Pension and retirement income

For a typical diaspora landlord whose Kenyan income is purely rental, the housing levy does not apply to that rental income. You pay 7.5% MRI tax on the rent and that is the whole tax line on rent. The housing levy is a separate stream that captures payroll income.

The Affordable Housing Programme itself

The levy funds the construction of state-supported housing across the country. The official allocation target as of 2026 is 200,000 units over five years, across three tiers: social housing (target rent KES 1,000 to 5,000 per month, for households earning up to KES 20,000), affordable housing (target sale price KES 1m to 3m, for households earning KES 20,000 to 50,000) and affordable middle income (target KES 3m to 10m, for households up to KES 150,000 monthly).

Allocations are run through the Boma Yangu portal. Applicants register, the system runs a points-based allocation algorithm, and successful applicants proceed to payment plans (10% deposit, balance over 25 years through the Kenya Mortgage Refinance Company).

Can diaspora Kenyans benefit?

A common diaspora question. The current rules:

1. The AHP allocation prioritises residents who have contributed to the housing fund through the levy. Diaspora Kenyans without a Kenyan payroll income do not contribute and therefore do not earn allocation points.
2. Diaspora Kenyans can still apply through Boma Yangu and may be allocated, especially in lower demand zones, but the system is designed to favour contributors.
3. The AHP units are not aimed at the diaspora investment market in any case. The price points and target demographics are local-resident first. For diaspora investors looking at Nairobi investment property, the AHP is not the channel. Private market acquisition through property sourcing remains the route.

The indirect effects on the private market

Even if AHP is not directly available to diaspora investors, the programme is reshaping the Nairobi and broader Kenyan housing market in ways that affect private investors:

• Land prices in AHP corridors. Land adjacent to large planned AHP estates (Mukuru, Starehe, Park Road in Ngara, parts of Mlolongo) has seen demand pick up from private developers looking to position for spillover. Mixed effects so far, with some pockets seeing 10 to 20 percent price moves.
• Mid-market rental supply. AHP delivery, where it works, gradually adds supply at the lower end of the rental market. For diaspora investors holding entry-level rental property (USD 600 to 900 a month rents), this is a long-term supply tailwind to be aware of, though delivery timelines mean the impact is years out.
• The KMRC effect on mortgages. The Kenya Mortgage Refinance Company refinances banks’ long-term mortgage portfolios at lower cost, partly funded by the housing levy stream. Over time this is gradually pushing mortgage rates down for borrowers in the KMRC-eligible segment. Limited diaspora benefit today, possibly more in future as eligibility rules expand.

The 1.5% levy does not apply to your rent. The Affordable Housing Programme it funds is reshaping parts of the Kenyan market you should track, but it is not a channel for diaspora investment buying today.

How Goldstay handles it

We track the AHP rollout because it changes the long-run dynamics of certain Nairobi submarkets, especially eastlands and the southern corridor. For clients with Kenyan payroll income on top of rental income, we coordinate with our tax partners to keep the levy filings clean alongside the MRI filings.

Read the related pieces on the 7.5% MRI tax and Kenyan mortgage rates in 2026 for the linked tax and finance picture.