A new report reveals that rising taxes and the Affordable Housing Levy are squeezing disposable incomes, making it harder for many Kenyans to secure SACCO loans for home construction. Over 70 percent of potential borrowers earn Ksh100,000 or less monthly, exacerbating the financial strain. The findings highlight barriers to affordable housing under President William Ruto's administration.
A report commissioned by the SACCO Societies Regulatory Authority (SASRA), Kenya Mortgage Refinance Company (KMRC), and FSD Kenya has exposed how recent government policies are hindering Kenyans' access to affordable housing finance through SACCOs. Titled 'Leveraging SACCO Data and Research to Strengthen the Financing of the Affordable Housing Value Chain by the SACCO Sector,' the study, published on November 20, 2025, points to the Affordable Housing Levy, increased National Social Security Fund (NSSF) contributions, and new Social Health Insurance Fund (SHIF) deductions as key culprits eroding net incomes for salaried workers.
For instance, a SACCO member with a gross monthly income of Ksh200,000 faces deductions that reduce their eligible loan amount by approximately Ksh340,000 compared to April 2022. 'Rising statutory deductions and stagnant incomes are reducing borrower capacity and limiting the loan amounts that SACCO members can qualify for,' the report states. It further notes, 'The Affordable Housing Levy, increased NSSF contributions, and new SHIF deductions have significantly eroded net incomes for salaried workers.'
This financial squeeze forces many to compromise on home size or quality, delay homeownership, or risk breaching the one-third rule on payslips, potentially increasing non-performing loans. The report emphasizes that over 70 percent of borrowers seeking land and housing loans earn Ksh100,000 or less per month, where even minor income changes can exclude them from mortgages. 'The increased statutory deductions have a direct and negative correlation with a member’s ability to service a long-term mortgage,' it adds.
Additional barriers include high closing costs—legal fees, valuation charges, and property transfer fees—amounting to 9 to 10 percent of the loan value. As a result, many turn to general development loans with higher interest rates of 10–16 percent and shorter terms of 2–8 years, leading to gradual home building that formal mortgages do not support well. SACCOs, meanwhile, are compelled to issue long-term, low-interest mortgages, tying up capital.
To mitigate these issues, the report proposes a pre-financing or bridge facility to cover gaps between loan disbursement and KMRC refinancing. It also recommends redirecting part of the Affordable Housing Levy revenue to bolster SACCOs, recycling funds to ease capital shortages and enhance mortgage access.