President William Ruto announced yesterday that he will not assent to the Finance Bill 2024. This decision brings a welcome reprieve to Kenya’s real estate sector, which had been bracing for substantial changes under the proposed legislation.
The Finance Bill 2024 included several provisions aimed at boosting revenue through increased taxes and duties on various goods and services. For the real estate sector, this meant facing new excise duties on imported building materials, potential restrictions on affordable housing resale, and stringent corporate tax requirements for developers.
President Ruto, addressing the nation, acknowledged the public’s concerns and emphasized the government’s commitment to fostering an environment that supports economic growth and development without overburdening citizens.
The decision not to sign the bill provides immediate relief to the real estate industry. Key provisions that will not take effect include:
Excise Duties on Building Materials: The proposed 3.0% excise duty on imported building materials such as wooden furniture and parts of furniture will not be implemented. This move is expected to keep construction costs lower, encouraging continued investment in new housing projects.
Corporate Tax Incentives: Real estate developers constructing at least 400 residential units annually will continue to enjoy the current corporate tax rates without the additional restrictions proposed in the bill. The current corporate tax rate for developers in Kenya is generally 30%. However, for companies constructing at least 100 affordable housing units annually, there is a reduced rate of 15% as an incentive to boost the supply of affordable housing.
Affordable Housing Regulations: Restrictions on the resale of affordable housing units and the associated tax implications will not be enforced, providing greater flexibility for homeowners and developers.
Real Estate analysts also predict that this decision will have a stabilizing effect on the real estate market, potentially leading to increased investment and development activity.
President Ruto has called for a revised approach to the Finance Bill, urging lawmakers and industry stakeholders to work together to draft a more balanced version that addresses revenue needs without hampering key sectors.
As the government revisits the Finance Bill, the real estate sector remains cautiously optimistic, hoping for a legislative framework that promotes growth, investment, and housing affordability.
