Finance Bill threatens housing, jobs and Investment, warns lobby

Treasury CS John Mbadi before the Senate's Finance Committee to deliberate on matters of 2025 Budget Policy Statement and also to Consider the Public Finance Management (Amendment) Bill (National Assembly Bills No. 45 of 2025 ) at County Hall, Parliament, Nairobi. March 18th, 2025. (Elvis Ogina, Standard)

Real estate stakeholders have raised concerns over the Finance Bill, 2025 and the National Rating Act, 2024, saying they could choke investment, drive up housing costs, and destabilise an already fragile property sector.

Speaking during a press briefing in Nairobi yesterday, the Treasurer of the Real Estate Stakeholders Association (RESA) Peter Gitau said the proposals in the Bill and the newly enacted Act represent a policy shock that could derail affordable housing efforts and hurt ordinary Kenyans.

The National Rating Act of 2024, assented into law on December 4, 2024, replaces previous legislation concerning property valuation and rating.

"These measures, if passed without significant amendments, will make it more expensive to build, buy, or rent a home. The ripple effects will hit everyone-from developers and contractors to families struggling to find decent housing," he said.

RESA expressed concerns that the two legislative instruments will not only burden property owners with new taxes but also damage investor confidence and slow down capital inflows.

"What we are seeing is a dangerous layering of taxes and compliance obligations that will ultimately hurt the economy. Private capital is already under pressure, and these changes will only push it further away," said Gitau.

The Finance Bill proposes applying standard 16 per cent VAT on previously exempt construction inputs, including materials used in affordable housing. According to Gitau, this could drastically increase the price of homes.

The bill proposes shortening VAT refund timelines and eliminating the ability to offset overpaid taxes. A proposed 0.3 per cent annual property tax on urban residential homes, the lobby argues, will amount to double taxation, as it comes on top of existing county land rates.

RESA says this could trigger rent hikes of up to 25 per cent, and the repeal of investment deductions and preferential corporate tax rates is likely to discourage large-scale projects.