Kenyan court quashes law allowing home buying with pension savings

The Kenyan government’s plan to accelerate its affordable housing agenda has suffered a setback in court after a judge quashed a law that allows members of retirement schemes to use a portion of their savings to purchase residential houses.

The court also stopped the implementation or enforcement of the amendments introduced to the Retirement Benefits Act No. 3 of 1997, which allowed the retirement benefits industry to help fill the housing gap.

Justice Anthony Ndung’u found that the amendment to the law was achieved through an irregular and flawed parliamentary process because MPs failed to allow public participation in the enactment process.

The amendment was introduced through the Tax Laws Amendment Act 2020, which came into effect on April 25, 2020, and the objective was to cure the large housing gap.

Boost home ownership

The Kenyan government’s aim in amending the law was to boost home ownership and lift the sluggish property market by enabling members of retirement schemes to purchase and own homes using their savings.


Changes to pension laws were also meant to make it easier for individuals to buy their first homes given that most Kenyan households are unable to raise the minimum house purchase deposit or afford the typical monthly mortgage payments.

To bring the amended law into force, former Treasury Cabinet Secretary Ukur Yatani published the Retirement Benefits (Mortgage Loans) (Amendment) Regulations, 2020 showing the rules and limits for accessing pension savings for home purchase. The regulations were published on September 14, 2020.

Pensioners were allowed to use up to Sh7 million ($57,000) or a maximum of 40 percent of their retirement savings to buy a home from an institution or real estate investors.

An institution was defined in the regulations to include banks, mortgage or financial institutions, building societies, microfinance institutions, the National Housing Corporation, institutions approved by the Retirement Benefits Authority or any other entity offering a residential house for sale.

Source:  The East African

Leave a Reply

Your email address will not be published. Required fields are marked *

News Subscription

Subscribe to our newsletter