Real Estate Sector Raises Red Flag on Finance Bill 2025
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By John Kariuki
Kenya’s real estate sector has sounded the alarm over the Finance Bill 2025 and the National Rating Act 2024, warning that proposed tax reforms could derail affordable housing, cripple investor confidence, and hurt millions of livelihoods.
At a Nairobi press conference, the Association of Real Estate Stakeholders Kenya (RESA) urged Parliament to amend or suspend the proposed changes, calling them “draconian and counterproductive.”
Key concerns include:
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16% VAT reintroduction on construction materials, which were previously exempt under affordable housing policies, threatening to inflate building costs.
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A 0.3% annual national property tax on urban residential homes, on top of existing county land rates, which could push up rents by up to 25%.
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Scrapping of critical tax incentives for developers, including the 15% corporate tax rate for projects over 400 housing units and 100% investment deductions for Special Economic Zones and marginalized areas.
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A cap on tax loss carryforwards from indefinite to five years, risking long-term projects.
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Tighter VAT refund rules: reduced claim period, no input VAT offsets, and extended audit timelines that could squeeze developers’ cash flow.
RESA also criticized the National Rating Act 2024, which broadens county powers to define rateable property, mandates revaluations every five years, and allows property auctions in case of default. While it offers a dispute resolution mechanism, RESA fears increased compliance burdens and uncertainty.
“The housing sector is a major economic driver, contributing over 12% to GDP and supporting over two million jobs,” RESA said. “These proposals risk stifling investment and raising the cost of living.”
RESA called for urgent stakeholder consultations to strike a balance between revenue generation and economic sustainability.
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