How Kenya’s Affordable Housing Program is Shaping 2025: Progress, Challenges, and Opportunities

Kenya’s Affordable Housing Program (AHP), a cornerstone of the government’s Bottom-Up Economic Transformation Agenda, continues to reshape the nation’s real estate landscape in 2025. Launched to address the chronic housing deficit—estimated at 2 million units, with an annual demand of 250,000 homes—the program aims to deliver 200,000 units yearly, targeting 1 million homes over five years. With urban centers like Nairobi and Mombasa grappling with a 61% informal settlement rate, the AHP is a bold step toward fulfilling Article 43(1)(b) of Kenya’s Constitution, which guarantees every citizen the right to accessible and adequate housing. As of mid-2025, significant strides have been made, but challenges persist, and new opportunities are emerging for homebuyers, investors, and developers. This article explores the program’s progress, hurdles, and potential to transform Kenya’s housing sector.

Challenges: Hurdles to Overcome

Despite its progress, the AHP faces significant obstacles that threaten its ambitious targets. The 2017–2022 Big Four Agenda delivered only 13,529 units—less than 3% of the 500,000-unit goal—highlighting persistent challenges. Key issues in 2025 include:

1. High Costs and Funding Gaps: Land and construction costs remain prohibitive, with design, materials, and labor accounting for 50–70% of development expenses. The proposed removal of VAT exemptions on building materials in the Finance Bill 2025 could further inflate costs, slowing delivery. Inadequate financing and limited access to affordable mortgages, particularly for low-income earners, continue to hinder uptake. For instance, the 12.5% deposit required for house allocation via lottery remains out of reach for many.
2. Legal and Bureaucratic Delays: Legal disputes have delayed projects, with occupancy timelines for 4,888 units shifting from December 2024 to later in 2025 due to issues like lift installations. The 1.5% housing levy, deducted from salaried workers’ gross earnings since July 2023, faced court challenges for being “discriminatory and unconstitutional,” though the Affordable Housing Act of 2024 addressed some concerns. Bureaucracy in project approvals and fund absorption—much of the levy is invested in Treasury papers—further stalls progress.
3. Displacement and Community Resistance: Mass evictions in areas like Lang’ata, Huruma, and Eldoret’s Pioneer estate have sparked public outcry. Over 800 families in Eldoret were displaced without promised KSh 10,000 compensation, raising fears of exclusion from new units. Cultural and religious concerns, such as the loss of sacred grounds, have also fueled resistance, complicating implementation.
4. Low Public Engagement and Awareness: Despite the Boma Yangu portal’s transparency, many Kenyans remain unaware of application processes or struggle to save for deposits. Only 17% of housing supply targets low- to lower-middle-income groups, who make up 74.4% of the workforce, highlighting a mismatch between supply and demand.
5. Contractor Issues: A controversial KSh 2.2 billion contract awarded to a financially unstable company in Loitoktok, Kajiado County, in January 2025 raised concerns about transparency and competence. The company’s tax disputes and unpaid debts underscore governance challenges within the program.

Opportunities: A Path Forward

The AHP’s challenges are not insurmountable, and 2025 presents several opportunities to enhance its impact:

1. Innovative Building Technologies: Adopting alternative, cost-effective materials and industrialized construction methods could reduce costs by up to 30%. Companies producing sustainable materials are already active in Kenya, and scaling these solutions could make homes more affordable. For example, the Mukuru project’s bedsitters, built at KSh 600,000 (~$4,700), demonstrate thoughtful, compact designs that maximize space.
2. Strengthening PPPs and Financing: Expanding capital market access, such as reducing minimum investments in Real Estate Investment Trusts (REITs), could attract private developers and reduce reliance on bank loans. The KMGT’s credit guarantee scheme for non-salaried workers is a game-changer, potentially unlocking homeownership for Kenya’s 88% of formally employed workers earning less than KSh 100,000 monthly.
3. Urban Infrastructure Investment: Increasing the supply of serviced land through investments in physical and social infrastructure (roads, water, electricity) could lower development costs. Projects like the Nairobi Expressway and Western Bypass create opportunities for satellite towns like Athi River, where demand for housing is rising by 15–67%.
4. Community Engagement and Transparency: Enhancing awareness through campaigns and simplifying the Boma Yangu application process can boost participation. Addressing displacement concerns with fair compensation and community relocation plans, as seen in Mukuru’s approach to moving informal settlements together, could mitigate resistance.
5. Diaspora and Investor Opportunities: The Kenyan diaspora, a key real estate investor group, can leverage the AHP’s transparency and incentives like stamp duty waivers. Virtual tours and online listings on platforms like MakaoBora.com can attract these buyers, while fractional ownership models could make investment more accessible to young professionals.

The Road Ahead

Kenya’s Affordable Housing Program is at a pivotal moment in 2025. With 140,000 units completed and ambitious targets ahead, the initiative has laid a foundation for transformative change. However, overcoming high costs, legal hurdles, and community concerns requires sustained collaboration between the government, private sector, and communities. By embracing innovative technologies, expanding financing, and prioritizing transparency, the AHP can bridge the housing gap and empower millions of Kenyans to own decent homes.For homebuyers and investors, now is the time to engage. Visit MakaoBora.com for the latest listings, virtual tours, and expert advice on navigating Kenya’s evolving real estate market. Join our WhatsApp community for updates on affordable housing opportunities, and let’s build a future where every Kenyan has a place to call home.

Have thoughts on the Affordable Housing Program? Share them in the comments below or contact us at MakaoBora.com!

Sources:

• BuyRentKenya, 2025
• HUDUSER, 2025
• Cytonn Investments, 2023
• Mwakilishi.com, 2025
• KIPPRA, 2024
• Kenya Permanent Mission to UN-Habitat
• Bowmans, 2024
• TripleOKLaw, 2024