National Housing Development Fund deductions will be refunded back in full to contributors who reach retirement age without receiving houses.
Housing Cabinet Secretary James Macharia says, the government will go on with the deductions after consultations with all relevant stakeholders as it seeks to raise cash to finance construction of housing units to bridge the current deficit.
Kenya has a 2 million housing units deficit, with the government embarking on an ambitious housing project that will see the construction of at least one million houses within four years across the country at a cost of Ksh2.3 trillion.
To raise capital for the project, the government proposed a one percent monthly deduction from employees to be channeled to the national housing fund, a proposal that was heavily criticized.
However, Housing CS James Macharia says the deductions will go on as planned after an agreement was reached with stakeholders to refund deductions to employees who retire before benefitting.
Large real estate developers will also be required to set aside, 20 percent of their land for social housing as a way of diversifying the real estate sector.
The government has also proposed further tax cuts for real estate developers to attract more investments into the sector.
Macharia says counties have allocated land for the housing project that is soon set to start with building 2,000 housing units.