Career advice · Updated October 2026

Housing Allowance in Kenya: When It Is Owed, How Much and the 15% Rule

Many payslips in Kenya show a “house allowance” line, while others show a single consolidated salary. Some workers get nothing for rent at all. Whether that is lawful depends on section 31 of the Employment Act, 2007 and, for lower-paid workers, on the wage orders. This guide explains when housing allowance in Kenya is owed, how much the minimum is, how it differs from the Housing Levy, and how to claim it if it was never paid.

The rule in section 31

Section 31(1) says an employer shall at all times, at its own expense, either:

1. provide reasonable housing accommodation for each employee at or near the place of work; or
2. pay the employee a sufficient sum as rent, in addition to wages or salary, to enable the employee to get reasonable accommodation.

So the default position is that housing is the employer’s cost. An employer cannot simply ignore it.

The two exceptions: consolidated pay and CBAs

Section 31(2) says the duty does not apply where the contract of service:

• contains a term that consolidates into the basic wage or salary an element meant for rent or housing; or
• is covered by a collective agreement that provides for such consolidation.

Section 31(3) also lets the Cabinet Secretary, on the National Labour Board’s recommendation, exclude a category of employees by notice in the Gazette.

The consolidation exception is the one that matters most in practice. A contract that says “your gross monthly salary of KSh 60,000 is consolidated and includes housing allowance” meets section 31(2)(a). A contract that just states a salary, with no mention of housing, does not clearly do so. Courts read the contract, so check yours. Our employment contract guide explains the written particulars your employer must give you under sections 9 and 10, including pay.

The 15% rule for minimum-wage workers

For workers covered by the Regulation of Wages (General) Order, paragraph 4 is specific:

“An employee on a monthly contract who is not provided with free housing accommodation by his employer shall, in addition to the basic minimum wage prescribed … be paid housing allowance equal to fifteen per cent of his basic minimum wage.”

The current schedule, substituted by Legal Notice 108 of 2026 with effect from 1 May 2026, says its monthly rates are exclusive of housing allowance. Its daily and hourly rates are inclusive of it. For a general labourer, cleaner, gardener or house servant, that gives:

Two points follow. First, a monthly-paid worker in that category in Nairobi who is not housed is underpaid if total pay is below KSh 20,754.51, even if the payslip shows the basic minimum. Second, daily and hourly-rated workers should not expect a separate housing line, because the allowance is already in their rate. Rates differ for other occupations; our minimum wage guide lists them.

Housing allowance vs the Housing Levy

These two are often confused, but they move money in opposite directions:

• Housing allowance is money your employer pays you, so you can rent somewhere.
• The Affordable Housing Levy is a statutory deduction: 1.5% of your gross pay, matched by 1.5% from the employer, paid to the government’s affordable housing fund.

The levy does not replace the allowance, and paying the levy does not satisfy section 31. Our guide to NSSF, SHIF and the Housing Levy covers the deduction in detail.

Is housing allowance taxed?

Yes. A cash housing allowance is part of your gross pay. PAYE, SHIF, NSSF and the Housing Levy are all calculated on gross pay, so a higher allowance raises your deductions as well as your income. Enter your total gross in the net salary calculator to see the effect, or use the PAYE calculator for the tax alone.

Where the employer provides a house instead of cash, the tax treatment follows KRA’s rules on housing benefits, which are separate from section 31. Ask payroll how it is reported on your P9.

Housing allowance and your final dues

Because “basic salary” in section 2 of the Act means gross salary excluding allowances, the difference matters when a job ends:

• Payments tied to “basic” pay, such as service pay under some contracts, may exclude housing allowance.
• Notice pay and compensation for unfair termination are usually based on gross pay, including allowances. Section 49(1)(c) refers to the “gross monthly wage or salary”.

If housing allowance was never paid when it should have been, unpaid arrears can be claimed alongside other dues. Our service pay guide and the terminal dues calculator help you add it up.

How to check whether you are owed housing allowance

1. Read your contract. Does it say your salary is consolidated and includes housing? If so, section 31(2)(a) probably applies and no separate allowance is due.
2. Check your payslip. Is there a house allowance line? If not, and the contract is silent, ask HR in writing how section 31 is being met.
3. Check the minimum. If you earn near the minimum wage on a monthly contract and are not housed, compare your total pay with the basic minimum plus 15%.
4. Check for a CBA. If you are a union member, the collective agreement may set a specific housing rate.
5. Raise it in writing. Keep the request and the reply.

How to claim unpaid housing allowance

If talking to your employer does not work, section 86 lets you complain to a labour officer or file a claim at the Employment and Labour Relations Court. Under section 89, claims generally must be filed within three years, or within 12 months after a continuing injury ends. Since unpaid housing allowance tends to be a monthly, continuing shortfall, act sooner rather than later. Our guide on how to file a case at the ELRC or labour office explains the process step by step.

For rent budgeting, Business Radar’s guide to PAYE bands and the Housing Levy table shows how your net pay is worked out.

Key takeaways

• Section 31 requires employers to house employees or pay a sufficient rent allowance on top of wages.
• The duty does not apply where the contract or a CBA consolidates housing into the basic pay.
• For minimum-wage workers on monthly contracts who are not housed, the wage order requires 15% of the basic minimum wage as housing allowance.
• LN 108 of 2026 monthly rates exclude housing allowance; daily and hourly rates include it.
• The Housing Levy is a deduction, not a substitute for housing allowance.

Read our plain-English guide to the Employment Act for the rest of your rights, or browse jobs in Kenya with clear pay.

Frequently asked questions

Latest jobs in Kenya

• Nurse · Scanlab Kenya
• Sales Developer 100% Remote (Energy Solutions) · Solvo Global
• Project Manager Intern · BURN
• Customer Operations Officer - Insurance · M-KOPA Solar
• Senior Technical Manager, Nature Markets · Conservation International
• HR & People Operations Officer · a Reputable Company

See all open jobs in Kenya →