A breakdown of 2025/2026 finance bill in relation to real estate
Written by: Erick Ochieng Edited by: Linet Kanario
On 12th June 2025, Hon. FCPA John Mbadi, Cabinet Secretary for the National Treasury and Economic Planning, presented the much-anticipated Finance Bill 2025/26 to Parliament. Framed under the theme “Stimulating Sustainable Economic Recovery for Improved Livelihoods, Job Creation, and Business and Industrial Prosperity,” the Bill outlines a series of proposals aligned with the government’s broader economic agenda. So, what implications might this have for Kenya’s real estate sector? Whether you are a developer, homeowner, or property investor, this blog unpacks the key highlights to help you understand what is at stake and what to watch out for. Let’s get into it.
Key Housing Measures
One of the key emphases in the document is the government’s intention to facilitating the construction of decent, safe and affordable houses for Kenyans. This aims at increasing home ownership to meet the ever-rising housing demand as well as reducing informal settlement in the country. Below are the proposed policies.
Affordable Housing Program
A notable key initiative is a proposal by treasury to allocate Ksh 128.3 billion for the Housing, Urban Development and Public Works sub sectors. This includes:
- Ksh 13.4 billion under the Kenya Urban Programme (KenUP).
- Ksh 64.5 billion for construction of Affordable Housing Units.
- Ksh 10.5 billion for construction of Social Housing Units.
- and Ksh 5 billion for social and physical infrastructure.
- Ksh 7.2 billion for the Kenya Informal Settlement Improvement Project Phase II.
Institutional Housing:
- Ksh 3.5 billion for the construction of Housing Units for the National Police and Kenya Prison.
- Ksh 500 million for Building Climate Resilience of the Urban Poor Programme (BCRUP).
- Ksh 454 million targeted to support construction of County Headquarters
Construction Industry Support
- Ksh 6 billion for the Regulation and Development of the Construction Industry.
Tax Measures Impacting Real Estate
Tax incentives for Investors
To bolster Kenya’s status as a regional financial hub, the National Treasury has proposed amendments to the Income Tax Act targeting companies certified by the Nairobi International Financial Centre Authority. Under the proposed changes, companies that invest new capital of at least Ksh 3 billion within three years will benefit from a reduced corporate tax rate of 15% for the first 10 years and 20% for the following 10 years. Additionally, certified start-up companies will enjoy a 15% tax rate for their first three years of operation and 20% for the subsequent four years.
Mortgage Interest Relief Expansion
The bill proposes extending mortgage interest tax relief to cover mortgages taken for construction of residential houses (previously only covered purchases or improvements).
Public Private Partnerships Framework
The proposal intends to reinforce the role of Public-Private Partnerships (PPPs) as a key mechanism for financing Kenya’s development priorities. As per records from the National Treasury, there are currently 32 PPP projects at different implementation stages, expected to attract approximately Ksh 70 billion in private investment for the 2025/26 financial year. These projects span critical sectors which include real estate and housing.
To promote greater transparency and accountability throughout the project lifecycle, a recent government Circular introduced mandatory disclosure requirements for all Privately Initiated Proposals (PIPs). This move aims to enhance the integrity of the PPP framework and foster increased public confidence in private sector involvement in national development.
Analysis of Potential Impact
If fully rolled out, the 2025/26 Finance Bill could be a game-changer for Kenya’s real estate sector but as always, the real test lies in implementation. Assuming it is implemented, developers and investors stand to benefit from the government’s commitment to affordable housing, with allocations directed toward direct investment and enabling infrastructure, while aspiring homeowners would gain from the proposed expansion of mortgage interest relief to cover construction loans.
Large-scale developers could also benefit from clearer investment pathways and reduced bureaucratic hurdles, thanks to the revamped Public-Private Partnership (PPP) framework, which aims to enhance transparency and structure in project delivery. In addition, the proposed Implementation Trust Fund promises to unlock new financing channels for real estate ventures, offering much-needed capital for ambitious housing and urban development projects.
Foreign investors also could benefit significantly from the tax incentives proposed under the NIFCA certification, which aims to attract long-term capital into the sector. If executed, the policy offers reduced corporate tax rates for qualifying firms, which could attract increased direct foreign investment into the country particularly in large-scale, mixed-use, and sustainable housing projects.
In short, the concern is not whether the proposed bill is great or not. The key question lies in the implementation of these policies.
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