President William Ruto and Cotu Secretary General Francis Atwoli have reached a deal to restrict the use of the Affordable Housing Levy, with funds now to be used strictly for housing projects and related infrastructure.

Atwoli, who met the President at State House on Wednesday alongside Cotu Assistant Secretary General Ernest Nadome, said the government agreed to suspend all market construction projects financed through the levy and to refund any funds already spent back into the housing fund.

He described the meeting as having produced “critical commitments” to protect the interests of workers.

“We appreciate the government’s commitment to protecting the interests of Kenyan workers, particularly regarding the use and administration of the Affordable Housing Levy,” Atwoli said.

The agreement provides that levy funds will be used solely for physical and social infrastructure within affordable housing projects. Exceptions will only apply where facilities like schools cannot be built within a housing development but serve the same objective.

“In exceptional circumstances... support may be extended to a nearby facility, but only if it serves the fund’s primary objective,” Atwoli said.

In what Cotu called a major win for salaried workers, the government will now prioritise salaried employees—who contribute most to the levy—in the allocation of housing units, excluding social housing beneficiaries. “Salaried workers will now automatically be considered for housing units,” said Atwoli.

Additionally, the down payment for house allocations has been halved from 10 percent to 5 percent of the unit's cost, easing access to home ownership for workers.

To address earlier concerns over misused funds, a new special committee will be formed under the Affordable Housing Board to oversee recovery and reallocation of money spent on non-housing projects such as markets. “The committee will oversee the recovery and reallocation of funds spent on market construction back into the housing programme,” Atwoli added.

Cotu had opposed the diversion of levy funds for the construction of markets, schools, hospitals, and toilets, accusing the government of sidelining the union from the drafting of related regulations. “As Cotu, we are clear and unequivocal that there was no consultation,” Atwoli said.

Principal Secretary for Housing Charles Hinga had earlier defended the use of levy funds for supportive infrastructure, insisting Cotu was part of the regulatory process. “Affordable housing is not just about putting up homes. It’s about creating complete environments where people can live, work, and thrive,” said Hinga.

But Cotu challenged Hinga to provide evidence. “If indeed PS Hinga claims that Cotu was involved, we challenge him to produce any written resolutions, minutes, or official correspondence from Cotu’s Executive Board endorsing the drafting or content of the current regulations,” said Atwoli.

Cotu welcomed the outcome of Wednesday’s meeting, calling it a transparent and constructive engagement and reaffirmed its commitment to ensuring that workers’ contributions are used only for their intended purpose under the housing programme.