Landlords faced with higher financing costs have gradually sought to increase their rents, as would be tenants hold their ground with a lower bid price, leaving lots of houses vacant in Nairobi, writes ALLAN OLINGO
In March 2008, Eddy Mulinge signed his lease contract indicating that his Sh8,500 one bedroom apartment rent in Umoja was to increase by 10 per cent after two years (read 2010) and then yearly after that.
By March this year, he received a notice that his rent starting March would be Sh12,500 for the same house, yet no improvements had been done on the house. He opted to move out. Interestingly, ever since he moved out, the landlord capped the vacant house and three others at Sh12,500. Up to date they have been vacant.
This is the scenario that is playing out in most neighbourhoods with landlords increasing their rents as old tenants move out. A spot check by the Home and Away team reveals that it is now easier to go house hunting as compared to before, because chances are that you will find more houses within the shortest time possible but the catch comes in their asking rental prices. The hardest hit areas serve middle income earners with Ongata Rongai, Dagoretti, Madaraka, Lang’ata and most of the Eastlands’ estates in Nairobi. They are hit by rental increase. In Muimara, next to Imara Daima, a two bedroom apartment goes for about Sh28,000. If the house is standalone expect to cough about Sh35,000. There are plenty of vacant houses and landlords painstakingly watch and wait for tenants that are nowhere to be seen.
To some it might seem like a case of greedy landlords but there is more that underpins this predicament that many Nairobi landlords find themselves in.
According to the Property Price index report released by Hassconsult last week, the asking prices for all rents rose by 2.2 per cent in just 12 weeks, taking the rise over the last year to 7.7 per cent.
“However, that annual increase has been heavily concentrated in the first half of 2012. Since the beginning of January, overall rents have risen by 6.6 per cent,” read the report.
According to Farhana Hassanali, Property Development Director at HassConsult, the rises have been greatest for tenants in apartments, who have seen their rents rise by an average 10.33 per cent since the hikes began to take hold at the end of September last year.
“The rents have risen in the last nine months at ten times the rate they were rising in the two years from September 2009 to September last year,” said Hassanali.
central bank intervention
Hassanali says that they foresee continuing rises in rents, which may take some years to return to stability owing to a possible construction slowdown at a time when the demand remains relatively high.