By Harold Ayodo
Rogue estate agents are reaping fortunes from hapless house seekers as landlords increase rents with impunity.
?The bogus agents are taking advantage of the principle of supply and demand to defraud many tenants looking for cheaper housing.
?Other tenants — especially in middle and low income neighbourhoods — have been evicted so as to charge their successors higher rent.
?Majority of landlords in the expansive Eastlands have increased the monthly payments by between Sh2,000 and Sh5,000.
?And some tenants of apartments in Kilimani, Lavington, Riverside and Westlands are battling arbitrary increases of between Sh10,000 and Sh15,000. ?Some of the affected tenants say their homeowners served them with notices last month — a day after Treasury cracked the whip on landlords who evade rental income tax.
?Consequently, tenants who are battling harsh economic times and could not pay a penny more, opted to seek for cheaper houses, which increased their demand.
?On the flipside, errant landlords increased rent to ‘cushion’ themselves from the directive by Finance Minister Njeru Githae to the Kenya Revenue Authority (KRA).
?Githae ordered the taxman to implement the existing law requiring all landlords to pay revenue of 30 per cent annual rental income.
?Professional bodies like the Institution of Surveyors of Kenya (ISK) and lobby groups like Consumer Federation of Kenya have raised a red flag against landlords. ?
Therefore, estate agents who many rely on to look for houses in major urban areas have increased their ‘viewing’ fees from Sh1,500 per house to up to Sh3,000. A viewing fee is charged by estate agents after showing a house seeker a vacant house.
?A similar amount or slightly higher than the viewing fee is charged by the agent when he/she moves into the house. ?Interestingly, the agents are even swindling landlords who pay them commissions for bringing tenants, unknowing that they have already pocketed secret profits.
Agents mainly have an edge in real estate following their experience, network and contacts compared to property owners whose core business may not be in property. Legally, registered agents who make secret profits are in breach of their duties and obligations. They are not supposed to make secret profits from transactions on behalf of their principals – those who engage them on commission basis.
Accountability
? The Law of Agency requires that agents disclose secret profits they would have made out of transactions just as principals reimburse them on extra costs. For instance, the agent may have spent money out of his or her pocket to fuel the car he uses to show houses to would be tenants.
? However, the agent should show receipts of the amount he/she spent to fuel the car before reimbursement. ? According to the law, principals who discover that agents made secret profits out of their personal property are entitled to recover the amounts.
The property owners are empowered to cancel their agreements with the agents whether or not the secret profits had any effects on the transaction. ? Furthermore, the principals can move to court to recover the commissions they paid the rogue agents.
?Moreover, some agents who allegedly assist people to get houses are not registered estate agents in line with the law. Estate agents should be registered with the registrar and details should include the name, address and qualifications of the person.
The registered dealers must have certificates, which are valid for one year but can be renewed on payment of a fee. Names of registered estate agents must be published in the Gazette — the registrar should publish the same annually for the public.
Unregistered estate agents are liable for offences that draw fines of Sh20,000 or imprisonment of up to two years. And some landlords who have increased rents overnight are also on the wrong side of the law as lease/tenancy agreements stipulate the increases.For instance, many of the agreements have clauses that rent would be increasing by between five and ten per cent annually.
Moreover, home owners should give tenants their reasons for increasing rent, which mainly is they have renovated their houses.
The writer is an Advocate of the High Court of Kenya.
