These are difficulty times for many folks in urban centres, especially tenants. The landlords have taken to increasing rent at whim forcing tenants to perpetually be on the move, writes Harold Ayodo
Peep Peep. A Short Text Message (SMS) from her landlord showed on her phone. In a blink of a eye it announced the increase of her rent from Sh60,000 to Sh75,000 per month in Lavington, Nairobi. Bang! Just like that!
Diana Njeri says the message from the apartment owner got her perplexed.
“I signed a tenancy agreement with the landlord in January that rent would be Sh60,000 monthly until December,” Njeri says.
But in a dramatic turn of events, her landlord sent her the SMS on a Sunday morning informing her that the rent would increase by Sh10,000 over unavoidable circumstances.
“I tried to reason with him (landlord) but he stood his ground that the rent would be Sh70,000 from September 1,” Njeri says. Consequently, Njeri moved out to a cheaper apartment in the nearby Kilimani estate after a written agreement with her former landlord.
“We agreed to revoke the contract and I move out as the increased rent was not manageable,” she says.
Njeri now lives in a two bed-roomed apartment off Ngong road paying rent ofSh40,000 per month.
Shifting residence
For Aggrey Kinyanjui and his wife Millicent, moving from Riverside Drive to South C, South B or Buru Buru is their next option. ?“The landlady hiked the rent of our apartment from Sh55,000 per month to Sh68,000 from July 1, which is beyond us,” Kinyanjui says.
According to Kinyanjui, the increased rent eats well into their budget on basics and necessities like food and fuel.
“We have resolved to shift to a cheaper house in Nairobi West, South B, South C or, if it comes to the worst then Buru Buru,” Kinyanjui says.
Even as the couple shops for a cheaper house, their other concern is how the rental increase has unsettled them. ?“We work in Westlands while our children are at St Mary’s School…shifting will force us to spend more time in traffic,” Kinyanjui argues.
The couple is not alone as many other families are criss-crossing Nairobi with household goods in lorries in search of cheaper houses.
Across highway
“We moved from South C to Buru Buru on August 1 after the landlord increased rent from Sh25,000 per month to Sh35,000,” says Purity Wambua.
Their concern now is getting accustomed to waking up earlier to battle traffic along Jogoo Road and Mombasa Road.
“The children go to school at Makini off Ngong Road and I work on Uhuru Highway, which are both nearer to South C,” Wambua argues.
These are the changing fortunes of many a tenant.
Majority of the affected tenants say their landlords attributed their increase of rent by over ten per cent to actions by the Kenya Revenue Authority (KRA).
To refresh memories, the taxman announced three months ago that the revenue body would step up vigilance for landlords to pay rental income tax at 30 per cent annually.
Hence, landlords resolved to increase monthly payments in a bid to cushion themselves from the cracked whip. According to KRA Commissioner General John Njiraini, landlords who have not been paying tax must clear their arrears before the law catches up with them.
Unfortunately to tenants, their changing fortunes can only shift to top gear if recent developments are anything to go by.
Clamp down
For instance, landlords will continue increasing rent as Njiraini tightens the noose around their necks.
“Landlords who have not been paying rental income tax will have to pay all the arrears or risk a jail term or hefty fines,” Njiraini insists.
The Commissioner General says the taxman has engaged government agencies and banks to collect data on property ownership to net defaulters.
“There is no power to forgive taxes…outstanding taxes must be paid,” Njiraini said in response to a request by landlords for waiver of arrears and penalties. “Pay taxes and seek waivers from the Finance minister, who is the only one with powers to waiver penalties on unpaid taxes,” Njiraini says.
The City Council of Nairobi has also joined the fight to net wayward developers who never pay land rates.
City Hall recently kicked off a campaign dubbed “Operation Clamp Down: Jiokoe Sasa” on land rate defaulters. The campaign encourages payment of arrears on land rates by offering waivers on penalties before auctioning property of defaulters.
“It will be the most thorough and conclusive operation ever executed by the council,” Nairobi Town Clerk Roba Duba recently remarked.
As a result, tenants are bearing the brunt as defaulting landlords seek money to pay up before the August 21 deadline set by City Hall.
“We shall institute legal proceedings to repossess and auction the property of owners who owe us on expiry of the waiver period,” Duba says.
Bottling banks
Another reason that has kept tenants in Nairobi on intense house searching missions and incessant increase of rent by landlords is the high lending rates. Since the Central Bank of Kenya (CBK) recently reduced the benchmark-lending rate, commercial banks cut down theirs by a paltry 1.5 per cent.
Inevitably, the high interest rates regime has slowed down vibrant growth of the lucrative real estate sub sector.
According to latest figures by the Kenya National Bureau of Statistics, activity in the construction sub sector has reduced by more than half in recent months. The figures show that growth has plunged to a paltry 3.2 per cent from seven per cent over the same period last year.
Growth in real estate has also slowed down to 2.6 per cent compared to 5.6 per cent in 2011 as developers shun borrowing.
According to Hass Consult property development manager Farhana Hassanali-Hashmani, rental increases may not end soon. In reference to a recent survey on house price indices, Hassanali-Hashmani says apartments have since witnessed the steepest hike in rent.
“Apartment rents have risen by 10.33 per cent since September last year and by 8.1 per cent since January,” Hassanali-Hashmani explains.
The steep monthly payments could perhaps explain the exodus of tenants from high-end apartments and the many ‘To-Let’ notices in the upmarket areas. Hassanali-Hashmani says that high interest rates resulted in poor mortgage uptake meaning prospective homeowners continue staying in rental houses.
Tenancy laws
Therefore, there is an escalation in rental levels, which have risen to an average of 7.7 per cent over the past year.
Hassanali-Hashmani explains that the annual rental increase was been heavily concentrated in the first half of the year with an overall rise of 6.6 per cent since January.
According to lawyer Desma Nungo, many tenants are victims of increased rent following loopholes in tenancy laws. For instance, the Rent Restriction Act mainly controls monthly payments for tenants who pay less than Sh2,500 per month.
“It restricts the increase of rent, right to possession…and for fixing standard rents,” Nungo says.
The Advocate of the High Court of Kenya explains that the law has no express restrictions on increase of rent to tenants who pay over Sh2,500 per month. However, majority of tenants pay rent of over Sh2,500 per month, which works to the advantage of ‘greedy’ landlords.
Sound agreement
For such unregulated tenancies, it is legally arguable that when there is a tenancy agreement, it constitutes a contractual binding relationship.
“Before expiration of such tenancy agreements, a landlord ought not to increase rent unless expressly provided for in the tenancy or lease agreement,” Nungo says.
In the event of such increment contrary to lease or tenancy agreement, there should be legal action for breach of contract.
“Landlords have mastered the art of calculatingly increasing rent after determination of their previous tenancy or lease agreements,” Nungo says.
She says that house owners always have an upper bargaining power and may even adopt a “take or leave” attitude.
“Many desperate tenants fall into traps set by landlords and continue to cough up hiked rents mainly out of desperation,” she says.
Nungo regrets that a law that would have saved many tenants from the jaws of ‘greedy’ landlords has not seen the light of day.
“The Landlord and Tenant Bill (2007) consolidated all laws regulating relationships between tenants and landlords,” she says.
Nungo explains that the Bill essentially had provisions on regulating and restricting rent and circumstances when the monthly payments would be hiked.
“The Bill never saw the light of day continuous exploitation of unregulated rents is the order of the day and landlords are taking advantage,” Nungo maintains.
But in a ray of hope, Housing minister Soita Shitanda recently assured Kenyans that the Landlord and Tenant Bill is still on the process of becoming law.
Shitanda said the Bill was yet to be discussed by Cabinet before undergoing other legal procedures to become an Act of Parliament.
According to the Bill, landlords, especially within urban areas, will be forced to get a permit from relevant authorities before they hike house rent.
“The Bill is aimed at cushioning Kenyans from exploitation by property owners,” Shitanda said while commissioning a housing project in Komarock, Nairobi.
