Home & Away
Landlords admitted that they have now resigned to fate as they join the nation in hoping for recovery from the crisis
Joe sells bootleg movies out of a stall on a building along Moi Avenue. Before the coronavirus pandemic hit the country, when Kenyans walked around without caution, he would easily sell about 200 movies, making enough cash to pay rent for the stall.
He could easily take care of his livelihood and even send something back home.
As the reality of Covid-19 settles and subsequent measures such as the government advisory on social distance and a curfew, he is lucky if he can sell 20 movies.
Previously, he used to close shop at 9pm but today, his hours have been disrupted following the curfew. He closes early, at 3pm to get a matatu back home on time.
He says making rent this coming few months will be hard, almost certain that he will default on his April rent. His landlord hasn’t communicated anything despite noting most businesses in the building have shut down.
Joe says the landlord should brace himself for massive defaults. “Honestly I can’t make the rent. This means it will be rolled over and I’ll be working to pay debts,” he said, adding that paying taxes to Nairobi County government will also be a tall order.
While Joe’s landlord appears to bury his head in the sand, delayed rent payment is something that he has to confront in the coming weeks.
It remains a tough period for landlords in the country as coronavirus scare continues to wreak havoc on incomes, hence eroding tenants’ ability to pay rent. So far, more than 60 people have been confirmed to have the virus.
So tough is the going for homeowners that several landlords’ associations in the country estimate that by June, the strain on rental yields will have hit between 60 and 70 per cent for the low-cost rents and between 10-30 per cent for the middle-income earners.
This as the impact of unpaid leaves or the slowdown in business for the self-employed hits home.
Different firms across sectors last month sent employees home, with the lucky ones being on paid leave. But for many who are engaged on a casual basis, this might mean several months of unemployment.
While sectors such as tourism, aviation and horticulture stand out as among the most affected, the impact of Covid-19 cuts across all sectors.
The overall impact will be high default rates on rental payments. This will further hurt property owners, many of them already living on the edge, going by a large number of defaults on loans advanced to property owners as well as the number of houses being put on auction.
Landlords who spoke to Home&Away admitted that they have now resigned to fate as they join the nation in hoping for recovery from the crisis - that a quick reprieve visits the country sooner.
The unique challenge in meeting rental obligations in some areas is cited to be premised in the barmaids and commercial sex workers legion that has been struck hard by bar closures and the national curfew - effectively locking them out of income.
According to Urban Tenants Association of Kenya Secretary General Ephraim Murigo, landlords will have to face reality that “it is not business as usual”. “The going is tough and as everyone is being called upon to belt up, landlords are not exempted,” he noted.
He says the strife on rental yields is premised on the closure of most economic avenues that earn tenants some income. The closure of major businesses and firms, he noted, has driven many workers into temporary poverty.
“It is in light of this that we as an association anticipate that the low-end housing units might suffer as high as 70 per cent rental defaults by May if the situation does not subside, with the mid-level rental segment suffering up to 30 per cent default by the same period,” Murigo preempts.
He says most jua kali sector work stations have been closed, with many low-cadre jobs in industries locked. Small Medium Enterprises (SMEs) have also been starved off workforce and markets.
“When this happens, both national and county gross produce suffers and the prevailing economic environment is that of poverty. At the social front, what Covid-19 scare has induced is panic. All these are serious economic forces that erode both investments and returns,” Murigo said.
He urged all landlords to “exercise patience, humaneness and be willing to make concessions that offer tenants a reprieve”.
Maragua MP Mary Wa Maua urged landlords to give tenants rental rebates.
“I propose that all tenants who can meet their rental obligations to pay up. Those who have genuinely suffered economic setbacks be given the rebates in form of rental reductions or total waivers for the period the country will remain under siege by this global scourge,” she says.
Wa Maua promised to moot a National Crisis Relations Bill-19 that provides legal guidelines on how the economic front should relate with the social front in times of a crisis. She says the proposals should compel all multinationals in the country to channel 100 per cent of their social corporate responsibility budgets to the crisis.
She said the proposed bill could require that all landlords who are subjected to land rate taxes be given a 100 per cent waiver to cushion them on rental strains while basic amenities like water, electricity and internet bills for their buildings be zero-rated.
Senate Majority Deputy Chief Whip Irungu Kang’ata says most Murang’a born landlords have since admitted that the going is tough and will offer a reprieve to their tenants.
“As Murang’a Senator who also is aware of the big share my native investors in major towns real estate enjoy, it is good news that so far, there are many who have since placed notices that they have halved or waived rents for the period running from March to May,” he said.
He urged the State to subsidise the real estate sector so that landlords can reciprocate by also extending rental subsidies to tenants in times of crisis.
Council of Governors Deputy Chair Mwangi Wa Iria told landlords at county levels to be lenient to their tenants.
“We as county governments will be interested parties in how relations between landlords and tenants play out during this difficult period. We will be interested to know what will be happening in all arbitration sittings involving rental defaulters. We must safeguard the vulnerable in such times of distress,” he said.
According to Nairobi Regional Coordinator Wilson Njenga, rental panic has been caused by the confirmation of Covid-19 in Nairobi, increasing panic among households.
Limited economic activities and restricted movements have also seen many urban families flock to villages where economic pressures are less, given low rental and dietary budgets.
“As a result, many families have either abandoned their rental homes and retreated to the countryside to get bigger space necessary in combating this scourge as well as give themselves economic reprieve,” he says.
Rift Valley Regional Coordinator George Natembeya told Home&Away that Kenyans are also contributing to rental flight owing to their tendencies to stigmatise others in a humanitarian crisis.
Both administrators called upon landlords to be sensitive to families facing restricted earning avenues and constrained budgets.
Mr Natembeya urged landlords to extend tenancy arbitration on rent defaulters to eight months instead of the usual three.
Last week, it emerged that more than 120,000 flower farm workers were last month sent home on paid leave owing to lack of market for flowers. The situation could change into a long unpaid leave if the situation remains.
Dozens of hotels have also suspended operations as occupancy levels plunge, leaving their staff idle. Some have indicated that it will be months before they reopen as it will take time to get bookings even after the world has been able to contain Covid-19.
And it is not just the tourist hotels but also the ordinary eateries that cannot sustain operations because of reduced human traffic.
With little travel locally and a total ban on flights to and from Kenya, the aviation industry is also bleeding.
The impact that coronavirus will have on the economy this year comes after 2019 that was also difficult for the economy and numerous companies saw their profit fall.
Additional reporting by Wainaina Wambu and Macharia Kamau [email protected]