For a financier or developer, it is a huge relief once you complete the project. One cannot wait to start enjoying a return on investment - either through rent payment or the sale of the project.
However, this is not always the case. While sometimes the housing bubble may burst and deny you the profits, if you manage to sell and rent out, you may still encounter problems.
You may also end up with a tenant or two who refuses to pay or are not in a position to pay.
However, despite the milestones in Kenya’s real estate sector, the industry remains a tough terrain for developers, financiers, landlords and property managers to navigate.
Just recently, a 31-year-old was taken to court for falsifying mobile money messages as proof of rent for 37 months.
And no matter how structured your property management system is, dealing with the rogue tenant or one who doesn’t remit his or her dues on time is a tough calling.
Severally, landlords have been bashed whenever they lock out tenants for not paying rent. Washington Agutu, the man in charge of the asset management division at National Housing Corporation (NHC) terms the bashing as unfair.
During the recent affordable housing conference organised by Kenya Mortgage Refinance Company (KMRC), developers called for a policy change and increased use of technology by property managers.
Agutu called for the empowerment of landlords to have the leeway to vet their own tenants and choose who to admit and who not to.
Within the legal framework, he says, the law seems to favour tenants more than investors.
Article 43(1)(b) of the Constitution states that every person has the right to accessible and adequate housing and reasonable standards of sanitation. Denial of such, hence, means a tenant can sue the landlord for their right.
Such is the reason why some landlords go to the extent of removing roofs or bringing down doors to ‘force’ tenants to pay up.
In December last year, reports emerged of a landlord in Kitengela who locked up two children following the delay in the payment of two months’ rent arrears.
One of the children was aged eight and is said to be physically challenged.
Mr Agutu, while admitting to the challenges landlords face in collecting rent called for increased use of technology-aided solutions.
He says within the legal framework, NHC technical personnel are working on a technology that allows access by swiping of cards, a common practice in high-end accommodation facilities. “If you do not pay they will disable you at the other end,” he said.
He says it is time developers’ designed or developed smart houses that will facilitate easy property management in the future.
Such will eliminate the need for landlords to hire goons to evict someone due to nonpayment of rent. “That is why we are talking to our technical team to start thinking of smart houses where I can disable your smart key without bringing in the police,” he said.
While this technology is seen as a way of managing property, particularly rent payment, he says it will resonate well with the young population.
The challenge on how to deal with non-payment of rent is one the government is also dealing with. The trouble with rent payment extends as well to the heart of the government with government housing.
As Cassius Kasienya, director of Estates in the State Department of Urban Housing says, rent collection from the 77,000 houses his department manages is below the Sh125 million expected every month.
He says there is a dedicated account held with the Central Bank of Kenya where the rent is supposed to be deposited monthly once deducted but has faced fluctuations.
While some civil servants payslips show the money has been deducted, it is not reflected in the account due to lack of automation. “We hope that if we can automate our system, we can track and find out where the leakages and discrepancies’ arise from,” he said.
In some bizarre cases, some individuals have even obtained titles for the housing units and so they refuse to pay rent. In such a case, he says, the best one can do is take them to court. “And that means you are losing potential revenue. This has happened over the years,” he said.
Agutu said it becomes a challenge to evict a tenant following a ruling from the Supreme Court that a tenant cannot be evicted by ex parte court orders. “By the time you are through the court cases, you cannot evict the tenant,” he said.
He called for a review of the judicial orders that protect the tenant and leave out investors. “You will need to consider the kind of tenant you bring on board,” said Agutu.
This vetting process, he says resembles what banks do before they lend money to a customer.
It is simply a due process key in securing one’s investment. However, in affordable housing, the provision is that they have to cater for all kinds of people hence lack of leeway.
“We also need to select the kind of tenants we put in our houses. If we do not do that, we create a problem from day one and you cannot evict them,” he said.