Rogue agents run riot as rents go up

Property law with HAROLD AYODO

Some rogue estate agents are reaping from hapless house seekers in the wake of the New Year.

They are on the loose in Nairobi as tenants change houses for varied reasons, including increased rents by landlords.

The agents who eke a living out of ‘helping’ tenants get new houses have also taken advantage of the biting housing shortage to defraud tenants seeking cheaper houses.

For instance, house agents in South C are charging Sh5,000 for aiding a tenant shift to another house.

They also charge at least Sh2,500 as viewing fees — amount paid after being shown a vacant house — whether the tenant moves in or not.

Some are also somersaulting to the bank as some landlords have issued tenants with notices to increase rent by up to Sh2,000 monthly.

Up-market apartment tenants in Kilimani, Lavington, Riverside, Muthangari, Runda and Westlands are also battling increaments of between Sh10,000 and Sh15,000.

Majority of the affected tenants say landlords slapped them with increament notices last month arguing that the Treasury has cracked the whip on landlords who evade rental income tax.

The landlords argue that they have increased rent to ‘cushion’ themselves against the directive initially by former Finance Minister Njeru Githae to the Kenya Revenue Authority (KRA).

Two years ago, Githae ordered the implementation the existing law requiring all landlords to pay revenue of 30 per cent annual on rental income.

Consequently, some 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.

VIEWING FEES

A similar amount or slightly higher than the viewing fees is charged by the agent when he or she moves into the house.

Interestingly, the agents are even swindling landlords who pay them commissions for bringing tenants, not knowing that they have already pocketed secret profits.

Agents mainly have an edge in real estate because of their experience, network and contacts compared to property owners who spend hours in offices.

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.

The Law of Agency requires that agents disclose secret profits they would have made out of transactions just as principals reimburse them 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 or she spent to fuel the car before reimbursement.

According to 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. Estate agents should be registered with the Estate Agents Registration Board as well as the Institution of Surveyors of Kenya.

The registration should include details like 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 Kenya 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, homeowners should give tenants their reasons for increasing rent, which mainly is whether they have renovated their houses.

— The writer is an advocate of the High Court of Kenya