The Government, through the tabled Landlord and Tenant Bill 2021 looks to take control of commercial and residential rents in order to protect tenants from the rising costs in the real estate sector.
According to the Bill, rent increase should not surpass the annual average inflation rate for the preceding year, meaning, if Parliament was to adopt the proposed law then rent increase for the year would be capped at the average 2020 inflation which stood at 5.2%.
In the recent years, the housing sector has been one of the fastest growing sectors, mostly from exorbitant, even prohibitive rent incomes. According to HassConsult for instance, the asking rent in Nairobi has increased threefold since 2007. Prior to the Bill, the economy has favoured economic liberalisation over price controls.
However, now the Government reckons there is a need to regulate rent as already a majority of Nairobi residents are moving away from city estates in favour of cheaper homes in the suburbs due to the rising cost of living and good infrastructure.
In order to not only favour the tenants, the Government has also given landlords a window to breach the new law if adopted. For instance, in the case of increases in rates to counties and state agencies or when one includes additional services such as internet, garbage collection or security. Also, if the owner of the house is to make upgrades then they will be allowed to increase the rent even above the cost of living. On the other hand, the Bill also provides for a decrease on rents when landlords withdraw some of these additional services.
If one is to breach the proposed rent regulations once they are adopted, then they will risk a fine of Sh20, 000 or an undisclosed period in jail. If the Bill is passed, owners will also be allowed to increase rent once a year for residential houses and once in two years for commercial premises.
