Business

Focus on Bill as property sector roars back to life

Wednesday, May 11th, 2022 00:05 | By
Kenyan Parliament. PHOTO/Courtesy

Analysts are forecasting a strong real estate sector rebound this year following an impressive comeback in a sector that had been obstructed by inflationary pressures from Covid-19 hardship.

But the anticipated growth will largely centre on the passage of the Landlord and Tenant Bill 2021, according to estimates by industry tracker, HassConsult.

Latest findings from the real estate firm suggest that overall property sales prices recorded a 2.8 per cent increase in three months to March, an annual 6.8 per cent rise compared to a similar period last year. “It is still too early to say with certainty the impact of the proposed rent control laws, but investors are keeping tabs,” Sakina Hassanali, Head of Development Consulting and Research at HassConsult said.

Support consumers

Similar laws such as the 2016 Banking Act that aimed at controlling interest rates to support consumers had unintended consequences of reducing credit availability for the market,” she added. 

HassConsult attributed the growth to the rebounding economy and the ever-rising demand for detached houses in a period that also saw a flat or static growth in the inquiries for apartment housing units with Kenyans burdened by tough economic living. Apartment asking rents recorded a 2.2 per cent increase in the quarter under review lifting overall asking rents by 1 per cent, the firm said.

A detached home is a standalone, one-family residence, while a semi-detached house is one that is joined to another by a common wall that they share – but the market’s spine is mainly driven by rental apartments – a segment that is synonymous with middle-income earners.

Understandably, the apartment segment suffered as most companies either slashed their employees’ wages or rendered them jobless as Covid-19 reality cut their revenue bottom lines.

Going forward, the property market could benefit from State’s plans to promote stability in the rental sector by consolidating laws governing the relationship between landlords and tenants through the proposed Bill.

The Landlord and Tenant Bill 2021 (Bill) was introduced by the Majority Leader in the National Assembly Amos Kimunya last year and has since been passed by MPs and is awaiting Senate’s approval.

Besides breathing fresh air into the fraud-infested sector, the Bill is also proposing a repeal of existing laws including the Distress for Rent Act (DRA), the Rent Restriction Act (RRA) and the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act (LTA).

Residential premises

“The Bill applies to all residential premises other than certain excepted residential premises such as residential premises leased on serviced tenancies as well as residential premises whose monthly rent does not exceed such amount as will be prescribed by the Cabinet Secretary,” noted Amrit Soar, a Partner in the Real Estate and Finance Practice at DLA Piper Africa, Kenya (IKM Advocates).

Such a move could also benefit investors in the land market whose prices soared by 2.17 per cent in selected towns, according to HassConsult.

It picked Thika, Juja, Ruiru towns as some of the regions experiencing a sustained investor demand which was reflected in land asking prices increasing by 6.3 per cent, 4.6 per cent, and 1.6 per cent respectively.

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