Why Real Estate Bill 2023 is profoundly flawed
For some time now, I have been incredibly vocal on the need to regulate real estate developers in the country.
Real estate developers is a key contributor to our GDP to be left in the hands of anyone, everyone. Further, the unvarnished truth is that most Kenyans are patently gullible when it comes to real estate investment. It is therefore imperative to ensure that those practicing real estate development are genuine.
We must certainly regulate real estate developers, however, we must do it right. The proposed Real Estate Regulation Bill 2023 that is before the Senate is grossly flawed.
The Bill is in conflict with quite a number of already existing construction and real estate regulations, some that are too obvious to conflict. First, the Bill is proposing the establishment of Real Estate Board whose functions inter alia include to regulate real estate agents.
However, real estate agents are already being regulated under the Estate Agents Regulatory Board derived from the Estate Agents Act. This board defines an Estate Agent as any individual involved in selling and renting out buildings and land. Real estate agents falls within the lines of this definition and do not need to be regulated again by a new board.
Bill is too blind to the existing defect liability regulations in the construction industry. The known and established buildings defects liability period in the construction and real estate sector is six (6) months from the date of an architect’s certificate of practical completion. Erroneously, this Bill introduces a five (5) years defects liability period.
It states under Section 41, subsection 4: “In case of any structural defect or any other defect in workmanship, quality or provision of services or any other obligations of the developer as per the agreement for sale relating to such development is brought to the notice of the developer within a period of five years by the purchaser from the date of handing over possession, it shall be the duty of the developer to rectify such defects without further charge, within thirty days.”
This is shocking! Even more laughable is the omission of Quantity Surveyor in certification of work done before withdrawal of payments by a developer. Bill is gravely silent on the critical role of a Quantity Surveyor in this process. It instead refers to prefer this certification be done by an engineer, architect and chartered accountant.
Bill as well, consciously or not, proposes the stalling of real estate developments. How would you call the proposed burden that any alterations cannot be done in a development without the previous written consent of at least two-thirds of the purchasers? If you understand the life cycle of a construction project, then you will appreciate that changes are bound to happen.
It is foolhardy and counterproductive to lay such a heavy approval burden requirement on such inevitable changes. There’s this misplaced proposal in the Bill that when a project is done in phases, each phase shall be considered a separate real estate project. How is this possible when the other statutory approvals consider the project as one? There is only one title, county, NEMA and NCA approvals.
How would this board consider the project as separate? May be to make more money from registration. Lastly, I have a profusion of issues on the pro-posed board composition. A real estate board that doesn’t have representation from the built environment professionals is a waste of tax payer’s money.
How do you leave out the people responsible for designing and supervising the real estate developments? This is an irreducible minimum.
Bill is impulsive and not well conceived. However noble the intention is, it cannot see the light of day, and in fact it should not see any light in its current status.
The drafters must recall it so that it can go through thorough laundry cleaning.
— The writer is a construction manager