Kenyan Landlords to Increase Rent by 25% Should Finance Bill Pass

Kenya's real estate market is bracing for major changes as the Kenya Property Investors Association (KEPIA) raises alarms over an imminent rent crisis.

The association forecasts a staggering 25% surge in rental prices, a direct consequence of the heightened tax burdens introduced in the proposed Finance Bill 2024. KEPIA Secretary General Ephraim Murigu sounded the clarion call during a press briefing on Monday, voicing the concerns of landlords and property owners. The Finance Bill's provisions have cornered these stakeholders into a tight spot, leaving them with little recourse but to transfer the financial strain to tenants. The ripple effects of this increase are expected to impact residential tenants across various estates and entrepreneurs who have invested in retail spaces and commercial premises.

Murigu mentions that landlords are contemplating rent increments ranging from 15% to 25% which would further strain Kenyans already grappling with soaring prices of necessities. The backdrop of this development is a series of apartment blocks in Kilimani, Nairobi, where murmurs of discontent are growing louder. "My members, including landlords and corporate tenants, are lamenting over the current bill. They foresee no alternative but to implement a rent rise of 15%-25%," Murigu discloses.

Beyond KEPIA's membership, other property stakeholders have echoed similar sentiments, signalling an industry-wide consensus on rent escalation as a survival tactic in an increasingly hostile business climate. This situation is poised to worsen should the Finance Bill pass without amendments. Murigu further laments the prospect of vacant properties as Kenyans downsize or retreat to rural or less developed locales in search of affordability. This exodus could spell disaster for both the economy and property owners.

"Landlords are already in distress; about 60% are not collecting full rent. Vacancies abound in residential and commercial properties alike," he remarks.

This predicament is compounded by the spiralling cost of construction materials. KNBS data highlights a steady climb in construction costs since January. The price hike is palpable even in everyday items like paint which has surged from Sh2,400 to Ksh3,200. The contentious Finance Bill 2024 aims not only to raise existing taxes but also to introduce new ones. As Kenyans brace for its impact, all eyes turn to the National Assembly Finance Committee, which is slated to deliver its verdict on the bill following extensive public engagement.

Since its introduction in May, the bill has faced stiff opposition from citizens and leaders across the political divide who have implored the government to reconsider these tax impositions that only serve to deepen the financial woes of Kenyans.