The Landlord and Tenant Bill 2021 (the “Bill”) that is before the National Assembly aims to, among others:
- regulate the relationship between landlords and tenants in order to promote stability in the rental sector;
- consolidate the laws (the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act Chapter 301 of the Laws of Kenya (“Cap 301”), the Rent Restriction Act (Chapter 296 of the Laws of Kenya (“Cap 296”) and the Distress for Rent Act Chapter 293 of the Laws of Kenya (“Cap 293”)) governing the renting of business and residential premises; and
- establish tribunals and provide for the adjudication of disputes.
The Bill, should it be passed into law, will repeal Caps 293, 296 and 301.
Key features of the Bill include:
Establishment of new tribunals
The Bill, seeks to establish rent tribunals (the “Tribunal”) which applies to both residential and business premises. The Tribunal is to be established by the Chief Justice by way of a notice in the Kenya Gazette.
The Tribunal will have jurisdiction in the areas as the Chief Justice may consider necessary.
Currently, the appointment of the tribunals is in the ambit of the Cabinet Secretary.
The jurisdiction of the Tribunal shall to determine disputes between landlords and tenants.
The Bill applies to controlled tenancies as defined under Caps 293,296 and 301, only that it does not expressly refer to them as “controlled” but rather, adopts their definition from the said Acts.
The Tribunal shall determine any dispute within a period of 3 months from the date the dispute is lodged. Parties aggrieved by the decision of the Tribunal may appeal to the High court.
Due process to be observed before increasing Rent
This marks the first attempt by the State to regulate rent in an economy that has resisted price controls in favour of economic liberalization.
A landlord shall not increase rent payable without at least issuing the tenant with 90 days’ notice of intention to do so. The Bill has proposed a prescribed form of notice whereby the landlord must specify intention to increase the rent and the new rent. If the Landlord fails to issue the tenant with such a notice, any attempt to increase rent will be void.
A landlord can only increase rent where they undertake to carry out capital expenditure, provide a new or additional service or having taken account of inflationary rates in the economy. Additionally, where the land rates have increased or have become payable since letting the premises. The Bill defines specific instances for usage of the capital expenditure and determinants of the inflationary rates. A tenant shall be deemed to agree to the increase in rent where they do not oppose it within thirty (30) days of receiving the notice.
It is noteworthy that Landlords will only be able to increase rent if at least 12 months have passed after commencement of tenancy agreement in the case of a residential property and 24 months after the commencement of a tenancy agreement in the case of a business property.
Parties to a tenancy will therefore be required to have regard to the foregoing rent escalation timelines and considerations when addressing the effective date of rent escalation under a tenancy agreement.
Termination of Tenancy agreements
If the Bill is enacted in to law, a landlord will be able to terminate a tenancy without any notice where a tenant defaults on rent payment for a period of 3 months or sublets the property without giving notice to the landlord or on expiry of the tenancy period.
A tenant may terminate a tenancy by issuing the landlord with a notice of one (1) month in the case of residential property and two (2) months with regards to business property.
Death of a Tenant or Dissolution of a Company
Upon the death of a tenant, the tenancy shall automatically determine within 60 days where there are no other tenants residing in the premises.
The same 60 days’ determination period shall apply to the tenancy of a limited liability company that is dissolved.
Assignment of Tenancy
According to the Bill, a tenant will be able to, with the consent of the Landlord, assign the premises to another tenant. The Bill anticipates that the landlord shall not unreasonably refuse such a request to assign the premises by the tenant for the remainder of the tenancy.
Notably, if the premises is assigned to another person, the tenancy agreement will continue under the same terms and the new tenant will be liable to the landlord for any breach of the tenancy obligations.
Mandatory Obligation For The Landlord To Keep Record of Payment of Rent
Bill obligates the landlord to keep rent records in respect of the rented premises. A copy of the record which has to be provided to the tenant must contain the following:
- Details of the parties to the tenancy
- Particulars of the rented premises
- Payable rent
- Record of all payments of rent made
The record will be required to be signed by the landlord or his/her own agent.
Failure to keep such a record will result in the landlord committing an offence and upon conviction will result to a fine not exceeding one month’s rent of the premises.
Tribunal’s permission to be sought prior to denying services to tenants in arrears , To cure the numerous incidences of landlords who have deprived the tenants of essential services such as water, light, conservancy or sweeper especially when rent is due, the Bill requires the landlord to seek permission from the Tribunal before causing such deprivation on the tenant. In contravention of this proposed law, the landlord will face a fine up to no more than Kshs, 10,000.00 or imprisonment not exceeding 6 months or both upon conviction.
Due Process to be regarded before exercising Distress for Rent.
The Bill does not necessary involve the Tribunal in the process of levying distress, but states instead that due process should be regarded by the landlord in exercising the right.
The Bill does not however elaborate on what amounts to due process.
Mandatory requirement for the Landlord to obtain an Order from the Tribunal prior to the Eviction of a Tenant. In order to evict a tenant, the Bill has proposed conditions to be met by the landlord. It makes it mandatory for the landlord to make an application to the Tribunal seeking an eviction order. In the event an eviction order is granted by the Tribunal, it shall expire six (6) months from its issue date.
A landlord who evicts a tenant without the authority of the tribunal commits an offence and is liable to upon conviction to a fine not two months of rent or imprisonment not exceeding 6 months or both.
The consolidation of these statutes promises an efficient, convenient and easy administration of tenancies in Kenya. Moreover, the Rent Tribunals established therein will operate in consonance of terms stipulated in respective statutes, a departure from the current minor differences elucidated in those established under each mentioned statute. The relationship between tenants and landlords is expected to be more orderly, should the Bill be passed into Law.
There is still ample opportunity to incorporate additional amendments to the Bill that will reflect the realities of landlord and tenant relationships and disputes.