The Landlord and Tenant Bill 2021 dated 12th February 2021 (“the Bill”) is sponsored by Majority Leader Amos Kimunya and is currently undergoing review in Parliament. The Bill seeks to consolidate all the laws on residential and commercial tenancies and to ensure regulation of the rental sector in Kenya.
The main objectives of the Bill are:
- To repeal the Distress for Rent Act, the Rent Restriction Act, and the Landlord and Tenant (Shops, Hotels, and Catering Establishments) Act;
- to consolidate the laws relating to renting of business and residential premises; and
- to introduce a legal framework which balances the interests of landlords and tenants aimed at promoting the sustainable growth of the rental sector in Kenya.
We have discussed the salient features of the Bill below.
- B. OVERVIEW OF THE BILL
- Scope of Application of the Bill
If passed, the Bill will apply to:
- tenancies of all residential premises except the following:
- excepted residential premises;
- residential premises let on service tenancies, that is, premises let by a landlord to an employer who provides the same premises to an employee in connection with their employment; and
- residential premises whose monthly rent does not exceed the amount prescribed by the Cabinet Secretary.
tenancies of business premises that meet the following conditions:
- Not in writing;
- In writing but have an express provision allowing for the tenancies to be terminated before the end of 5 years for reasons other than breach of covenants in the tenancies.
- Establishment of Regulatory Tribunals
The Bill gives the Chief Justice power to establish related tribunals with mandates and jurisdiction over prescribed areas including:
- resolution of disputes amongst landlords and tenants;
- authority to determine, assess, and apportion rent and service charge payable;
- making orders that are incidental to the rights and obligations of landlords and tenants such as ordering a landlord to repair premises, reinstate a wrongfully evicted tenant, etc;
- power to investigate complaints from landlords or tenants or in the tribunals’ own motion.
The decisions of the tribunals are binding on the parties and failure to act on their orders amounts to an offence punishable by a fine not more than Kshs. 100,000/= or to imprisonment for a term not more than 12 months, or both.
3. General Provisions
The following crucial provisions in the Bill are worth highlighting:
- a. Rent Increase and Decrease
The Bill recognizes that rent payable in tenancies is a matter determined by mutual agreement by the parties. However, where parties fail to agree on the rent payable, the tribunals established under the Bill can determine the fair rent payable.
The Bill also seeks to regulate any increase or decrease of the rent payable in tenancies. Rent can only be increased after 12 months for residential premises and 24 months for business premises. This is from the commencement of tenancy or from the date of the last increase in rent under the same tenancy.
The increase has to be justified and should be based only on capital expenditure incurred, increase in land rates of the property or the inflation rates in the country’s economy.
Further, for an increase of rent to be valid, the landlord has to serve a 90-day notice to the tenant of the intention to increase rent. Failure to serve the notice will render the increase ineffective. The tenant has a right to object to the notice given by the landlord within 30 days or it will be deemed an acceptance of the increase in the rent payable.
The Bill also mandates landlords to decrease rent payable proportionally if they cease to provide a given service with respect to the tenancy.
- b. Termination of Tenancies
The Bill provides that either party may terminate the tenancy. A valid notice of termination of tenancy issued by either party must comply with the requirements set out in the Bill. Landlords are required to give tenants at least 24-months’ notice of termination for business premises and 12-months’ notice for residential premises where they intend to terminate the leases, before expiry of the lease term, for reasons other than breach of covenant by the tenants. Where the tenants are in breach of a covenant, and that forms the ground for termination by the landlords, the landlords are required to serve notice in the prescribed form. These notices of termination have to be filed with the Tribunal.
Despite this, a landlord may terminate a tenancy in the following ways:
- in good faith, by giving a 60-day notice to the tenant if the premises are needed for possession by the landlord, their spouse, their children or their parents;
- by giving a 120-day notice to the tenant if the landlord needs to demolish the premises, convert them to other use other than change of user, or carry out extensive renovations on the premises.
A notice of termination of tenancy may be challenged by referring the matter to the Tribunal for determination. If the tenant does not vacate the premises pursuant to the landlord’s notice to terminate, the landlord may apply to the tribunal for an order to terminate the tenancy and to evict the tenant.
c. Other Terms
The Bill also has provisions governing the following:
- variation of terms and conditions of a tenancy;
- subletting of premises;
- the landlord’s responsibility to keep records of tenancy and rent payment and share the same with the tenant;
- eviction and reliefs from unlawful eviction;
- protection of tenant’s property from illegal distress for rent and illegal evictions;
- landlord’s remedies upon abandonment of the premises by tenant or death of a tenant; and
- penalties for breach of the provisions of the Bill.
As seen above, the Bill proposes to regulate the relationship between Landlords and Tenants in various ways including rent increases and termination of tenancy which would effectively reduce the power of landlords over tenants.
Article by Sheila Mutiga and Judy Marindany