BRIEF OVERVIEW ON THE LANDLORD AND TENANT BILL, 2021


 

The Landlord and Tenant Bill dated 12th February 2021 (the “Bill”) was introduced at the National Assembly with the intention of consolidating the laws relating to the renting of business and residential premises. Currently, these are captured under the Rent Restriction Act Chapter 296 Laws of Kenya (the “RRA”), the Distress for Rent Act Chapter 293 Laws of Kenya ( the “DRA”) and the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act Chapter 301 Laws of Kenya (the “LTA”). It is set to balance the interests of the landlords and tenants in a free market economy by ensuring that landlords earn reasonable income from their investment while also protecting the tenants from exploitation.

This Bill applies to:

(1). all residential premises other than

  1. excepted residential premises;
  2. residential premises leased on serviced tenancies i.e. premises let to an employer who provided the premises to an employee in connection with their employment; and
  3. residential premises whose monthly rent does not exceed such amounts as prescribed by the Cabinet Secretary.

(2). a tenancy of the business premise which –

  1. is not reduced in writing; or
  2. is reduced in writing and
    1. is for a period not exceeding five years;
    2. contains a provision for termination other than breach of a covenant within five years of the commencement of the tenancy term.

Some of the salient features of the Bill worth highlighting include:

1. Rent

The rent payable shall be determined by mutual agreement. Where there is no mutual agreement, a tribunal on application by either party will determine the rent based on comparable premises within the area.

2. Procedure for increase and decrease of rent

Section 18 of the Bill lays out the permitted procedure which the landlord must follow to increase rent payable by the tenant. An increase in rent must be justifiable on account of either of the following:

  1. the landlord incurring a capital expenditure;
  2. inflation in the economy;
  3. where an additional service is provided to the premises; and
  4. where land rates payable increases or becomes chargeable.

The landlord must issue a written notice to the tenant at least 90 days prior on their intention to increase rent. Failure to do so renders the rent increase invalid. Where a tenant does not object to this notice within 30 days after receipt, they are deemed to have accepted the increase. The landlord may increase rent once every 12 months for residential premises and once every 24 months for business premises.

The landlord is also entitled to decrease rent where they are ceasing to offer any of the prescribed services to the tenant. Such a decrease must be proportional to the reduction of services provided.

To avoid issuing notice for rental increase, it may be prudent for the landlord to ensure that there is a rent escalation clause where the tenancy does not terminate. Additionally, it may be necessary to have surviving clauses in the tenancy agreement.

3. Form of Tenancy Agreement

The parties are free to adopt any form of tenancy agreement that they agree on. The Bill further provides the terms and conditions that shall be implied in all tenancies. These terms and conditions are listed in the Schedule of the Bill and reflect the ones recorded in the LTA.

The Bill further allows the parties to alter the terms and conditions of the tenancy by issuing a notice to the other party. This notice takes effect in 30 days after the date of issue in case of a residential tenancy, 60 days in case of a business tenancy or on the date specified in the notice.

4. Termination

Like the RRA and LTA, the Bill provides that the landlord must give written notice of their intention to terminate to the tenant. This notice must:

  1. provide the termination date;
  2. be signed by the landlord or their agent; and
  3. provide the reasons for termination.

The notice period in case of business tenancies is 24 months whereas it is 12 months for residential tenancies. This is a notable departure from the LTA where the notice period is 2 months for business tenancies. The notices for termination must also be filed at the tribunal.

The tenant is also entitled to terminate the tenancy by issuing a notice to the landlord at least 1 month to the end of the term for residential tenancies and at least 2 months to the end of a business tenancy.

By Sections 28 and 29 the landlord may terminate the tenancy where they require possession of the premises for occupation by themselves, intend to demolish the premises, convert the user of the property or undertake extensive renovations on the property. In such cases, the landlord issues a notice to the tenant specifying these reasons for termination:

  1. at least 60 days after the date of the notice where the landlord intends to occupy the premises; and
  2. at least 120 days where they are carrying out works or changing the user of the property.

5. Jurisdiction and Power of the Tribunals

Presently, the Rent Tribunal and the Business Premises Rent Tribunal have the jurisdiction to decide on disputes surrounding these tenancies. These tribunals were established by the Cabinet Secretary whereas with the new Bill, the tribunals are to be established by the Chief Justice who determines their jurisdiction.

The members of the tribunal are to be appointed by the Judicial Service Commission. Most notable from the powers listed in Section 5 of the Bill, the tribunals are empowered to grant injunctions, enforce its own orders and punish for contempt as any court of law which is not applicable to the. the current tribunals.

The tribunals are to determine disputes within three months from the date in which the dispute was lodged. This is set to ease the delays in delivery of justice and decrease case backlog.

Appeals lie at the High Court but only on points of law. This is a departure from the RRA where appeals lie at the Environmental and Land Court (“ELC”) on any point of law or in case of premises where the standard rent exceeds Kshs 1,000/- a month on any point of mixed fact or law. The LTA provides for appeals at the ELC.

6. Agent

Where a landlord hires an agent, their duties shall be in writing and also supplied to the tenant.

7. Exclusion of the Act

Like the LTA, the Bill provides that any agreement relating to a condition in a tenancy is void in so far as it purports to:

  1.  preclude the operation of the Bill;
  2. provide for termination or surrender of the tenancy where the tenant makes an application to the tribunal;
  3. provide for the imposition of any penalty or liability on applying to the tribunal; or
  4. terminate without issuing notice to either party.

8. Subletting/Assignments

The Bill grants the tenant the right, with the landlord’s consent which must not be unreasonably withheld, to assign or sublet the premises.

Where the landlord refuses to consent or is unresponsive to this request within 7 days after receipt, the tenant may issue a termination notice.

Conclusion

It is notable that at the time of publishing of this article, the Bill has undergone the 1st reading at the National Assembly on 25th March 2021.[1] This is the introductory stage of a bill with a few stages until it is passed to law. As it is still in its early stages, we expect that there will be some amendments based on commentary from stakeholders. As such, we shall publish further updates on this article once the Bill is passed into law providing the key improvements that the Bill shall provide in the governing of the landlord-tenant relationship.

Overall, the introduction of a consolidated Bill is a welcomed improvement as it promises convenience in the access of the laws relating to tenancies in Kenya. Further, the added powers of the tribunals would encourage ease and efficiency in the access of justice in cases of dispute.

For further reading, the Bill may be accessed here.

Article by Christine Wambui, Junior Associate, MMAN Advocates. Christine's background is in commercial and corporate law specializing in Real Estate, Banking and Finance.

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[1] The National Assembly of the Republic of Kenya, Bill Tracker as at 14th May 2021, http://parliament.go.ke/sites/default/files/2021-05/BILLS%20TRACKER%20AS%20AT%2014%20MAY%202021.pdf (accessed on 13th May 2021)

 





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