27. Rent Restriction Act, 1959 (Cap 296)

The law provides for restrictions on rent increases for residential premises whose monthly rent is below Ksh 2500.

Quick Link: http://www.kenyalaw.org/lex//actview.xql?actid=CAP.%20296

· The statute makes provision for restricting increase of rent, the right to possession and the exaction of premiums, and for fixing standard rents, in relation to dwelling-houses, and for other purposes incidental to or connected with the relationship of landlord and tenant of a dwelling-house.

· The restriction of rent for only rental houses whose monthly rent is Ksh. 2,500 and below is however low in the modern day and has since been overtaken by events.[1] These are known as protected or controlled tenancies.

· Section 2 of the Rent Restriction Act, Cap 296[2] restricts the increase of rent in relation to dwelling houses whose monthly rent is below Ksh. 2,500 as well as the legal right to possession and the exaction of premiums and fixed standard rents in relation to some dwelling houses.[3]

· This law was enacted to protect low-income households from exploitation by landlords through unjustified rent hikes and therefore serves as a cushion for low-income earners. The Act only allows a rent increase by the landlord by giving notice to the tenant when the rates payable by the landlord to the government over the dwelling premises increase during the letting period.[4]

· Further, the Act prohibits levying of distress for rent over such dwelling houses without leave of the Rent Restriction Tribunal.[5]

This law was enacted to protect low-income households from exploitation by landlords through unjustified rent hikes, and therefore serves as a cushion to low-income earners. However, this figure of Ksh 2, 500 is now too low, with the law having been enacted half a decade ago, with the consequence that most vulnerable persons are no longer protected. The law needs updating and revision.

· Under section 5, the Rent Restriction Tribunal has powers to: assess the standard rent of any premises either on the application of any person interested or of its own motion; to fix in the case of any premises, at its discretion and in accordance with the requirements of justice, the date from which the standard rent is payable; to fix the amount of water, light, conservancy, sweeper, watchman, or other service charge in addition to the standard rent where the rent chargeable in respect of any premises includes such charges; to apportion payment of the rent of premises among tenants sharing the occupation thereof and that of rent payable in respect of different premises included in one composite tenancy; to make an order for the recovery of possession of premises whether in the occupation of a tenant or of any other person and/or an order for the recovery of arrears of rent, mesne profits and service charges; to make orders permitting landlords (subject to the provisions of any written law) to excise vacant land out of premises where such a course is, in the opinion of the tribunal, desirable in the public interest for the purpose of enabling additional buildings to be erected; to permit the levy of distress for rent; to impose any conditions in any order it makes; to order the landlord to carry out such repairs within such time as the tribunal may stipulate, and, if the landlord fails to comply with the order, and upon application by notice of motion by the tenant, to authorize the tenant to execute the repairs and to deduct the cost thereof from the rent; to apportion charges for such as water, light, conservancy, sweeper or watchman in any premises occupied by tenants who enjoy such services in common; to reduce the standard or recoverable rent of premises where the tribunal is satisfied that the landlord has failed to carry out such repairs to, or maintenance of, the premises as he has a duty to carry out either by agreement or under the Act upon application by a tenant; to order a refund of any sum paid by a tenant on account of rent, being a sum irrecoverable by the landlord under the Act so long as the application is made within two years of the refundable amount being due or in case of more than one payment, within two years from the date of last payment; to reopen any proceedings in which it has given any decision, determined any question, or made any order, and to revoke, vary or amend such decision, determination or order, other than an order for the recovery of possession of premises or for the ejectment of a tenant therefrom which has been executed so long and there is no pending appeal.

· Under section 6, the Tribunal also has powers to summon a landlord or tenant for purpose of investigating a complaint or a dispute.

· Section 7 imposes a fine of Ksh 2, 000 or imprisonment for no more than 6 months for failure to comply with a lawful order of the Tribunal.

· Sections 9 and 10 of the Rent Restriction Act, Cap 296 restrict rent increases without a reassessment and approval of the Rent Restriction Tribunal for dwelling houses that have a monthly rent figure of Ksh. 2,500 and below as of 1st January 1981. The rent control/cap has not been changed or reviewed for four decades. Accordingly, the envisaged changes in the form of the new Landlord and Tenant Bill 2021 are timely.

· Section 11 of the Act only allows a rent increase by the landlord by giving notice to the tenant when the rates payable by the landlord to the government over the dwelling premises increase during the letting period.

· Further, section 16 of the Act prohibits levying of distress for rent over such dwelling houses without leave of the Rent Restriction Tribunal.

· Section 17 prohibits any charging of a premium, sum, fine or money consideration as a condition for the grant or renewal of a lease or tenancy.

· Section 20 requires a landlord of any premises to supply a statement as to the standard rent payable if requested by the Tribunal or the tenant.

· Section 21 requires a landlord (of premises not exceeding Ksh 2, 500 in rent) to keep or cause to be kept a rent book and provide the tenant with a copy of the same. The rent book contains a record of the parties to the tenancy, the premises, the standard rent and the rent payable, and of all payments of rent made and should be signed by the landlord or their agent.

· To repeal and modernize the Rent Restriction Act and other related laws, there was a government-sponsored Bill in Parliament known as the Landlord and Tenant Bill 2021[6] which sought to peg rent increases by landlords to the annual inflation rate as measured by the Consumer Price Index. However, the bill was not reintroduced post the 2022 general election and constitution of the 13th Parliament and therefore lapsed.

· Overall, rent controls have the effect of restricting the ability of landlords to increase rents to existing tenants. While this may serve to promote affordability of housing for tenants in current occupation at least for the time the rent controls remain in place, it may potentially serve to reduce the quality of housing as landlords cease to improve or maintain the housing units and even potentially attempt to make the houses unconducive for habitation to force tenants to leave.

· Even more fundamentally, it may have the effect of reducing housing supply as developers, landlords and prospective landlords shy away from investing in housing units due to the reduced profit margins. In the main therefore, rent control regulations may have the perverse and unintended effect of disincentivising investment in the housing sector especially at the lower end of the market segment.

· What is more, rent controls provide an incentive to tenants to remain in occupation of rented houses rather than leave, which effectively works against the necessary mobility that is key to economic productivity and which may even harm such households, and effectively limiting upward mobility of low-income households to better housing.

· The wisdom and utility of rent controls in general was questioned by the High Court in Mombasa in Laxmishanker Kanji Vyas v Firdaus Salim & another [2014] eKLR where the court, in referring to a judgment of the Supreme Court of India, stated that restriction on rent increases no longer appeared to be a reasonable restriction and that such legal provisions had become unreasonable, arbitrary and discriminatory. The court, however, only remarked that the matter ought to be addressed through legislative intervention rather than judicial intervention.

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[1] Rent Restriction Act, section 2(1)c as read with section 9.

[2] <http://extwprlegs1.fao.org/docs/pdf/ken62996.pdf >

[3] Rent Restriction Act, Section 2(1)c, 9, 10.

[4] Section 11.

[5] Section 16.

[6] <http://www.kenyalaw.org/kl/fileadmin/pdfdownloads/bills/2021/TheLandlordandTenantBill_2021.pdf >