What to Look Out for in a Lease

7/27/2019 What to Look Out for in a Lease

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| Nairobi Business MonthlySeptember

BY AAMERA JIWAJI

As the property market grows, more

Kenyans are buying and investing in

houses and apartments. Those who have

purchased property as an investment are quick

to rent it out in the hope that the rental incomewill oset a mortgage.

The Landlord and Tenant Bill, 2007, applies

to all residential and business premises, and is

designed to protect tenants from unlawful rent

increases and evictions. However, it only applies

to residential premises which have a rent less

than Sh15,000 per month and thus excludes the

majority of upmarket properties. Rent disputes

may be heard by the Rent Restriction Tribunal,

under the Distress for Rent Act (cap 293) but the

cost of bringing cases to tribunals discourages

its use.

South African estate agent Pam Goldings,

which recently opened in offices in Kenya,

says, what aspirant landlords should know is

that the rentals business is as well-controlled

and administered as the rest of the property

industry; its no seat of the pants business.

The danger, however, is that the landlords

rights are much more protected than the rent-

ers, and the Global Property Guide describes

the Kenyan rental market pro-landlord. With

no legal recourse, all that protects the landlord

and the tenant is the lease agreement.

PROPERTY LAW

What to look out for in a leasebefore signing the dotted line

Property&InvestmentsCONTENTSProperty agents make a kill from Kenyas real estateboom 53

5-10%The agents are paid a commission

of between 5% and 10% of rent

paid per house by every landlord.

options and terms for renewal, including the

annual increment in rent (for example 10%).

The contract must also clearly outline the

procedures to be followed in case of contract

termination or expiry, since this is the conten-

tious period when the tenant is still in posses-

sion of the residence but transitioning to

another. While rent payments are taken care

of, there are a number of tricky areas including

access to the house by the owner to show it to

prospective tenants.

Rent payment

Every owner will mandate advance payment of

rent, which ensures a reasonable notice period,

and the ability to withhold rent if repairs are

More than 70% of Kenyans pay rent, and the

majority of these leases are privately arranged,

which means that it may not be aligned with

current legislation. This does not oer su cient

legal protection and often leads to the exploita-

tion of the tenant.

So what are the key clauses that landlords

and tenants must look out for before signing

a rental agreement?

Lease and renewal options

It is good practice to specify the duration of the

contract (i.e. one year period) without leaving

it open-ended. This will allow the agreement

between the landlord and the tenant to natu-

rally expire, giving both parties the flexibility

to decide whether a renewal is mutually benefi-

cial. The contract also needs to clearly specify

Because the law protectslandlords more than tenants, youmust read the fine print whengetting into a new house

Pro-landlord rental market in Kenya puts tenantson notice


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September Nairobi Business Monthly |

required in case of damage. More sophisticated

contracts ask for a quarterly payment upfront,

with one cheque to cover the current month and

two post-dated cheques to cover two additional

months.

This period will, however, vary depending on

whether the premises are furnished or unfur-

nished (the standard practice is a longer period

for furnished premises).

In addition to monthly rent, the contract often

specifies that utility bills electricity, water,

telephone, service charges, garbage collection,

security etc are to be paid by the tenant.

Most owners usually pay for the value tax and

land rent for their property, but some choose to

pass it to the tenant, in which case this needs to

be clearly disclosed so that the tenant is aware

of the financial implication.

Ingoing and outgoing inspections

Any damage that is caused to the rental premises

during the duration of the existing tenancy is

directly the responsibility of the tenant, and

most contracts spell this out clearly. The more

detailed ones go so far as listing what is and is

not allowed, for instance alterations or addi-

tions to the premises through nails, screws or

other fasteners.

At the end of the tenancy period, most

contracts mandate that the tenant must paint

and varnish all rooms in the house, and restoreall furniture and fittings including keys or locks

that have been broken, lost or damaged during

the tenancy period.

Traditionally, tenants expect their landlord to

arrange for any plumbing, electrical or hardware

repairs that are needed but todays contracts pass

this to the tenant with the proviso that before

taking occupation of the premises, the tenant

verifies that everything is in working order.

All these maintenance related clauses ulti-

mately allow the landlord to force the tenant

to take responsibility and bear the financial

implications for anything that is not in work-

ing order upon his exit.

This means that new tenants need to thor-

oughly inspect premises before taking posses-

sion, and flag any broken or damaged elements

otherwise they will be forced to pay for their

repair when they leave.

Standard additional clauses in lease agree-

ments include a commitment that the premises

will only be used for residential purposes, will

not be sub-let, and specify whether animals will

be allowed or not.

It is mid month and the queue outside a tiny

office measuring about 2 by 2 metres in

Nairobis central business district is growing

longer by the minute.

A young man in the office fills bank slips

from clients who are in a rush to beat the

deadline for paying house rent. Others have

come with complaints about their electricity

and water bills, while some want their leaking

tanks repaired or walls repainted.

Caleb Ngunjiri, the young man in the office,

works for a property agent and on this August

midday, he is serving tenants who stay in

houses managed by an agent. His employer

is among hundreds of property managers in

the capital, who have sprung up in the recent

years in the rapid growth of the real estate

Kenya.

Increased demand for residential and

commercial properties, especially in the

capital, has offered agents lucrative business

opportunities. Many people have seized the

opportunity to become property agents,managing commercial and residential houses

for busy landlords. The business is lucrative,

going by the number of people joining it as

Kenyas housing industry continues to register

phenomenal growth.

From the tiny office in the city centre,

Ngunjiris employer manages over 15 proper-

ties scattered across the capital. Many of

them are apartments with at least three

floors. The houses have two and three bed-

rooms, said Ngunjiri.

Their main work involves ensuring tenants

pay rent on time, attending to queries and

complaints and liaising with the landlord on

maintenance. We also look for new tenants,

help them settle in the houses and clear with

those who are vacating, he noted.

But Ngunjiris employer does not receive

rent from tenants on behalf of landlords. Our

contracts with landlords do not allow us to

handle rent from tenants. Landlords have

given us bank account numbers, which we

pass to tenants. Tenants deposit the money in

the account and bring to us slips for account-

ing purposes, he said.

The agents are paid a commission of

between 5% and 10% of rent paid per house

by every landlord. Property agents rake

thousands of shillings from the business every

month. This is beside other commissions thatthey charge potential tenants and landlords,

which include searching and viewing fees

and property listing fee respectively. There

is good money in property management busi-

ness, especially if you have numerous clients.

The commission is good, noted Antony

Kuyo of Avent Property Agents in Nairobis

eastlands area. He noted that most landlords

in the capital are currently contracting agents

to manage their properties. Landlords are

finding it easier to work with agents than

deal with tenants directly, which can be very

frustrating, he said.

However, emergence of agents in the

multi-billion dollars sector that is unregulat-

ed has come with various challenges for both

tenants and landlords. Some rogue agents,

especially those in low and middle-income ar-

eas of the capital, take advantage of tenants

to con them and lay blame on the landlord.On

the other hand, rent for various property has

shot up in the East African nation to cater for

agents fees.

MANAGEMENT

Property agents make a killfrom Kenyas real estate boom


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LIFE TRAVEL RESTAURANT REVIEWS FILM& THEATRE ART MUSIC BOOK REVIEW

Society&Culture

BOOKREVIEW

BY AAMERA JIWAJI

Matteo Guzzinis speech is punctu-

ated with pauses as he searches for

the right words to express himself,

whether it is in Italian, English or Swahili.

He begins many of his sentences with Allora,

a colloquial Italian word which means well

.... And like many people new to the English

language, he prefers the present tense I

arrive, I take, I go which adds a sense of

immediacy to his speech.

But the challenges he experiences when

trying to say something melt away when he

communicates through his photographs.

All of a sudden it doesnt matter that he is

an Italian native who moved to Watamu

three years ago, or that he doesnt speak

fluent English or Swahili. With his camera,

he conveys the humility of the religion of

Islam, the gracefulness of waves as they carve

Hes seen the lightHeir to lighting empiresettles in coastal townof Watamu and makes

it big in photography

THROUGH THE VIEWFINDER

ThebookoffersaglimpseintothepsycheofthisEasternpower,itscultureandthestorybehindthegreatChineseeconomy.

CONTENTS

The hidden story behind Chinas success 63

The lastword on Management 64

a pattern on a bed of sand, and the wisdom

etched into the face of a Maasai elder. Pauses,

tenses and slang disappear in this intensely

powerful moment of communication.

Matteo Guzzini is one of the heirs to the

iGuzzini family empire, a 50-year-old compa-

ny that produces Europes most exclusively

designed lights. He graduated from univer-

sity and first worked at a marketing agency

in Italy, but had a passion for photography. A

visit to Watamu in 2000 for a holiday with his

family changed his fortunes and his future.

Twelve years ago, Watamu was empty,

says Matteo. There were only two lodges.

After two days in Watamu, my family decided

to buy a house here. For me, it was the reali-

sation of a dream.

As a young boy, he says, he would look

lustily at pictures from National Geographic

of Maasai Mara and Amboseli. Kenyas rich

diverse landscapes brought to life his dreams


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Society&Culture

This will be the first book to show all the differentMaasais: the ones from Ngorongoro, Lake Natron,

Tanzania, Maasai Mara, Loitokitok and Samburu.

in a way that Italys urban and rural settings

never could.

Matteos visions of Kenya stayed with

him as he returned to Italy to trade on

the European and North American stock

exchanges. Some months later, global stockmarkets crashed and he realised he needed

to distance himself from the emotions of

the market, and its allure of haraka profit

through hasty buy or sell decisions. In that

moment I understood that to spend the time

in front of the laptop and to see the stock

market move was to lose time. Instead I

preferred to stay away and look at the stock

market kidogo, he says.

Matteo restarted his life by moving to

Kenya. Initially, he apprenticed for Armando

Tanzini, an Italian artist based in Kenya for

over 30 years. A renowned architect and

sculptor, Tanzini had designed the Safari

Park Hotel in Nairobi and was known in

coastal circles as the man who designed

Malindi. Together, they published a book

called P O Box Kenya Africa, which featured

Matteos photographs of Tanzinis work. It

was a stimulating start for me, says Matteo,

and it oered direction to his passion for

photography.

The second book to carry Matteos work

is an Italian publication entitled The Last

Warrior in Africa. It will be published by Skira,

a leading Italian publisher of photography,

followed by an exhibition of Matteos photog-

raphy in Milan in January 2013 and in Nairobi

in April or May.

My passion has always been travel. I have

visited the border of Ethiopia, Somalia, Tana

River, Taveta, Busia, Mumias, Kakamega,

Kisumu, Matteo says. It was his one-month

long stay with the Maasai in Samburu andMaralal, and the photographs he took during

this time, which gave birth to this second

book.

This will be the first book to show

all the dierent Maasais: the ones from

Ngorongoro, Lake Natron, Tanzania, Maasai

Mara, Loitokitok and Samburu.

The national networks that Matteo has

built in Kenya over three years have made

him a port of call for Italian media. So earlier

this year, when journalists from Italy wanted

to do a documentary on the Al Shabaab and

their activities in Lamu, Matteo arranged

interviews with members of the Al Shabaab

group.

For the next phase of the documentary,

they will visit the drought-stricken areas of

Garissa, a conflict-ridden border post.

Parallel to his passion for photography,

Matteo continues to follow the stock

markets. Everyday I wait for news on what

is happening in the market in Italy, or Spain

or Greece or Germany. In the last months, I

have spent a lot of time in front of the laptop

My passionhas alwaysbeen travel. I

have visitedthe borderof Ethiopia,Somalia,Tana River,Taveta, Busia,Mumias,Kakamega,Kisumu,Matteo says.It was hisone-month

long stay withthe Maasaiin Samburuand Maralal,and thephotographshe tookduring thistime, whichgave birth tothis secondbook.

Matteo Guzzinis

photographsdocument the

different Maasaigroups in East

Africa.

Italian born photographer Matteo Guzzini


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to make trade because the markets, theygo very fast up and down so if you take a

good moment and you buy when they break

some level you can find money. In the same

moment I dont make speculation for only

one day or today. This is also the time to

invest money in the stocks market because

the prices are very down.

Matteo says he invests in a basket of stocks

but sees a lot of potential in financials,

and is focusing on a Russian hedge fund,

which recently bought 70% of the stocks of

Unicredit, one of the largest Italian banks.

He sees clear parallels between his photog-

raphy and his passion for stock trading: both

demand patience, and quick action at the

perfect moment.

To take a picture you have to be very

relaxed because sometimes you have only

five seconds, he says. You have to have a

nice light on the face, on the eyes; you have

to see the things that happen around you

and if you are stressed you dont see nothing

around you. You become selfish, you dont

see the soul of what is happening.

He started taking photographs 15 years

ago when he was 25, and gradually honed

his skills. Today, he describes himself as a

portrait photographer: a genre where you

take the perfect moment when people show

an emotion. In the photograph you describe

the moment, he says. I want to be like a

hunter. Someone who goes around with a

gun, you weigh the moment and you shoot.

Matteo is well aware of the enormity of the

decision and the great sacrifice that it took

when he chose life as a photographer over the

Guzzini family empire. When you have a big

business like my family which is worth Sh40

billion and you have 2,500 people work-

ing you have to be really professional and

serious. You cant just go there to try and be a

good manager. If you are in such an industry

Society&Culture

Muslim

childre

peer

throug

doorw

Lamu


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BOOK REVIEW

Atrain trip from Hong Kong

through Shenzhen, Dong-

guan to Qaungzhou doesnt

reveal the factories adjacent to these cities and

the people inside. These are industrial cities, like

other coastal cities of China. Yet the people in the

factories are the most important resource of Chinas

success. And 70% are women, while over 95% are

migrants from distant villages in interior China. And

hundreds of items like shoes, handbags, beauty

products, and materials which are today supplied

to developing and developed world are created by

these women.

Author Leslie T Chang, an American of Chinese

origin and a correspondent for the Wall Street

Journal, follows the lives of two ordinary girls in her

book Factory Girls. Lu Qingmin and Wu Chunming

grow up in the village; leave home in their mid teens

partly because the boys are respected more than

them and because there is nothing to do at home.Like 130 million others, they go to the cities to earn

a living. They are an explanation of what China is

today. Migrants create the economy of China, earn-

ing as little as 200 Yuan a month, (Sh2400). They

learn English, Mandarin and basic computer courses

which catapults them to success and save thou-

sands and even millions of shillings in a few years.

They send home over Sh80,000 a year and change

their lives and those of their families. They soon call

the shots back home. A few years later they begin

to date, start a business, get married and even buy

homes in the cities. The long-held dream of going

back home and getting married to a local man

fades.

Factory Girls is about the self-improvement,

ambition and resilience of the human spirit. Beyond

that, the book offers a glimpse into the psyche of

this Eastern power, its culture, and through the

narratives of a group of women, the story behind the

great Chinese economy. It is about the triumph of a

disadvantaged people in a competitive world.

Mr. Kipchumba is a Consultant with Quest Works and

adjunct faculty at Strathmores Executive Education

Author: Leslie T Chang

Factory Girls

The hidden story

behind Chinas

Success

About iGuzzini

The Guzzini family business has

worked with light for over 50

years. A company that makes indoor

lighting and outdoor lighting luminar-

ies, it was established in 1959 and is

now the leading Italian company in

the lighting design sector.

Since its inception, the company

has focused on the idea that the qual-

ity of a designed light is fundamental

to contributing to the quality of the

environment and so its applications

across the world are developed in

collaboration with leading architects

and designers, and known for their

subtlety and elegance. As a result,the company has received numer-

ous international design awards

including the coveted Guggenheim

Prize. iGuzzinis designs illuminate

the most popular locations in the

world including Leicester Square in

London, Cathedral of Resurrection in

St Petersburg, Rolex tower in Dubai,

and the Shirvanshahs in Azerbaijan.

Their designs are also displayed at

international museums, which trace

the changing fortunes of the industry

and the transition from copper to

plastic casings.

iGuzzini is a family business owned

and managed by the Guzzini families

who took over the business after the

demise of its founder, Mariano Guzzi-

ni. It is the leading lighting companyin Europe, and recently established

subsidiary offices in Shanghai but it is

yet to expand into Africa.

you have to work 365 days a year, 24 hours a

day, you have to put 2,000% in the industry.

At 40, Matteo is the youngest amongst his

brothers and his 19 cousins, and the only one

who has not been absorbed into the industry.

Not all of us are born to be on the frontline,

to be a manager, to sacrifice all his life to the

business. I was born free. I want freedom. I

am like a bird, I like to fly here, there.

His parents had nurtured hope that Matteo

would eventually return to the fold: My

mother and father had a lot of dream for my

future but I was not clear. So it was a very

strong decision to go away and take my life

and do what I wanted to do.

In a characteristic shrug, Matteo shakes o

any regrets and di cult memories from the

past, and says, Allora, I know that here I can

do something good for myself. Something

good for the Kenyans who are my friends.

When you havea big business likemy family whichis worth Sh40billion and youhave 2,500 peopleworking you

have to be reallyprofessional andserious. You cantjust go there totry and be a goodmanager. If you arein such an industryyou have to work365 days a year, 24hours a day, youhave to put 2,000%in the industry.

As a portrait photographer, he exercises a great deal of

patience to capture the perfect moment.

What to Look Out for in a Lease

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