Cover landlords, tenants from Covid impact

In Kenya, home ownership is elusive in the cities and towns. Even the commercial and office spaces are generally rented.

About 80 percent of town dwellers are tenants who depend on the landlords for their residences. Almost a similar number of businesses don’t own office or commercial spaces.

Covid-19 came and has disrupted a lot of people. In the high class estates, which are predominantly rented by expatriates were affected when a lot of them went back before the flights were halted and during the charter air flights.

In terms of finance, we state that the owners of those properties were exposed to the default risk. Some have not recovered from this situation.

The middle class who live in both the city and the city suburbs like Kitengela and Lang’ata in Nairobi faced the problem of default when the tenants were retrenched, got pay cut, or were required to take unpaid leave.

The lower middle class and the lower classes who find themselves on Thika Road, Githurai, Zimmerman, Ruiru,Kawangware, Kabete among others were also hit.

A lot of people in this group are either in low paid jobs or are in informal trading where incomes are unpredictable. Some people moved their families to the village as schools closed and were not sure of their income flows.

These tenants either abandoned their apartments or negotiated with landlords to stagger payments. There was no stimulus package for tenants to enable them to pay rent and in a number of cases tenants were evicted.

The State did not come in to salvage the situation the way developed economies did to cushion the affected citizens.

There was a plea from the tenants to be spared but there was no fund put aside to cover the housing sector.

One lesson now clear from the Covid pandemic is that we are not prepared as nation to handle such disasters.

In discussing all the impact of the Covid on real estate we should see the central position of the landlords.

The landlords provide accommodation or shelter for both businesses and individuals.

Investment in real estate is an expensive undertaking. This has been witnessed in the struggle to offer affordable housing under the government’s four-point growth agenda.

Let us be clear. Landlords offer an essential service. No policy guidelines have been developed to deal with this. There should be a moratorium for the landlords who have loans to pay and their tenants have become defaulters.

Pension savings

There are those landlords who used their lifelong savings and their pensions to build rental properties and use that money for upkeep.

None of these issues have been handled during the Covid response discussions.

There has not been a formalised discussion between landlords and the tenants and the Government.

Land owners have to pay rates, service charges and other taxes. These have not been addressed while expecting them to waive or reduce rents for the tenants.

Going forward, we should accept that there is no after-Covid. That Covid is going to be with us for quite a long time and, therefore, the measures we are taking now should be viewed as longterm. And the government should come up with policies that address how they can be sustainable.

Tax amnesty

The taxing authority should use this period to work out a method of reading from the same script as taxpayers. Those in business and had not registered should be given amnesty and register so that they can qualify for the tax breaks and the financial packages under consideration.

This pandemic should help the tax authority to create an enabling environment for enterprises. Landlords provide a service which is being appreciated now while the tenants are the consumers of the services.

Another deliberate effort that should be attended to is creating a funding system that encourages Kenyans to own their houses in the towns just as people own their homes in villages.

Ngotho wa Kariuki Chancellor, Copperstone University, Zambia