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Plan for office lease cost review in austerity drive

The cost of rentals for building leased by the
The cost of rentals for building leased by the State rose to Sh5.9 billion in the year to June, 2018. FILE PHOTO | NMG 

The Government will negotiate afresh the cost of leasing offices to cut rent under austerity measures that will hurt landlords benefiting from inflated fees.

Treasury Secretary Henry Rotich said from next month the Government will pay a standard rent for homes and buildings.

The cost of rentals for building leased by the State rose to Sh5.9 billion in the year to June, 2018, up from Sh5.4 billion a year earlier.

“The Government has been leasing office space at higher market rates resulting in huge costs to the Government,” said Mr Rotich. “Beginning July 1, 2019, all procurement of office accommodation by Government will be standardised with uniform cost leases and existing contracts will be renegotiated to ensure a standard rate,” he added.

The move could see government quit some properties in the event landlords opt not to accept the lower State rent.

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Foreign affairs ministry accounted for the largest share of rent paid by the State for leasing office and envoys’ homes in foreign capitals.

The State has been forced to lease space in capitals like Geneva, London, New York and Washington either due to lack of own space or poor state of its buildings, which has forced ambassadors to rent.

Rentals are a costly affair with government paying a further Sh700 million to renovate diplomats’ homes and offices in Washington D.C, London and New York.

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