The Kenya Property Investors Association (KEPIA) has raised alarms over a potential 25 percent increase in rent due to the proposed hikes in taxes outlined in the Finance Bill 2024.
Speaking to the press on Monday, Ephraim Murigu, the Secretary General of KEPIA, explained that landlords and property owners are facing significant pressures from the increased tax burdens proposed in the bill.
Murigu highlighted that landlords have expressed their inability to absorb these costs without passing them on to tenants.
Consequently, they are planning to increase rent by 15 to 25 percent, affecting not just residential tenants but also business owners renting commercial spaces.
This comes at a time when Kenyans are already grappling with rising costs of basic commodities.
“I have heard from my members, including landlords and other corporate tenants, who are complaining about the current bill. They will increase the rent by 15%-25% because they have no other option,” Murigu stated.
The SG further emphasized that this impending rent hike will exacerbate the economic strain on Kenyans, potentially leading to an increase in vacant properties as tenants move to more affordable housing options or relocate to rural and less developed areas.
This shift could have detrimental effects on both the economy and property owners, who are already struggling with high vacancy rates.
“Currently, landlords are suffering, about 60% are not getting their rent. If you ask a landlord today, they’ll tell you that most of the spaces are empty, houses and shops for rent. This is because some cannot afford the rent anymore,” he added.
Murigu also pointed out the additional economic pressures faced by property owners due to rising construction costs.
Data from the Kenya National Bureau of Statistics (KNBS) shows a consistent increase in the prices of construction materials since January. For instance, the price of a can of paint has surged from Ksh2,400 to Ksh3,200.
“Today, you can’t even buy a can of paint, it’s up from Ksh2,400 to Ksh3,200. What do they expect us to do?” Murigu questioned.
The Finance Bill 2024, which proposes various tax increases and new taxes, is seen as a significant contributor to the rising cost of living in Kenya.
The National Assembly Finance Committee is expected to present its report on the bill on Tuesday after weeks of public participation.
As the debate over the bill continues, KEPIA and its members are urging for reconsideration of the proposed tax measures to avoid further economic hardship for both property owners and tenants.