Protecting tenant and landlord rights in the current economic climate

Right to shelter should not deny landlords their source of income

In Summary

•Viable tenant options include enhanced protections from arbitrary evictions and  temporary rent increase suspensions

•Landlord options include mortgage relief programmes and tax rebates or incentives

The COVID-19 pandemic has introduced unprecedented levels of uncertainty into ordinary life. Many businesses, inclusive of SMEs and corporates, cautious of the impact reduced demand and prolonged uncertainty will bode for their bottom lines, are contemplating and implementing various methods to reduce operating expenditures in a bid to weather the economic backlash caused by the pandemic. Similarly, individuals are faced with the prospect of salary reductions, redundancy or mandatory unpaid leave.

The above factors have necessitated businesses and individuals alike to rethink their monthly and annual expenditures, with a view to minimise costs. While extravagant or unnecessary costs are easily dealt with, the same does not apply with respect to major yet mandatory costs such as rental expenses, which often comprise a significant portion of business or individual expenditure. Mitigating this expense, however, requires a concerted and collaborative effort by both landlords and tenants enlightened by the financial circumstances of either party.

Drilling down to residential tenants, who are often considered more price sensitive than commercial tenants, a recent survey by the National Bureau of Statistics paints a dire picture. Per the analysis, approximately 30 per cent of residential tenants were unable to settle their rental expenses in April 2020. Noting that the right to shelter is a constitutionally guaranteed right, it is imperative that various residential rent relief options are considered, albeit appropriately balanced with landlord’s property interests.

The plight of the residential tenant, unfortunately, is an uphill one. Despite constitutional protections guaranteeing the right to shelter, it is pertinent to note that Kenya operates as an open and free market. Consequently, tenancy rights cannot be considered in isolation, but rather ought to be balanced with the landlord’s right to generate an income from their property. It is probably with this in mind that the Government of Kenya has largely remained mum on state sponsored rent relief programmes, instead opting to advice tenants and landlords to arrive at amicable solutions on an individual basis.

While indeed tenants and landlords are encouraged to openly discuss mutually beneficial solutions to tenancy wrangles caused by the current pandemic, more can be done by the State to protect vulnerable parties. This however, should not be interpreted as a call to suspend rental payments, but rather, an opportunity to devise innovative methods through which vulnerable tenants may be sheltered from capitalistic realities, while protecting landlords’ rights to property.

Viable tenant side options that may be considered include enhanced protections from arbitrary evictions, temporary rent increase suspensions and rent forbearance measures with respect to the most vulnerable tenants. Similarly, viable landlord side options include mortgage relief programmes and tax rebates or incentives where rent relief options have been extended by the landlord to tenants on an individual basis.

Karen Kandie – MD IDB Capital