The debate about the regulation of
the real estate industry has slowly started gaining momentum in the recent
times. This conversation has been fueled, majorly, by the increase of the
unscrupulous companies operating in the industry. These companies have sold
empty promises to their clients. As a result, Kenyans have lost their
hard-earned money.
The other reason why the discussion
is attracting a lot of interest, is the formation of a real estate stakeholders
association, commonly referred to as RESA. The formation of this association
came about due to the rising cases of fraud in the industry. This association,
is estimated to have about 200 member companies. It was formed early this year
to ‘self-regulate’ the industry.
The crop-up and objective of this
association, has set tongues rolling, and diverse views have emerged. In the varying opinions raised by stakeholder
and Kenyans at large, there are two central questions that begs for a
critically analyzed response. One; why should the industry be regulated? And
two; what exactly is ailing the industry?
Speaking during a recent RESA
function in Nairobi, the chairperson, Kinyua Wairatu, strongly defended the
move for its formation.
“The deceit
by some companies in the industry has led to a tainted image of the sector.
There is a very bad perception about people involved in real estate business.
Unfortunately, genuinely functioning firms have been pulled into the sludge, notwithstanding
their innocence. This wrong view must be reversed at all costs, and all the
players in the sector called to order,” he explained
The
regulation agenda taken-up by the association has generally received a warm
reception from stakeholders in the industry. In any event, Isaac Kamau, who is
a lawyer, argues that the association has every constitutional right to exist
under article 36 of the constitution.
To achieve
this noble goal of restoring the confidence, there has to be a tight
collaboration between the clients, the genuine players, and the government.
“RESA was
founded on the understanding that, apart from achieving the primary goal of
ensuring Kenyans can own land and houses affordably; the real estate sector
remains a strong pillar in the growth of Kenya’s economy as it has proven to be
over time,” says Peter Gitau the association’s Chair of the Council of Elders
and a Director at Olive.
Statistics
in the Kenya National Bureau of Statistics (KNBS) Economic Survey brings out
this fact undeniably. The data indicates that there has been a positive
performance trajectory in the industry for the last five years. The compounded
growth rate stands at 6% at this time.
In the last
quarter of 2022, the total Gross Domestic Product (GDP) contribution of the
real estate was at 10.5%. These figures have positioned real estate as the second largest contributor to Kenya’s
GDP, only after the agricultural sector that contributed 14.8% in the same
period.
One of
the pillars through which the government wants to realize development in Kenya
is the housing agenda. So serious is the government about this course, that
when presenting the budgetary allocations for the financial year 2023/2024, a
collective sum of slightly more than Ksh. 73 billion was directed to different
programs that are directly or indirectly tied to activities in the real estate.
“This
commitment is a sure bet that the future of the sector is guaranteed. However,
it also indicates the need for ensuring that there is proper regulation, and
RESA comes in handy and timely,” added Gitau
In terms of
creating employment opportunities, real estate has performed exemplary
well. The number of people employed
directly in the sector was at 4,300 in 2022 out of the 94,500 jobs created by
the different sectors in the private sector in the same period.
Aware that
the sector also creates indirect opportunities for surveyors, engineers, media
and other consultancy services, it means that any attempt to overlook the need
to tighten its regulatory framework is committing economic perversity.
As
part of the association’s monitoring agenda, the public has been advised to
always ensure that the companies, through which they intend to acquire
properties, are members of RESA. This simple process, together with other
procedures of ensuring due diligence, will help to minimize cases of investors
being swindled off their hard-earned money.
But is
poor regulation the only thorn in the flesh of the industry?
The
government has been urged to streamline areas that affect doing business in
this industry. For instance, the digitization of land ministry has been a talk
that is long overdue. “Although the Nairobi registry has digitized part of its
records, a lot needs to be done. If complete, it will reduce the amount of time
within which land transactions are conducted. It will also reduce causes of
land-fraud,” urges Kamau
Another
area that requires urgent attention of the government, is the backlog of land
cases. Statistics indicate that over 70 percent of cases filed in courts across
the country are on land use and ownership.
“Once
matters are taken to court over land, restrictive and preservatory orders are
issued thus freezing any economic growth that could arise from the use of such
land. Whereas we appreciate that the court protects such land from being wasted
or alienated in any way, the court takes years to render a determination and
the need for this issue to be addressed,” Gitau indicates.
Additionally,
Gitau says that he legislative bodies in the country; the national assembly,
senate and county assemblies, should involve the stakeholders while formulating
laws that affect the industry. This means that the collaboration will take care
of the interest by the stakeholders as well as the consumers.
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