Kenya: ISK Urges Landlords Not to Increase Rent
By Zachary Ochieng
NAIROBI---In the wake of Finance minister Mr Njeru Githae’s Budget Statement that called for the enforcement of tax on rental income, the Institution of Surveyors of Kenya (ISK) has appealed to landlords not to increase rent following this directive.
Addressing a press conference at ISK’s offices Monday, Chairman Mr Collins Kowuor noted that taxation on rental income was not new and landlords should not take advantage of it to increase rent under the guise of passing the burden to tenants.
“Rent has been taxed as any other income over the years. It is therefore a misinformation that it is a new tax that should be passed on to the tenants”, said Mr Kowuor. “In fact, where the professional property management has been involved, this has been factored in property budgets and accounts and are payable.”
Mr Kowuor further clarified that the income tax is calculated as a percentage of net rental income and urged landlords to maintain proper accounting records to avoid being overtaxed.
“It is therefore not proper and useful to transfer the tax to tenants as increased rent because such increase affects gross and may not affect net income due to tax bands”, added Mr Kowuor.
Still, Mr Kowuor said the minister should have been clearer to the public on what type of tax he was talking about to avert the panic that gripped the real estate sector following the Budget statement.
According to Mr Kowuor, database of properties in itself cannot help in netting payment of income tax on rentals but a well thought out GIS system, partnership with various service providers and professionals, as well as collaboration amongst relevant government agencies to meet the objective.
ISK would also have expected to see incentives that will encourage the development of more housing units to meet the escalating demand in the country.
Mr Kowuor was flanked at the press conference by ISK CEO Mr Moses Kiambuthi, who is also Secretary to the Council, Mr Stephen Omengo, Chair of the Valuation and Estate Management Surveyors (VEMS) Chapter, Mr Stephen Ambani, Secretary, Land/Geospatial Surveyors (LS/GS) Chapter and Ms Catherine Masyuki, Chair, Finance and Audit Committee.
In his 2012-2013 Budget Statement, Mr Githae noted that to ensure fairness and allow landlords to contribute towards nation building, the Kenya Revenue Authority (KRA) would shortly embark on mapping out all residential and commercial areas and implement a comprehensive strategy to ensure that all landlords are effectively brought into the tax net and all rental income due are paid.
ISK is a professional organization that brings together Land/Geospatial Surveyors, Building Surveyors, Land Managers, Geospatial Engineers, Valuers, Property Managers and Registered Estate Agents, among others.