Introduction

The proposed Landlord and Tenant Bill, 2021 dated 12 February 2021 (the Bill) is intended to introduce a consolidated legal framework to govern landlord and tenant relationships.

The Bill will repeal the following laws:

1. The Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, Chapter 301 (the LTA);
2. The Rent Restriction Act, Chapter 296 (the RRA); and
3. The Distress for Rent Act, Chapter 293 (the DRA).

Key features of the Bill

The Bill has made the following key changes:

• Equality – seeks to offer protection to both landlords and tenants. This is in contrast to the LTA and the RRA, whose provisions are largely pro tenant.
• Powers to inspectors – permits an inspector or other officer of a tribunal to institute criminal proceedings where offences under the Bill have been committed.
• Increased penalties – significantly increases almost all fines and terms of imprisonment. For instance:
1. Failure to comply with lawful order of a tribunal: Fine increased to KSh100,000 and prison term to 12 months, or both
2. Depriving tenant of service: Fine increased to KSh10,000 and prison term to six months, or both
3. Not keeping rent records: Fine increased to one month’s rent of the premises
4. Subjecting tenant to annoyance: Fine increased to two months’ rent of the premises
• Jurisdiction of tribunals – moves the jurisdiction of the tribunals from the ambit of the Minister or the Cabinet Secretary to the Chief Justice.
• Powers to tribunals – grants tribunals established under the Bill the power to enforce decrees, issue injunctive orders and execute orders in the same manner as the courts. The tribunals will also have powers to punish for contempt in the same manner as any court of law.
• Timelines to complete disputes – requires all disputes to be determined within three months. This will eliminate the huge backlogs currently being faced by the tribunals.

Controlled tenancies

At present, the LTA mainly protects business premises which qualify as controlled tenancies. A controlled tenancy under the LTA means a tenancy of a shop, hotel or catering establishment which:

1. is not written; or
2. which is in writing but is (a) for a period of less than five years or (b) contains provision for termination, otherwise than for breach of covenant, within five years from the commencement; or
3. relates to premises of a class specified by the cabinet secretary.

To circumvent the creation of a controlled tenancy, landlords currently insist on lease terms of a minimum of five years with no option to terminate mid-tenancy. In the current economic climate, tenants of business premises have shown that they would wish to get shorter-term leases or terminate their leases mid-term for convenience, but this is largely curtailed by the existing provisions of the LTA.

It was expected that an overhaul of the definition of a controlled tenancy would be undertaken in any amendment to the law, but that is not the case in the Bill. The Bill maintains the same definition of controlled tenancies as in the LTA.

Government tenancies

The LTA currently expressly excludes tenancies to which the government or a local authority is a party, whether as landlord or as tenant, from being capable of creating a controlled tenancy.

However, the Bill has deleted this provision, meaning that a lease to the government or a local authority could give rise to a protected tenancy if the Bill is passed, unless such tenancies are expressly excluded by the Cabinet Secretary.

Additional steps for levy of distress for rent

Presently, if a tenant defaults, the landlord merely begins the process of levying distress for rent, and it is the tenant who approaches the court or tribunal seeking protection.

The Bill seeks to reverse this by compelling the landlord to get orders from the tribunal before levying distress. This will lead to more administrative bottlenecks for landlords.

Death or dissolution of a tenant

The Bill provides that, if a tenant dies and there are no other tenants on the premises, the tenancy shall be deemed to be terminated 60 days after the death of the tenant. It also provides that a tenancy would end within the same duration if a tenant, being a limited liability company, is dissolved.

Currently, the LTA provides that the tenancy would devolve to the representatives of the tenant upon death.

Additional protections for landlords

The Bill incorporates quite a number of protections for landlords which are not expressly provided for in the LTA and RRA. For instance:

• The right of a tenant to recover security deposit is attached to the tenant having restored the premises to the condition it was in at the time when the tenancy commenced, and the tenant having settled all utility bills. Perhaps this may be improved by adding a rider excepting fair wear and tear.
• The Bill also lays out grounds upon which a landlord may be entitled to terminate a tenancy without reference to a tribunal, provided the landlord complies with the provisions of the Act.
• The obligation on the landlord under the RRA to give a tenant the first option to let and take possession after rebuilding and reconstructing the premises has been removed.
• The notice period for terminating a tenancy in good faith when a landlord requires possession of the premises for personal use has been reduced from 12 months to 60 days.
• The additional obligation to obtain the consent of the tribunal if the landlord wishes to let the premises within 18 months after the date when possession was obtained is also removed.

Transition

The Bill provides that, if any proceedings have been filed under the LTA and RRA at the commencement of the Act, the proceedings shall continue until the dispute has been settled and orders made by the tribunal in accordance with the Act.

Conclusion

There is still ample opportunity to incorporate additional amendments to the Bill that will reflect the realities of landlord and tenant relationships and disputes. We expect  critics of the controls on business premises, which have made it customary for landlords to insist on lease terms of not less than five years with no option to terminate mid-term, to table their recommendations (if any) for improvement of those provisions. The Bill also requires some tidying up to remove repetition and clear up incomplete provisions.

Overall, continuously repealing old laws to expunge redundant and obsolete provisions is necessary to ensure effective governance. Given this, our considered view is that the amendments introduced by the Bill are progressive and welcome.