Tenants in Nairobi City County houses and land owners will start paying higher rents from Tuesday in the last phase of fees review that City Hall hopes will raise collections by a tenth.
The increase in rents, more than half in some cases, will see the county raise another Sh50 million from the low-cost houses per year. The houses are mostly in Eastlands and will see City Hall raise its rent proceeds to Sh520 million.
The housing stock in the county is 18,000 units for which rent ranges from Sh600 to Sh15,000 per month. The maximum increase for units attracting rents of less than Sh2,000 per month will be Sh300 per month, according to the county Finance Act enacted in September.
Tenants are already up in arms against the rent increase, saying the houses are too dilapidated state to warrant the higher costs.
“The county has neglected its legal duty of keeping the premises in habitable conditions hence the poor drainage, lack of proper painting, lack of water and
despicable human waste management system. The increment is misguided and untimely,” said Kenya Tenants Association official Erastus Mwangi.
The rents were last adjusted more than ten years ago.
Land owners will also start paying enhanced rates at the rate of 34 per cent, up from 17 per cent, of the land parcel’s unimproved site value (USV) based on the 1982 valuation.
Property in the larger Eastlands will be charged a flat rate with those owning less than a quarter of an acre paying Sh1,000 per plot per year. Land experts, however, say that there is need to update the valuation roll as well as review the basis on which rates are charged.
While Nairobi uses USV, some countries charge rates based on improved site value which sees the tax levied on the total market value of the land plus other developments on it to increase revenues.
This would see owners of commercial properties and high-value buildings pay more than those holding undeveloped or agricultural plots.
Land lawyer Francis Wasuna, however, says rates should be based on the availability of municipal services.
“If a property owner is being charged, then the county should justify the rate. Has it provided the roads, sewerage, water? As it is, the flat rate becomes unfair to some land owners who don’t enjoy these services,” Mr Wasuna adds.
County government revenues have stagnated at slightly more than Sh500 million as City Hall faces legal challenges in reviewing parking fees, its most lucrative revenue stream.
When signing the Nairobi City County Finance Act, governor Evans Kidero said the increases would see revenue collection jump to Sh1 billion.
Public service vehicles (PSV) operators have won a court injunction against the higher parking charges, which they contend are illegal and exorbitant.
Although Justice Isaac Lenaola dismissed the suit, he ordered a stay of the status quo pending review of their notice of appeal. The hearing is set for January 13.
The new charges would see motorists pay Sh300 from the current Sh140 for saloon cars in the city centre. City Hall had expected to raise its collection from the parking slots to Sh150 million per month, up from Sh100 million.
Before the county government, only Sh60 million was being collected from parking per month. Outdoor advertisers have also obtained interim orders barring the county government from increasing fees and charges as outlined in the Act. The hearing is set for January 21.
Outdoor Advertising Association of Kenya, which filed the suit, said that they did not participate in setting the new rates as required by the Constitution.
However, other provisions of the Act like business permits came into effect on October 1. Chief revenue officer Nixon Otieno said collections would rise to Sh700 million per month if the Finance Act was implemented to the letter.
“We have a payroll of Sh830 million. For us to provide services adequately, we need to collect a minimum of Sh1 billion,” he said.
Mr Otieno said the county was focusing on efficiency and sealing leakages.
“We are rolling out e-payment system platforms to make collection more efficient. Revenue will also increase once we take collections to the grassroots through the sub-county system,” he added.