The flaws in proposed real estate regulations Bill 2023

For some time now, I have been vocal on the need to, as a priority, regulate real estate developers. Real estate developers' work affects an exceedingly large constituency in our society and is a key contributor to our GDP to be left in the hands of just anyone.

Further, the unvarnished truth is that most Kenyans are gullible when it comes to real estate investment. It is, therefore, imperative to ensure that those practising real estate development are genuine.

The industry is rife with unbridled tears of innocent Kenyans taken advantage of by spurious real estate developers. We must regulate real estate developers, however, we must do it right. The proposed Real Estate Regulation Bill 2023 which is before the Senate is grossly flawed.

From the onset of the Bill, one wonders whether the drafters are strangers to the happenings in our construction and real estate industry.

Let me substantiate.

The proposed Bill is in conflict with quite a number of existing construction and real estate regulations, some of which are too obvious to conflict. First, the Bill proposes the establishment of a Real Estate Board whose functions inter alia include regulating real estate agents.

However, real estate agents are already being regulated under the Estate Agents Regulatory Board (EARB) derived from the Estate Agents Act. In fact, this board defines an Estate Agent as any one individual involved in selling and renting out buildings and land. Real estate agents fall within the lines of this definition and do not need to be regulated again by a new board.

Liability

The Bill is too blind to the existing defect liability regulations in the construction industry. The known and established building defects liability period in the construction and real estate sector is six (6) months from the date of an architect's certificate of practical completion.

Erroneously, this Bill introduces a five-year defects liability period. It states under Section 41, subsection 4: "In case of any structural defect or any other defect in workmanship, quality or provision of services or any other obligations of the developer as per the agreement for sale relating to such development is brought to the notice of the developer within a period of five years by the purchaser from the date of handing over possession, it shall be the duty of the developer to rectify such defects without further charge, within thirty days." This is egregious!

Even more laughable is the omission of a Quantity Surveyor in the certification of work done before the withdrawal of payments by a developer. In fact, the Bill is gravely silent on the critical role of a Quantity Surveyor in this process. It instead prefers this certification be done by an engineer, an architect and a chartered accountant. I mean, seriously!

I could somehow wrap my head around the inclusion of an engineer in this process but an accountant? Valuation of work done for real estate projects is done and certified by a quantity surveyor. For such an omission or error to be made points to someone not in touch with this industry.

This Bill, as well, consciously or not, proposes the stalling of real estate developments. How would you call the proposed burden that any alterations cannot be done in development without the previous written consent of at least two-thirds of the purchasers?

If you understand the life cycle of a construction project, then you will appreciate that changes are bound to happen. It is foolhardy to lay such a heavy approval burden requirement on such inevitable changes. A more sensible approach would be to categorise what changes would require two-thirds of the buyers' consent.

Then we have the misplaced proposal that when a project is done in phases, each phase shall be considered a separate real estate project. How is this possible when the other statutory approvals consider the project as one?

There is only one title, county, Nema and NCA approvals. How would this board consider the project as separate? Maybe to make more money from registration.

Lastly, I have issues with the proposed board composition. A real estate board that doesn't have built environment professionals is a waste of taxpayers' money. How do you leave out the people responsible for designing and supervising the real estate developments? This is an irreducible minimum.

The proposed Bill is impulsive and not well conceived. However noble the intention is, it should not see the light of day in its current status.

The drafters must recall it so that it can be improved. It is misplaced, expensive and out of touch with the industry it intends to regulate.

-The writer is a construction manager and author.