Government Continues to Formulate and Enact Real Estate Industry Policies

During the month there was a lot of focus on government actions centered on formulation and enactment of policies that directly affect the real estate industry. One of the bills enacted into law in the course of the month was the Nairobi City County Regularisation of Development bill which stipulates that all unauthorised buildings will be eligible for demolition regardless of whether they are under construction or have been completed.

The new law defines unauthorised buildings as those that have been constructed on river, road or rail reserve land and those that have been constructed without prior approval from City Hall. The owners of such buildings have been granted a six month window to come forward and seek fresh permits.

Structurally sound buildings will be approved while those with minor defects will have to be altered according to the recommendations of the vetting team that will be put in place to inspect the building plans. Those who will be seeking to regularise their properties will be charged the same amounts as if they were applying for a development permit before construction.

As highlighted in our Cytonn Report #34, the Physical Planning Bill and Finance Bill will boost the construction industry in Kenya, as they set key reforms, which will make it more cost effective to undertake developments and improve construction efficiency, respectively.

In our view, such reforms are market shaping and stimulating policies. To delve further, policy interventions fall under four categories, namely

• market shaping,

• market regulating,

• market stimulating, and

• capacity building policies. In contrast to the Physical Planning Bill and the Finance Bill, the NCC Regularisation of Development Act comes out as a strong market regulating policy. The act will be of great benefit by:

1. Helping to curb incidences of building collapse, and;
2. Prompting the public to engage the services of qualified, registered, technical consultants to design and construct their buildings.

Though it is clear that the bill was specifically formulated to regulate development in Nairobi, we hold the opinion that these efforts should also permeate to the counties since majority of developments in the counties are unauthorised. We also maintain that for the government to achieve measurable and sustainable results, it needs to focus more on building the necessary capacity and providing the required tools and resources to ensure that the laws are enforced.

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Disclaimer: The views expressed in this publication, are those of the writers where particulars are not warranted- as the facts may change from time to time. This publication is meant for general information only, and is not a warranty, representation or solicitation for any product that may be on offer. Readers are thereby advised in all circumstances, to seek the advice of an independent financial advisor to advise them of the suitability of any financial product for their investment purposes.

An excerpt of the monthly Cytonn Report