In July 2020, a committee appointed by the Principal Secretary, State Department for Housing and Urban Development, recommended the establishment of the Real Estate Developers Regulatory Board, “REDRB”, by October 2020 through an executive order subject to the Cabinet’s approval.
The establishment of the board is aimed at promoting a transparent, efficient, and competitive real estate sector, protecting the interest of the sector players and restoring investor confidence through safeguarding buyers’ deposits as well as providing a speedy dispute resolution mechanism between developers and home buyers.
The Key functions of the Real Estate Regulatory Board will include;
(i) registering, licensing, and regulating real estate developers
(ii) de-registering rogue developers
(iii) registering housing projects intended for sale to the public by developers
(iv) publishing and maintaining a website of records
(v) creating a transparent and robust dispute resolution mechanism between developers and buyers
(vi) collecting and analyzing data on real estate development in the housing sector
The establishment of the Board is expected to positively impact on the real estate sector, with some of the expected benefits being;
(i) development of a clear regulatory framework for a real estate development
(ii) Protection of deposits and interests of unit buyers
(iii) protection of interests of real estate developers
(iv) fostering transparency in the sector
(v) encouraging professionalism in the real estate sector by eradication of unscrupulous developers,
(vi) increase in delivery of property and especially housing units
We expect REDRB to face challenges in the strive towards regulating the real estate sector. Some of the key challenges will include;
(i) bureaucracy and delay in the registration process which may hinder the timely delivery of projects due to backlog in project approvals as the Board strives to ensure top-notch compliance by all developers
(ii) corruption in the regulation process as some developers strive to cut down on the registration and approval process before undertaking development projects
(iii) non-compliance by some developers who may be unwilling to adapt to the set guidelines and rules set to be introduced by the Board
(iv) lack of adequate public sensitization on the existence of the Board and its functions which is likely to make it difficult for the Board to protect the public interest through a complicated legal structure.
In conclusion, Real Estate developers have successfully been regulated in other jurisdictions such as in Dubai and Jamaica through the establishment of either an authority or a Board.
Therefore, the establishment of the Kenya Real Estate Developers Regulatory Board is a step in the right direction especially in the wake of a booming property market, amid increasing cases of fraudulent market players.
Once formulated and operational, we expect the Board to promote the growth of an impartial, transparent, efficient, and competitive real estate sector that will be essential in restoring investor confidence and enhancing the growth of the economy in general.