The real estate agency business is currently regulated under the Estate Agents Act Cap 533 of the laws of Kenya. It is defined as the process of negotiating or otherwise act in relation to the selling, purchasing, letting or management of land and buildings.
Definition of a Real Estate Agent.
A real estate agent as defined by the estate agents act as a person who is involved in the practice of selling, mortgaging, charging, letting or management of immovable property or of any house, shop or other building forming part thereof.
Qualification requirements of a Real Estate Agent;
A person may qualify to become a registered estate agent provided he/she fulfill the following conditions;
- A full member of the Institution of Surveyors of Kenya in the chapters of Valuation and Estate Management Surveyors, Building Surveyors and Land Management Surveyors.
- A corporate member of the Royal Institution of Chartered Surveyors (in the General Practice or Land Agency or Agriculture sections) and he is qualified to be or is a full member of the Institution of Surveyors of Kenya in the chapters of, Valuation and Estate Management Surveyors, Building Surveyors and Land Management Surveyors;
- the holder of a degree, diploma or license from any university or college or school which is recognized for the time being by the Board;
- A person who—
- is the holder of a degree, diploma or license of a university or college or school or a member of an institution the membership of which is recognized for the time being by the Board as furnishing sufficient evidence of an adequate academic training for practice as an estate agent; and
- has had, to the satisfaction of the Board, practical post-qualification experience in such practice of not less than two years of which not less than six months has been in Kenya; or
- A person who is not qualified under paragraphs (a), (b), (c) or (d) but is of good character and satisfies the Board that he has not been convicted (whether in Kenya or elsewhere) of an offence involving fraud or dishonesty. However, he/she must have practiced under a registered real estate agent for at least one year.
Real estate agency business lines
Upon meeting the qualifications as stipulated above, one requires to verify the same through an interview with the Estate Agents Registration Board- through which recommendation for registration as an Estate Agent will be given. Once registered, you would require applying for practicing license which is renewable annually at a fee if you are to practice as an Estate agent. You will also be required to get an indemnity cover from a reputable insurance company. There are several businesses that you can undertake. These include;
- Property Management
- Facilities & Common Area Management
- Letting, selling and purchasing of Real Estate Properties
This can be defined as the operation, control and oversight of real estate properties. The property manager role is to maximize returns for the owner. The following are some of the functions of a property manager;
- Preparation of budgets
- Management of service provider
- Screening of tenants
- Management of leases
- Rent collection and arrears management
- Management of human resource
- Procurement of goods and services
- Compliance with the statutory requirements
- Investment appraisal
The legal framework that guides the property manager include;
- Property Laws
- Law of Contracts
- Occupational Safety and Health Act
- Other applicable statutes including the constitution
Facilities & Common Area Management
This is a profession that encompasses multiple disciplines to ensure functionality of build environment by integrating people, place process and technology.
The functions of facilities or common area manager entails;
- Facility planning and forecasting
- Lease administration
- Space planning, allocation and management
- Coordination of professionals in planning and design
- Work planning allocation and management
- Budgeting, accounting and economic justification
- Construction and project management
- Operations maintenance and repair
- Security and life safety
- General administrative services, reception, mail hospitality and cleaning
Letting, Selling and purchasing of Real Estate Properties
This is an organizational function and processes for creating, communicating and matching the needs of a tenant or a buyer with the characteristic of the property-on behalf of the client/principal.
Real estate agents renumeration
The real estate agent’s fees is set out under the real Estate Agents Act under schedule of fees as follows;
10 per cent of the gross rents or less according to the circumstances but not less than 5 per cent.
7.5 per cent of the gross rents or by arrangement but not less than 2.5 per cent
Lease up to one year 7.5% of annual gross rent.
Lease of over one year One month’s rent.
Sole agency 7.5% of annual gross rent.
General agency 10% of annual gross rent
On the first KSh. 100,000 10%
On the next KSh. 900,000 6%
On the residue 3%
On the first KSh. 100,000 5%
On the next KSh. 900,000 3%
On the residue 1.5%
Note to the reader:
There are applicable fines and penalties when one is in breach of the provisions of the Estate Agents Act. More details can be referred to the Act which can be downloaded here: http://kenyalaw.org/kl/fileadmin/pdfdownloads/Acts/EstateAgentsAct_Cap533.pdf