[2022] KEBPRT 253 (KLR)

Abdulkadir & another v Billel (Tribunal Case 261 & 262 of 2020 (Consolidated)) [2022] KEBPRT 253 (KLR) (Civ) (15 July 2022) (Ruling)

Neutral citation: [2022] KEBPRT 253 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Civil

Tribunal Case 261 & 262 of 2020 (Consolidated)

Gakuhi Chege, Vice Chair

July 15, 2022

Between

Mohamed Abdulkadir

Tenant

and

Mohamed Biliel

Landlord

As consolidated with

Tribunal Case 262 of 2020

Between

Badawi Ali

Tenant

and

Mohamed Ali Billel

Landlord

Ruling

1. The Landlord issued tenancy notices to Mohamed Abdulkadir and Badawi Ali (hereinafter referred to as the 1st and 2nd tenants respectively seeking to increase their rent in respect of business premises situate on plot no. 784/1 Lamu.

2. The rent increment in respect of the 1st tenant is from Kshs.2400/- to Kshs.10,000/- per month with effect from 1st December 2020 and in respect of the 2nd tenant from Kshs.3000/- to Kshs.15,000/- per month with effect from the same date.

3. The grounds cited for the increment is that the current rent for the two premises is very low and yields uneconomical returns and the proposed new rent is comparable to the rent of similar premises in the area. According to the tenancy notices the premises is capable of being let at the proposed rent in open market.

4. Being opposed to the said increment, the tenants filed the instant references respectively and on 15th October 2021 the two matters were ordered to be consolidated for purposes of disposal.

5. The landlord filed his valuation report prepared by Kiliru & Company Valuers, Estate & Managing Agents which returned an assessment of Kshs.20,000/- for the 1st tenant and Kshs.24,000/- per month for the 2nd tenant. On the other hand, the tenants filed their joint report by Wyco Valuers Co. which returned an assessment of Kshs.5,175/- for the 1st tenant and Kshs.6168/- for the 2nd tenant per month.

6. I am therefore required to consider the two reports and come up with the fair market rent in respect of the suit premises.

7. The landlord’s report is dated 5th October 2021. The suit property is situate along Galgalo Road near its junction with Harambee Road at Langoni area of Lamu Island.

8. The 1st tenant occupies 29. 5m2 for the shop and 15. 5 m2 for the store with the current monthly rent being Kshs.2400/- which translates to Kshs.64. 43/m2. The 2nd tenant occupies a space of 29/5m2 for the main shop and 15. 5.m2 for the side shop and 8. 64m2 for storage/ablution area paying a monthly rent of Kshs.3000/- which translates to Kshs.68. 10/- m2. The tenant has sublet the side shop for use as a barber shop.

9. The valuer has used 7 comparables with 6 of them being on the same street with the suit premises and the last one is off Galgalo Road. The first comparable has a monthly rent of 527. 4/m2, the second one has 268. 8/m2, third one has 741. 56/m2, fourth one has 728. 08/m2, 5th has 2,028/m2, 6th one has 734/-m2 and the 7th one has Kshs.589. 57/m2. The valuer remarks that all the comparables have similar frontages on Galgalo Road as the suit premises and are in close proxity with it. The average monthly rent per square metre is Kshs.801/-. He has reduced the amount by 30% in consideration of the age of building to leave the rate at Kshs.561/- per square metre. It is noted that the store behind the 1st tenant’s shop is let at Kshs.5000/- which is equivalent to Kshs.578 per square metre per month.

10. The valuer has proposed the rent of 1st tenant at Kshs.20,000/- per month which is reduced from Kshs.20,890/- and the one for 2nd tenant is proposed at Kshs.24,000/- after further reduction from Kshs.24,704/-.

11. On the other hand, the tenant’s valuer has proposed a monthly rent of Kshs.5,175/- for the 1st tenant and Kshs.6168/- for the 2nd tenant. The valuation report is dated 13th October 2021 and it has 4 comparables. Three of the compables are along Galgalo Road while one of them is along Harambee Road.

12. The 1st comparable along Harambee Road shows that the tenant pays Kshs.3000/- per month for a space of 65. 97 per sq.m which translates to Kshs.45. 48 per sq.m per month. The last rent review was done in 1990 which is a period of 32 years todate.

13. The 2nd comparable along Galgalo Road shows that the tenant pays Kshs.3000/- per month for a space of 40. 88 sq.m. which translates to Kshs.73. 39 per sq.m per month. The last rent review was done in the year 1990.

14. The 3rd comparable a long Galgalo Road shows that the tenant pays Kshs.3000/- per month for a space of 40. 88 sq.m which translates to Kshs.73. 39 per sq.m per month. The last rent review was done in 2014 which is a period of 8 years todate.

15. The 4th comparable along Galgalo Road shows that the tenant pays Kshs.5000/- per month for a space of 20. 74 sq.m which translates to Kshs.241. 08 Sq.m per month.

16. According to the veluer, the premises are in dire need for a serious and/or total reconstruction, overhaul or renovation. The shops have leaking roofs, damaged ceilings and need repainting to attract investment and value for money. According to the valuer, the average monthly rate of rent along the Galgalo road is Kshs.250/- per square metre per month. The valuer has allowed 30% reduction due to the status of the suit premises to arrive at a rate of 115 per square metre per month.

17. The tenant’s counsel filed submissions wherein it is submitted that the landlord cannot seek to increase rent beyond the amounts stated in the tenancy notices. I concur with the said submission in that a party is bound by his own pleadings and cannot change goal posts without seeking amendment to pleadings. The notice to alter terms of tenancy as the initiating document in these proceedings is a pleading and cannot be amended under Cap. 301, Laws of Kenya.

18. The submission that the valuation report by the landlord cannot be used as it has a big difference with the figures in the notice is not correct. There is no law cited that the valuer cannot return a higher figure upon valuation of a premises than what is contained in a tenancy notice.

19. The tenant’s counsel argues without quoting any law in support that the difference in sizes of comparables is a factor that has created the variation between the reports by the two valuers. I do not think that size of a premise dictates rent as the same is calculated per square metre unit.

20. I have looked at the two reports and note that the comparables used by the tenant’s valuer save for one of them are based on monthly rent reviewed between 8 years and 32 years. The landlord’s valuer has used comparables with last review of rent between 2-4 years which is more reasonable and applicable in the circumstances. I shall therefore use the landlord’s report to set the new rent for the premises.

21. In view of the tenancy notices issued to the tenants by the landlord, I find and hold that the landlord is not entitled to increase rent beyond what is expressed therein. I shall therefore uphold the notices as set out therein under section 9(1) (a) of Cap. 301, Laws of Kenya which provides as follows:-“Upon a reference, a tribunal may after such inquiry as may be required by or under the Act or as it deems necessary:-a.Approve the terms of the tenancy notice concerned either in its entirety or subject to such amendment or alteration as the Tribunal thinks just having regard to all the circumstances of the case”.

22. In this particular case, I note that the economy of Kenya was adversely affected by Covid -19 pandemic and that the year 2020 and 2021 was not good for every business enterprises. The situation has since improved and I shall therefore direct that the rent increment shall take effect from 1st January 2022. I am guided in this regard in this regard by the decisions in the following cases:-a.Birindelli Sighns Limited v The Pioneer General Assurance Society (2007) eKLR.b.Mohamed Noor & 23 Others v Seif Binsaid Properties Ltd (2020) eKLR.

23. In regard to costs, I note that the rent increment by the landlord is high and it was normal human reaction for the tenants to seek guidance of the Tribunal on whether it was justified or not. I shall therefore not penalize them for the same in exercise of my discretion on costs.

24. In conclusion therefore, I make the following final orders:-i.The tenancy notices served upon the tenants dated 9th September 2020 are hereby upheld.ii.The monthly rent in respect of the business premises occupied by Mohamed Abdulkadir is increased to Kshs.10,000/- with effect from 1st January 2022. iii.The monthly rent in respect of the business premises occupied by Badawi Ali Billel is increased to Kshs.15,000/- with effect from 1st January 2022. iv.Each party shall meet own costs of the references.It is so ordered.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY THIS 15TH DAY OF JULY 2022. HON. GAKUHI CHEGEVICE CHAIRBUSINESS PREMISES RENT TRIBUNALRuling read in absence of the parties.