[2019] KEBPRT 11 (KLR)
The Tribunal found that the most suitable comparables for determining rent and service charge were from Hazina Towers and View Park Towers, where the subject premises are located. The Tribunal rejected the tenant's valuation for failing to consider these comparables and held that the landlord is entitled to...
Source-derived case information.
- Citation
- [2019] KEBPRT 11 (KLR)
- Parties
- Applicant: Swaleh Mwangi & Company Advocates; Respondent: National Social Security Fund
- Court
- Business Premises Rent Tribunal
- Jurisdiction
- Kenya
- Case Number
- Tribunal Case 283 of 2013
- Procedural Posture
- Rent Reference / Judgment
- Outcome
- Reference determined in favour of the landlord; rent and service charge increased as per landlord's notice; costs awarded to landlord.
- Legal Topics
- Business Premises Rent, Rent Assessment, Valuation Comparables, Service Charge Determination
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Swaleh Mwangi & Company Advocates
Applicant
National Social Security Fund
Respondent
Procedural Posture
Rent Reference / Judgment
Legal Issues
- 1 Whether the landlord is entitled to increase rent and service charge as per the notice dated 7th February 2013.
- 2 What is the appropriate rent and service charge payable by the tenant for the premises in question.
- 3 Whether the comparables used in the valuation reports are suitable for determining the rent and service charge.
Ratio Decidendi
The Tribunal found that the most suitable comparables for determining rent and service charge were from Hazina Towers and View Park Towers, where the subject premises are located. The Tribunal rejected the tenant's valuation for failing to consider these comparables and held that the landlord is entitled to harmonized rent among tenants in the same building. However, the Tribunal could not assess rent higher than what was sought in the landlord's statutory notice, even though open market rent was higher. The Tribunal therefore adopted the landlord's notice rates of KES 50 per square foot for rent and KES 26 per square foot for service charge, applied to the lettable area as per the...
Court Disposition
Reference determined in favour of the landlord; rent and service charge increased as per landlord's notice; costs awarded to landlord.
Orders
- The rent payable by the tenant is assessed at KES 99,833 per month inclusive of service charge and exclusive of VAT with effect from 1st January 2015.
- The tenant shall pay the landlord costs of the reference.
Full Case Text
Judgment text and source record
60 paragraphs
REPUBLIC OF KENYA
BUSINESS PREMISES RENT TRIBUNAL
TRIBUNAL CASE NO. 283 OF 2013 (NAIROBI)
SWALEH MWANGI & COMPANY ADVOCATES……...……………APPLICANT/TENANT
VERSUS
NATIONAL SOCIAL SECURITY FUND…………….…………RESPONDENT/LANDLORD
JUDGEMENT
The Landlord/Respondent in the above reference served the Tenant/Applicant with the notice dated 7th February 2013 seeking to alter the terms of the Tenancy with effect from 1st May 2013 as hereunder;
1. Increase rent to shs 50 per square foot per month exclusive of VAT.
2. Increase service charge to 26/= per square foot per month exclusive of VAT.
The Tenant did not wish to comply with the above notice and filed the reference in the Tribunal. The reference was filed on 26th April 2013. The record of the Tribunal shows the following;
1. The Landlord filed the valuation report on 23rd March 2015. The Landlord’s report had been prepared by Real Appraisal Limited.
2. The Tenant filed the valuation report on 12th March 2015.
3. On 11th April 2019, the Tribunal made an order that the lettable area in the Tenant’s valuation report shall be adopted for the purposes of the judgement.
It was stated from the bar that the Landlord’s valuers were not co-operative in the preparation of the joint report on the lettable area. The mandate of the Tribunal now is to evaluate the valuation reports and make a determination of the reference.
Summary of the Landlord’s Valuation Report
The Landlord’s valuation report has been prepared by Real Appraisal Limited. The report dated 16th March 2015.
Situation
8th floor Hazina Towers which is sandwiched between View Park Towers and Kemu Plaza along Utalii Lane. Page 6 of the report.
Lettable area/accommodation at page 7, 1467 square feet. Current rent
Rent kshs 28 per square feet and service charge of 26per square foot per month.
Comparables
The Landlord’s valuation report has 10 comparables page 10, 11 and 12 of the valuation report. Comparables 2, 4, 5, 6 are from the immediate neighborhood and are most suitable.
At page 13, the rent payable in respect of Hazina Towers and View Park Towers is shs 65per square foot per month.
The Landlord’s valuation recommends shs 70 per square foot per month for rent and service charges of shs 35. This is the rate according to the Landlord’s valuation which should have applied in the lettable area.
Summary of the Tenant’s Valuer Valuation Report
The Tenant’s valuation report has been prepared by Paragon Property Valuers Ltd. The report is dated 30th January 2015.
Situation:
The Tenant’s Valuer agrees with the Landlord’s valuation on the situation (page 2) of the report. Lettable area 1,313. 60 square feet.
Rental analysis
Shs 29. 14 rent.
Shs 21. 22 service charge.
Comparables
The Tenant’s valuation report has 7 comparables 1, 3 and 7 are from the immediate neighborhood. The other comparables are not from the immediate neighborhood. The Tenant’s valuers has not considered the rent payable by other Tenants in Hazina Towers which is the same premises where the Tenants operate from. The Tenant’s valuer recommends a rate of shs 35. 14 for rent and shs 18. 01 service charge.
Evaluation of the Valuation Reports
The Tribunal upon consideration of the valuation report is satisfied that comparables from Hazina Towers and View Park Towers are the most suitable. There is no credible reason why the Tenant’s valuer ignored comparables from Hazina Towers.
A landlord is entitled to harmonized rent from the Tenants in the same building
The rate at Hazina Towers and View Park Towers is shs 65 for the rent and service charge of shs 32. 5.
The Landlord’s notice seeks a rent of shs 50 and service charge of shs 26.
The Tribunal cannot assess the rent more than what the Landlord sought in the notice.
The Tribunal adopts the Landlord’s valuation recommendations on the rent and service charge but will in the circumstances of the case assess the rent as per the Landlord’s notices which is below the open market rent.
The Tribunal assesses the rent payable as hereunder;
a.Rent 1,313. 60 x 50 = 65,680.
b. Service charge 1,313. 60 x 26 = 34. 153.
Total 99,833 per month
Effective Date:
The Landlord delayed in filing the valuation report and the effective date in the circumstances of the case shall be 1st January 2015.
Costs:
Costs follow the event. The Landlord has succeeded in the reference and is entitled to costs.
The Tribunal makes the following determination in the reference.
Orders
1. The rent payable by the Tenant is assessed at shs 99,833 per month inclusive of service charge and is exclusive of VAT with effect from 1st January 2015.
2. The Tenant shall pay the Landlord costs of the reference.
3. Costs shall be agreed or taxed by the Tribunal.
4. The Tenant shall pay the arrears of rent arising out of the judgment within 6 months from the date herein in default the Landlord shall levy distress.
5. The Landlord is at liberty to serve the Tenant with a fresh notice to vary the terms of the rent and service charge after expiry of 12 months from the date of the judgment in the circumstances of this case.
Judgment delivered this12th day of July 2019 in the presence of Mr Ndome holding brief for Mwangi for the Applicant/Tenant, Miss Mora holding brief forMacharia for the Landlord.
MBICHI MBOROKI
CHAIRMAN
BUSINESS PREMISES RENT TRIBUNAL