[2021] KEBPRT 50 (KLR)

REPUBLIC OF KENYA

BUSINESS PREMISES RENT TRIBUNAL

VIEW PARK TOWERS 7TH & 8TH FLOOR

TRIBUNAL CASE NO. 47 OF 2018 (THIKA)

WINSTONE KIMANI KANG’ETHE........................................................APPLICANT/TENANT

VERSUS

MANGU INVESTMENTS LIMITED..............................................RESPONDENT/LANDLORD

JUDGMENT

1. The landlord served a tenancy notice dated 30TH April 2018 seeking to increase rent from Kshs.11,120/- to Kshs.33,333/- in respect of the tenant’s business premises known as room No. 7, 1st floor situate on L.R No. 4953/746/V, Thika Town with effect from 1st July 2018.

2. The grounds upon which the increment is sought are that the current rent paid is way below market rates for the premises and is not economically viable for the landlord’s expected returns on investments.

3. Both parties filed reports and rental assessment. The landlord’s report is by Zanconsult valuers and Management Company Limited dated 23/4/2018 while the tenant’s report is dated 14th November 2019 by Topmark Valuers Limited.

4. Owing to discrepancy in the lettable area contained in both parties report’s I directed that a joint report be filed by both valuers which was done on 26th March 2021. The lettable area was agreed upon to be 428 sq ft (39. 76sq.m).

5. Both valuers also testified in support of their respective reports with the tenant’s valuer starting. The report was presented as P. Exhibit 1 and the joint report as P. Exhibit 2. The valuer recommended 36. 75 per square feet with the total rent payable coming to Kshs.15,700/- after adding the 1square feet difference arising from the joint report. He stated that the rent increment to Kshs.33,000/- was too high since in ordinary cases the rate of increment should be between 10-15%.

6. The tenant’s valuer stated that rent for comparables used was current. He stated that the building was not ideal for office space as it was in a noisy environment. Although age of a building is a factor, he did not include it in the report.

7. In support of his report, the landlord’s valuer stated that his valuation was done in 2018 pursuant to objections filed by 5 tenants including the Applicant herein

8. One of the comparables used was a tenant occupying office no. 37B in the same building on 3rd floor. The analysis came to Kshs.55 per square feet per month. He used Kigio Plaza where a second floor tenant was paying Kshs.65/- per sq. feet and Alisa Plaza on Kwame Nkurumah road where all offices attracted Kshs..65/- per square feet.

9. The landlord’s valuer came up with a rate of Kshs.62/- per square feet. The rent came to 28000/- per month. In view of the valuer, human traffic was crucial when considering rent payable. There was also need to consider the last rent review for the comparables. After harmonizing the lettable area, the rent payable came to Kshs.26,536. 00.

10. In cross-examination, the valuer stated that the length of time a tenant had occupied a premises was not relevant under Cap. 301.

11. Age of a building was also not important in assessment of rent and what matters was the structural condition and decorative soundness of the building. After the initial assessment of 2015, the valuer testified that many of the tenants conceded to rent increment.

12. Both parties filed submissions to justify their respective positions. In the tenant’s submissions, it is contended that on the basis of the decision in Njoroge Ndurugu and others T/A Ngamini Bar & Restaurant – vs- Alykah Investments Limited(2015) eKLR, it was held that the Tribunal is expected to consider the age of the building, market locality and premises with similar trade besides open market rate.

13. It is submitted that Mang’u House was old compared to Kigio Plaza, Alisa Plaza and Kyanjau House used by the landlord’s valuer since they were newly constructed.

14. The landlord is said to have consented to a 15% increment for other tenants in case nos. 17B, 18, 19, 20, 23 and 24 of 2016 dated 11th September 2017 and filed in court on 12th September 2017.

15. The tenant further cites BPRT case Nos.7,17,31,32,33 35 and 43 of 2013 where rent was increased from Kshs.7000/- to 11,120/-. It is urged to set rent at Kshs.36. 75 per square feet as per tenant’s valuation.

16. On the other hand, the landlord submits that the tenant’s valuation has no single comparable from the affected building (Mangu house). No evidence was led that the comparable used by the landlord’s valuer was for relatively new buildings or better serviced facilities.

17. The landlord’s building is said to be in good repair and decoration. The landlord submits that open market rent is not the same as standard rent.

18. According to the landlord, Mang’u house is approximate distance to the comparables used by the landlord’s valuer and are in fact along the same avenue though two streets away from each other. The comparables were a few metres apart.

19. According to the landlord, the consents entered into in other matters have no bearing to this case as the tenant failed to take advantage of the said opening. He preferred to do a court battle.

20. I have looked at the evidence and both reports and considered the average for all the properties used in the two reports to come up with the rent payable at Kshs.57. 76 per square feet. This applied to the lettable area of 428 sq feet gives the rent payable to be Kshs.24,717/- per month.

21. I therefore use my discretion to assess the rent payable by the tenant at Kshs.24,717/- which shall apply with effect from 1st January 2021 in line with the decision in Mohamed Noor and 23 others – vs- Seif Bin Said Properties Ltd (2020) eKLR, Njoroge Ndurugu & Others – vs- Alykah Investments Limited (2013) eKLR and Birindeli Sighns Limited -vs- Pioneer General Assurance Limited (2007) eKLR.

22. I direct that each party shall meet own costs of the suit.

It is so ordered.

DATED, SIGNED AND DELIVERED VIRTUALLY THIS 21ST DAY OF DECEMBER 2021.

HON. GAKUHI CHEGE

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL

In the presence of:-

Njuguna for Tenant/applicant

No appearance for the landlord.