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Why landlords remain poor despite big investments

Landlords
may have expected to more than double their earnings from house rents when infrastructure
transformed some of Kenya’s remote towns.

It
has, however, proven to be a difficult task. Despite new electricity lines and
improved road networks, rents in many rural areas have remained virtually
unchanged.

In
other cases, initial rent increases were immediately overturned after tenant
protests and evictions.

Many
residents in rural areas, according to Joshua Mwangi, a tenant at a business in
a village in Nyeri County’s Kieni, are low-income earners.

Any
attempt to charge them a price that will force them to live above their means
is met with opposition, even a boycott of one’s rental units.

“The
majority of people simply want a place to rest their heads in the
evening.” “They aren’t searching for elegance,” he explains.

“There
is always another option for settling and avoiding a landlord with high
charges.” As a result, despite infrastructure expansion, the rents charged
stay mostly unchanged.

Mwangi
claims that rental houses timber in his village may be rented for as little as
Sh500 per month, the same sum as before the village was connected to the
national power grid.

The
majority of the houses have timber walls, while others have roofing sheets.

Daily
farmhand responsibilities pay roughly Sh250 per day in this village in Kieni,
and such work are not guaranteed.

With
the rising cost of living, their day-to-day expenses leave them with little
disposable income, making a rent of more than Sh500 difficult, says Njuguna, a
caretaker who did not speak on behalf of the landlord because he was unaware of
our conversation.

Many
of these tenants do not use the electricity placed in their homes, primarily
because it is expensive and they have no control over it.

They
still use oil lamps or very little electricity to illuminate their homes.

According
to the World Bank, over one
billion people lived without electricity in 2018, largely in Sub-Saharan Africa
and South Asia.

“Since
2010, the number of people gaining access to electricity has increased to
around 118 million per year,” the World Bank said in a report, “but
these efforts will need to accelerate if the world is to meet Sustainable
Development Goal seven of ensuring access to affordable, reliable, sustainable,
and modern energy for all by 2030.”

Mr
Mwangi also claims that tenants and landlords have a symbiotic relationship.
Tenants also provide as security for the landowners’ property in a village
context where social networks are strong and trust governs most relationships,
he adds.

“As
a landlord, you can relax knowing that these people you trust are on your
property. Because you’re a big family, nothing will go wrong because they’ve
got your back.”

If
the landlord is unable to pay the workers quickly, his tenants will not be
inconvenienced. He’ll charge them less for rent at the end of the month after
subtracting what they owe.

Rental
spaces in such places have so largely remained the same as they were before the
neighborhood’s infrastructure development – same rents, similar occupancies in
many cases.

The
fact that many of such houses are low quality and built as temporary shelters
is another factor contributing to the stagnant rents.

Njuguna
adds that such tenants, the bulk of whom are casual workers, are also called
upon to participate in the landlord’s farm or other business.

“We
don’t have to go out looking for people to come help us when we have big
responsibilities on the farm.” That would be a difficult task. He says,
“We have our army here, and they are ready whenever we need them.”

They
are plentiful, providing tenants with a vast selection.

Landlords
who have renovated their properties by making them more appealing have seen a
little increase in rents, with few takers. Some people have had to return to
their previous levels.

Some
argue that improving infrastructure did not necessarily improve living
conditions because people still live in poverty despite tarmac roads passing
through their villages.

These
include bandit-infested locations, semi-arid areas, and areas where large
amounts of energy are not required. There are no industry or big institutions
in these locations, for example.

While
land economists have criticized exorbitant land prices and excessively high
rents in Nairobi and other cities, with speculation abounding as the government
embarks on projects for the Big Four Agenda as well as other megaprojects,
rural areas have remained relatively quiet.

Developers
in metropolitan regions compete to offer the most appealing units at the
greatest prices to purchasers and tenants. Their equivalents in rural areas, on
the other hand, frequently give the bare minimum.

In
many cases, it is something that the tenants request. It’s all about what they
can afford and are willing to pay.

When
the landlord connected the houses to power and was prepared to leave, Zipporah
Wanjiru, a tenant in one of the houses in a Nyeri village, says she feared she
would be unable to pay her rent.

However,
after months of consideration, the landlord concluded that it would not work.

Tenants
in houses whose rents were raised massive numbers vacated. They looked for
less expensive alternatives.

“It
felt like a loss,” Njuguna says. “Now that we had tarmac and power,
several landlords built stone buildings.” Our landlord-built rooms that
might be used as businesses and hotels here.”

Some
of these houses are still unoccupied. Several retailers have closed their doors
due to dwindling business and are unable to reopen despite assurances that they
can pay the same amount.

As
a result, despite the government’s Last-Mile Power Connectivity program,
communities remain as quiet as ever. The houses are empty, the tarmac is seldom
utilized, and the power is turned off.

 And
landlords continue to charge low rents, frustrated by the lack of access to
roads and electricity connections.

Read more here..    

 

Related: Terms
to include in your lease or rental agreement

                Tips
on how to be a successful landlord in Kenya

                 How
to find tenants and reduce vacancy rates

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