The Real Estate Regulation Bill, 2023

Background

The Kenyan real estate sector, despite its major contributions to the economy, has experienced systemic fraud and gaps in the regulation of developers and agents. The Real Estate Regulation Bill, 2023, aims to replace the outdated Estate Agents Act (Cap. 533) with a comprehensive regulatory framework overseen by a new statutory body.

Key Amendments

• Establishment of the Real Estate Board: A new regulatory Board comprising a Chairperson appointed by the Cabinet Secretary, representatives from various state departments, the Council of County Governors, and professional associations (Section 6).
• Digital Real Estate Portal: The Registrar is mandated to establish and maintain an online digital real estate portal to register agents and projects, track approvals, and receive public complaints (Section 23).
• Repeal of Cap. 533: The Estate Agents Act, Cap. 533 is repealed, dissolving the existing Estate Agents Registration Board and transitioning its assets and personnel to the new Board (Sections 60 and 61).

New Obligations

• For Real Estate Agents: Must be Kenyan citizens holding a degree in real estate or its equivalent (Section 26). They must maintain proper books of accounts and are prohibited from facilitating sales in unregistered projects or engaging in unfair trade practices (Section 27).
• For Developers:
  • Must register any project where land exceeding five acres is subdivided for sale, or where more than ten built units are developed for sale (Section 2).
  • Must deposit 70% of payments received from purchasers into a separate bank account dedicated solely to land and construction costs (Section 33(2)(l)(iv)).
  • Cannot accept deposits exceeding 10% of the unit cost without first executing and registering a written agreement for sale (Section 40(1)).
  • Must rectify any structural defects reported within five years of handing over possession, free of charge, within thirty days (Section 41(4)).
  • Must execute and register a transfer of title in favor of the purchaser within three months of receiving the occupancy certificate (Section 44(2)).
• For Purchasers: Must make payments within the agreed timeline and take physical possession of the property within two months of the occupancy certificate being issued (Sections 46(2) and 46(6)).

Penalties

• Unlicensed Real Estate Practice: A fine of up to KSh 5 million, imprisonment for up to two years, or both (Section 28(2)).
• Unregistered Projects: A fine of not less than KSh 5 million, imprisonment for up to three years, or both (Section 53).
• Providing False Information to the Board: A penalty of five percent (5%) of the estimated project cost (Section 54).
• Failure to Comply with Board Orders: A daily penalty accumulating up to KSh 20 million or ten percent (10%) of the project's estimated cost, whichever is higher (Section 55).
• Failure to Comply with Court Orders: Imprisonment for up to three years, a fine of up to KSh 10 million, or both (Section 56).
• General Penalty for Developers: A fine of up to KSh 1 million for offences where no other penalty is specified (Section 57).
• Professional Misconduct: The Board may caution, suspend registration, or impose a fine not exceeding KSh 500,000 on agents or developers (Section 24).

Transitional Provisions

Upon commencement, the term of the Estate Agents Registration Board ceases. All valid directives, regulations, contracts, assets, and liabilities of the defunct Board are transferred directly to the new Real Estate Board, and ongoing court proceedings will not abate (Section 61).