Lands Cabinet Secretary Alice Wahome wants Senate to reject the Real Estate Regulation Bill, 2023 that seeks to regulate a sector with a turnover of over Sh100 billion annually.

Wahome argues the practice of purchasers contributing towards the acquisition and development of private properties in the hope the said developers will finalise the construction and subdivision processes have no legal basis.

In addition, Wahome further argued that the bill seeking to regulate real estate agents and developers under the same legislation tends to create fundamental flaws as registration of professionals and the real estate projects are quite different and distinct.

This even as she maintained that the investors are only out to make profits, which are not shared with purchasers as there, is no such legal framework.

“In the event of off-plan sales, regulations should be provided to protect the purchasers’ funds. Allowing developers to use up to 75 per cent of the purchasers’ fund exposes the purchasers to loss of funds in the event of default. This is tantamount to borrowing funds by investors without sufficient safeguards,” said Wahome.

While appearing before the Senate Land, Environment and Natural Resources Committee chaired by John Methu (Nyandarua), Wahome was, categorical that real estate agency is a distinct profession with training up to the university level and their regulation is already covered under the Estate Agents Act Cap 533 of the laws of Kenya.

“I propose that the registration and regulation of the Real Estate Agents remain as contained in the Estate Agents Act. This is consistent with other professional regulatory boards like the Surveyor Board, Physical Planners Board and Engineers Board of Kenya,” said Wahome.

In her submission before the committee, Wahome said that her ministry is at an advanced stage of reviewing the Estate Agents Act with some aspects relating to registration and regulation of estate agents in the bill sponsored by Trans Nzoia Senator Allan Chesang.

According to the Lands CS, the regulation of professionals is not a devolved function but under National Government while that of development approvals is under County Governments.

“The Real Estate Regulation bill 2023 is a good initiative in as far as it seeks to regulate Real Estate investors who intend to sell their properties off plan using parts of the funds contributed by the purchasers. It should however exempt those who do not wish to offer properties off plan,” said Wahome.

Purchaser’s deposit

She told the committee that most of the challenges faced are from developers who commence developments and use the purchasers deposit towards construction or to meet subdivision, and infrastructure costs while the process of construction subdivision and titling is incomplete.

 While poking holes into Chesang’s bill, Wahome said that the proposed law seem to confuse an estate agent with a developer.

In his bill, Chesang defines an Estate Agent as ‘a person who sells, offers for sale or offers for rent a piece of land, building or any other part of a building’ without qualifying that this is done on behalf of others and could be interpreted that developers are Estate Agents.

Wahome told the Methu led committee that the bill allows investors to use up to 75 per cent of the purchasers’ deposits towards development.

Ideally, developers and persons or entities dealing construction of property for sale, subdivision and sale of land should invest their own money to finalise the processes of construction, subdivision and titling.

Estate agents

Wahome was categorical that real estate sector and development involves physical planners, surveyors, lawyers, architects, engineers and quantity surveyors whose roles should be taken to account while the bill seems to concentrate on registration and regulation of estate agents and real estate projects.

Chesang in his bill seeks to put in place mechanisms for the regulation of real estate agents and real estate projects.

In order to protect purchasers from unscrupulous conmen, purchasers will be entitled to obtain the information relating to approved plans, and layout plans along with the specifications, approved by the competent authority.

In addition, buyers will be entitled to know time schedule of completion of the project, including the provisions for water, sanitation, electricity and other amenities and services as agreed to between the developer and the purchaser in accordance with the terms and conditions of the agreement for sale.