Automated Summary
Key Facts
The Business Premises Rent Tribunal consolidated cases 402 of 2020 to 457 of 2020 and 469 of 2020 to 472 of 2020 regarding rent disputes at Gikomba Business Centre. The Landlord's valuer (Geoffrey Chege) recommended Kshs 613.00 per square foot for ground/upper floors and Kshs 517.00 for basement spaces. The Tenants' valuer (Kepha Ogutu) provided significantly lower rates: Kshs 124.65 for ground floor, Kshs 93.49 for first floor, and Kshs 107.91 for basement, adjusted downward to Kshs 112.19, Kshs 84.14, and Kshs 97.12 respectively due to the building's poor condition and pandemic impacts. The Tribunal ruled to balance the proposals, setting rent at Kshs 300 per square foot for ground floor, Kshs 250 for first floor, and Kshs 250 for basement shops, effective 1st February 2022.
Issues
- The tribunal examined whether the premises' location in Gikomba main market and its primary use for storage (rather than retail) warranted the proposed rent adjustments. The Landlord's valuer cited Gikomba as a location indicator, while the Tenants argued the area's poor business performance and lack of justification for higher rates. The ruling factored these aspects into the final rent assessment, balancing them against the valuation reports.
- The tribunal was tasked with determining the reasonable rent payable per square foot for premises in Gikomba Business Centre, reconciling two widely differing valuation reports submitted by the Landlord and Tenants. The Landlord's valuer proposed significantly higher rates (Kshs 613.00 for ground floor, Kshs 517.00 for basement) compared to the Tenants' valuer (Kshs 124.65 for ground floor, Kshs 107.91 for basement). The tribunal balanced these positions, considering the building's condition, location, and the impact of the pandemic, ultimately setting rents at Kshs 300 for ground floor and Kshs 250 for other floors.
- A key issue was whether the building's poor state of repair and maintenance, as asserted by the Tenants, justified the proposed rent increases. The Landlord's valuer claimed the building was in good condition, while the Tenants' valuer highlighted deficiencies in common areas and finishes. The tribunal acknowledged the dispute but noted insufficient evidence to conclusively determine the building's condition, emphasizing the statutory duty to consider all relevant circumstances under Cap 301.
Holdings
- Basement shops: Kshs 250/- per sq ft (same as first floor, exclusive of service charge, effective 1st February 2022)
- Ground floor shops: Kshs 300/- per sq ft, first floor shops: Kshs 250/- per sq ft (exclusive of service charge, effective 1st February 2022)
- Each party to bear own costs
Remedies
- The Tribunal ruled that each party would bear their own costs in the proceedings.
- The rent for basement shops was determined at Kshs 250 per square foot per month, aligning with the first floor rate despite the Landlord's higher initial proposal.
- The Tribunal assessed the rent payable at Kshs 300 per square foot per month for ground floor shops and Kshs 250 per square foot for first floor shops, balancing the interests of both parties due to the disparity in valuation reports.
- The Tribunal's rent assessments for all premises became effective from 1st February 2022.
Legal Principles
The Business Premises Rent Tribunal applied its discretion under sections 12(1)(b) and 9(2)(a) of Cap 301 to assess rent payable in controlled tenancies. The court considered two conflicting valuation reports and determined the reasonably expected rent in the open market by balancing the interests of both parties, accounting for the building's condition and the economic impact of the COVID-19 pandemic. The ruling emphasizes statutory discretion in rent determination without prescribing specific valuation formulas.
Cited Statute
Cap 301
Judge Name
- Cyprian Mugambi Nguthari
- Gakuhi Chege
Passage Text
- If I were to take the average from the two proposals by the respective valuers, the rent payable would be (131.34 + 613) Kshs 372/= per square foot. If I rationalize the two reports by adopting this average for the lack of a better formula, the increment in rent would be 359%. This is not a reasonable increase.
- I will for the reasons given for the ground floor shops assess the rent payable for the basement shops at Kshs 250/= per square foot per month.
- I will assess the rent payable at Kshs 300/= per square foot per month for the ground floor shops and Kshs 250/= for the first floor shops.