Finance Bill 2024: House Rent Up 25% as MPs Work to Remove 4 New Levies


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Unaffordable Housing

Thousands of Kenyans living in rentals now risk a steeper rent increase should the Finance Bill 2024 sail through Parliament as is.

The Kenya Property Investors Association (KEPIA), in a press briefing on Monday, warned tenants of a 25 per cent increase in response to a slew of new taxes introduced by the Finance Bill.

Justification: KEPIA Secretary General Ephraim Murigu explained that the increase, which will fall somewhere between 15% and 25%, will accord the landlords a chance to deal with the spike in the cost of living anticipated once the bill takes effect.

A rent increase will affect not only tenants in different estates but also business owners who have rented shops and other business premises.

What Landlords Are Saying: "I have heard from my members, including landlords and other corporate tenants, who are complaining about the current bill. They will increase the rent by 15%-25% because they have no other option."

Murigu explained that the rent spike was not pushed by KEPIA members but by landlords across the board.

Practicality: If effected, Kenyans who live in a typical one-bedroom with a monthly rent of Ksh12,000 will see their rent rise by between Ksh1,800 and Ksh3,000. A bedsitter with rental charges of Ksh10,000 will increase by Ksh2,500.

A two-bedroom attracting Ksh20,000 monthly rent will spike by between Ksh3,000 and Ksh5,000.

Reality Check: If effected, the new charges will drive down the real estate market which is already reeling under a harsh operating environment.

So far, the occupancy rate has declined by 60 per cent and a further spike will see more tenants downgrade or depart for rural homes altogether.

"Currently, landlords are suffering, about 60% are not getting their rent. If you ask a landlord today they'll tell you that most of the spaces are empty, houses and shops for rent. This is because some cannot afford the rent anymore," Murigu explained.

Grim Industry: Data from the Kenya National Bureau of Statistics (KNBS) showed that indicated that the construction sector construction prices have been on an upward trajectory with a can of paint increasing from Ksh2,400 to Ksh3,200.

Glimmer of Hope: The Finance Bill has proposed a reduction in export and investment promotion levy on cement clinker from 17.5 percent to 10 percent of the customs value which is expected to boost the industry.

Fruits of Intense Uproar

After weeks of unending anger from Kenyans over the Finance Bill 2024, the National Assembly's Finance Committee is said to be doing away with four taxes and levies ahead of tabling on Tuesday, June 18.

The four Levies: The Committee, chaired by Kimani Kuria, is reportedly considering throwing away the newly introduced Motor Vehicle Tax alongside eco levy, excise duty on bread and vegetable oil, and money transfer and internet tax.

The changes were directly influenced by Kenyans' unanimous rejection of the proposed taxes during the public participation phase.

Departmental Committee on Finance and National Planning chair Kuria Kimani presides over the stakeholder meeting in Parliament on May 28, 2024.
Departmental Committee on Finance and National Planning chair Kuria Kimani presides over the stakeholder meeting in Parliament on May 28, 2024.
Parliament of Kenya

Catch Up Quick: The motor vehicle tax capped at Ksh100,000 targeted Kenyans owning cars expected to pay an annual fee of 2.5 per cent of the vehicle's value. The minimum was pegged at Ksh5,000.

  • Eco levy was going to affect manufacturers and importers in the country where the price would have been increased for the consumers. It would be imposed on batteries, plastic packing bags, and rubber tyres for vehicles, motorbikes, bicycles, smartphones, loudspeakers, microphones, earphones, monitors, projectors, ATMs, calculating machines, and cash registers.
  • On money transfer, the excise duty had been increased to 20 per cent and would affect internet data services as well.

Alternatives: During the public participation phase, motorists asked the state to consider removing the motor Vehicle Tax and instead adjust the road maintenance Levy, increase the excise duty on fuel, and adopt a new formula for the road licence charges (See our full coverage here). The Committee is reportedly considering adjusting the road maintenance Levy.

August House Heat: Last week, a majority of the lawmakers received northwards of 3,000 messages and phone calls (Some of which were vulgar) after their phone numbers leaked to the public. The overriding message was to reject the bill.

A section of Kenyans are prepared to hold protests outside Parliament against the Bill on Tuesday.

The G.O.A.Ts

A study published in the journal Scientific Reports has shown that East African athletes, including Kenyans, are among the fasted ultra-marathon runners.

The study, which analysed 1,398,845 race records from 549,154 unique runners competing in 50-km races, showed that the fastest runners were from Ethiopia (14.1 km/h, average speed)) followed by Lesotho (13.1 km/h), Malawi (12.4 km/h), and Kenya (12.3 km/h).

The fastest runners are aged between Ages 20 years old and 24 years old.

Countries with fastest runners.
Countries with fastest runners.

Here are five other stories we have prepared for you today;

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This newsletter was written by Derrick Kubasu and edited by Brian Muuo.

Washington Mito contributed to the content.

Graphics prepared by Kiruti I.