Is it time for a real estate regulator? This was the question left on the lips of me and a colleague after a long exchange and i this was the analysis.
Real estate is one of the fastest growing sectors of Kenya’s economy today because housing has become the most preferred investment asset among households and other investors. However this enthusiasm has come with a number of challenges; among them:
- Substandard constructions;
- Collapsing buildings;
- Delay in project completion;
- Delay in getting the necessary consents, approvals and/or documentation;
- Financial loss (deposits or entire amounts);
- Unplanned estates and urban sprawl;
- Irregular acquisition of public land;
- Undocumented investors;
- High property prices;
- Bad investment decisions as a result of limited information or poor advice;
- Disputes and protracted litigation.
Numerous players provide goods and services to the sector. They range from government departments, local authorities, financial institutions, developers, professionals, brokers, advertising agencies to building materials suppliers.
Professionals in the sector operate under different umbrella organizations which regulate members’ activities. However a sizeable number of “consultants” are not registered or licensed to practice. This has caused disjointed activity within the sector leading to confusion, losses, frustration and apprehension among potential investors.
Is it time the government steps in and sets up a regulatory body that will act as a reference bureau and also provide guidelines for orderly, transparent and efficient management of the sector?
If constituted, such a body should be an independent entity with representatives from all stakeholders and be charged with the responsibilities of ensuring that:
ü Buildings are constructed and completed as per approved plans and specifications;
ü New developments have the required approvals before construction commences;
ü All constructions are supervised by registered and licensed professionals;
ü Developers meet completion timelines;
ü Scrutinize title documents and provide advice to potential buyers;
ü All service providers are registered with respective professional organizations;
ü Standard operating procedures are set;
ü A website is set up where service providers are listed;
ü All agents are vetted and all properties being offered for sale;
ü Data on property transactions and investors’ details are kept;
ü Research on real estate is carried out and a journal produced periodically;
ü A property market performance index is prepared;
ü Complaints in the sector are attended to expeditiously;
Some members of the public believe the establishment of such an authority will ease public anxiety and restore confidence to the sector.
Professionals agree that research and preparation of a property market index will make property investment decisions more analytical and economic fundamentals oriented rather than market perception driven as is the case today. Some are of the view that a regulator is critical for the success of the proposed Real Estate Investment Trust companies in Kenya because investors will require comprehensive information from trusted sources; otherwise they may shy away.