How real estates are becoming cash cows for property agents

NAIROBI, Kenya:

It is mid month and the the queue outside a tiny office measuring about 2 by 2 metres in Nairobi’s city centre is seemingly growing longer every minute.

A young man is sitted in the office filing bank slips from clients who are in a rush to beat the deadline for paying house rents. Others have also come with complaints about their electricity and water bills while others wanted their leaking tanks repaired or walls painted.

Caleb Ngunjiri, the young man in the office, works for a property agent and on that day Aug. 17, he is serving tenants, who stay in houses managed by the agency firm. His employer is among hundreds of property managers in the capital, who have sprung up in the recent years due to rapid growth of the real estate sector in the East African nation.

Increased demand for residential and commercial properties, especially in the capital, has offered the agents massive lucrative business opportunities. Many people have seized the opportunity to become property agents, managing tens of commercial and residential houses for various landlords.

The business is lucrative, going by the number of people joining it as Kenya’s real estate sector continues to register phenomenal growth with demand for land and houses swelling.

From the tiny office in the city centre, Ngunjiri’s employer manages over 15 properties scattered across the capital for various landlords.

“Many of them are apartments with at least three floors. The houses have two and three bedrooms,” said Ngunjiri later in an interview.

Their main work involves ensuring tenants have paid their rent every month, attending to queries and complaints and liaising with the landlord to carry out repairs on their houses.

“We also look for new tenants, help them settle in the houses and clear with those who want to vacate,” he noted.

But Ngunjiri’s employer does not receive rent from tenants on behalf of landlords. “Our contracts with landlords do not allow us to handle rent from tenants. Landlords have given us bank account numbers, which we pass to tenants. Tenants deposit the money in the account and bring to us slips for accounting purposes,” he said.

For those who do not pay promptly every month, Ngunjiri’s employer follows up ensuring that they pay. “This is why our work is crucial. As an agent, you take responsibility if the tenant does not pay. We follow up with every tenant to ensure they pay because if they do not, it has implication on our work and payment,” he said.

As many other property managers, the firm is paid a commission of between 5 and 10 percent of rent paid per house by every landlord.

“Our commissions with various landlords vary. The least pays us 5 percent while the highest pays us 10 percent. Most of those who pay us 5 percent have residential properties while commercial properties are the ones that attract a commission of 10 percent,” he said.

Rent for the properties they manage range from between Kshs. 15,000 to Kshs. 30,000.

“Most of those that fetch 178 dollars are residential properties while the 360 dollars are commercial rooms in the central business district,” he said.

A quick calculation shows that Ngunjiri’s employer, as many other property agents, rakes in thousands of dollars from the business every month.This is beside other commissions that they charge potential tenants and landlords, which include “searching and viewing fee” and property listing fee respectively.

Agents charge potential tenants “searching and viewing fees” for the service they accord them to find properties and later to check if they fit their needs. It varies from between 12 dollars, for residential properties, and 60 dollars for commercial properties.

On the other hand, the listing fee is charged landlords, who are seeking tenants and property owners who want to sell houses.

“There is good money in property management business, especially if you have numerous clients. The commission one earns especially if you manage several properties and diversify your business is good,” noted Antony Kuyo of Avent Property Agents in Nairobi’s eastlands area.

He noted that most landlords in the capital are currently contracting agents to manage their properties.

“Landlords are finding it easier to work with agents than deal with tenants directly, which can be very frustrating. An agent will thus manage the property and be accountable to the landlord,” he said.

However, emergence of agents in the multi-billion dollars sector that is unregulated has come with various challenges for both tenants and landlords.

Some rogue agents, especially those in low and middle-income areas of the capital, take advantage of tenants to con them and lay blame on the landlord.On the other hand, rent for various property has shot up in the East African nation to cater for agents’ fees. (Xinhua)