The government plans to intensify revenue collection from landlords through a crackdown on unlicensed property agents.
Through the Estate Agents Registration Board (EARB), the state will in the coming days begin reigning in unlicensed property agents.
Lack of proper database has made it difficult for the government to ensure landlords contribute their fair share of taxes, which has seen the government miss its revenue targets from landlords over the years.
For instance, for the year 2022 the state recorded a shortfall of Sh27 billion in revenue from residential rental income taxes compared to initial projections.
“In order for the EARB to continue protecting the interest of the public and enhance professionalism in the real estate sector, consumers are advised to deal with registered estate agents only” EARB said in a notice by the registrar Hellen Abuya.
KRA has identified landlords as high net-worth individuals with high potential for growing revenue.
In January 2024, KRA revised the taxation framework and raised the rate that landlords will pay as taxes.
The taxman raised the rate of tax to 7.5 percent; effective from January 1, on the gross rent received and is final tax.
It noted that no expenses, losses or capital deductions are allowed for deduction from the gross rent.
However, this has still been a challenge for the government, despite the tax authorities introducing the latest modifications.
The latest move follows National Treasury’s directive last month to expand its team of property agents to assist KRA in tackling tax evasion among landlords, particularly due to significant shortfalls in rental tax collections.
The Estate Agents Act requires practitioners to register with the board and be issued with an annual practicing certificate.
A person practicing without the registrations faces a fine of as much as Sh20, 000 or a jail term of up to two years or both upon conviction under the law.
EARB said registration of estate agents is open to full members of the Institution of Surveyors of Kenya practising in valuation and estate management, building and land management, or a holder of a degree, diploma, or license from a university or college recognised by the board.
