City Hall to seize rent of land rate defaulters in new law
City Hall will seize and collect rent from homes and office blocks with land rate dues following a change in the county law that empowers Nairobi to temporarily repossess defaulting properties.
The Nairobi County assembly amended the Revenue Act of 2015 to empower City Hall to recover land rates from rental income in the push to recover over Sh15 billion owed in property fees arrears.
This is a shift from the previous law that allowed Nairobi County to restrict access to defaulting property and had no clause demanding that tenants forward rent to City Hall.
“Any property in default of payment of land rates and which has a rental income shall be put under management of the county Department of Finance and Economic Planning to recover monthly rent,” reads a section of the amended Act.
The stiff penalty comes after a geospatial analysis conducted by the national government showed that 90 per cent of land and property owners in Nairobi are rates defaulters.
The report further shows that only 150, 000 plots and property owners of the more than 1.5 million investors promptly pay land rates.
City Hall has in recent years relied on closure of office blocks to prompt payment by defaulters in a strategy that has not been successful in lowering the arrears. Nairobi has also previously waived penalties for defaulters with little success.
The quest to raise revenue comes as Nairobi County struggles for additional resources to revamp infrastructure and clear waste.
Its ballooning wage bill accounts for 60 per cent of income, denying the county resources to make the capital attractive to investors.
City Hall targets to raise Sh4.6 billion from land rates in the fiscal year ending June, making it the largest revenue stream ahead of parking fees (Sh2.97 billion) and single business permits (Sh2.9 billion).
But Auditor-General Edward Ouko has cast doubt on City Hall’s ability to collect outstanding rates of Sh305.4 billion as at June last year.
Nairobi has struggled to meet its revenue targets since the onset of devolution in 2013 on weak systems, corruption and lack of resources to nab rate cheats.
City Hall raised Sh10.2 billion in the year to June against a target of Sh17.2 billion.
Its revenue collection under Governor Mike Sonko dropped by Sh1 billion in the 10 months to June compared to his predecessor Evans Kidero.
Nairobi collected Sh8.8 billion in the 10 months to June, a 10 per cent fall from Sh9.8 billion generated in a similar period a year earlier under Mr Kidero.