Real Estate Agents Remuneration in Kenya: Understanding what Commissions to Charge

In Kenya,
real estate agents either work in a real estate agency or can be solo agents. When
working in an agency and an agent is formally employed, then they earn a salary
that is determined by the contract of employment.

Most real
estate agents in Kenya earn a commission from sales. The commission is set by
the Estate
Agents Act (Cap 533). The commission to real estate agents in Kenya are
payable in 5 scales as:

SCHEDULE Scale 1 Sale:

On the first Ksh. 100,000 10%

On the next Ksh. 900,000 6%

On the residue 3%

Thus, if you
are a real estate agent and help a buyer sell their property, above is the
amount set in law.

SCALE 1A Purchases:

 On the first KSH. 100,000
5%

On the next Ksh. 900,000 3%

 On the residue 1.5%

Thus, if you
are a real estate agent and help a buyer buy a
property, above is the amount set in law.

SCALE 1B On Sales of Plant and Machinery:

Ten per cent of the total value realized.

SCALE 1C Sale and Purchases Effected by a Transfer of shares:

Scales 1 and 1A shall apply undiminished by any loan or other
charges upon the property or the Company’s assets.

SCALE 2 LETTINGS

Residential:

Lease up to one year 7.5% of annual gross rent.

Lease of over one year One month’s rent

Commercial:

Sole agency 7.5% of annual gross rent

General agency 10% of annual gross rent.

Fees by negotiation if management services involved but not less
than half scale.

SCALE 3

(a) For seeking and negotiating the tenancy or lease of a property
to suit a client’s requirements: The fees payable as per the appropriate
letting scale and by arrangement if negotiations abort.

SCALE 4 MANAGEMENT

Residential:

10 per cent of the gross rents or less according to the
circumstances but not less than 5 per cent.

Commercial:

7.5% per cent of the gross rents or by arrangement but not less
than 2.5% per cent

SCALE 5 Mortgages:

For negotiating the terms of mortgages or charges as an
intermediary between or on behalf of either of the principals:

a.      
In case of a successful deal, the agent is entitled to a
negotiated commission but no fees.

b.      
Where agent is instructed to fund and negotiate a mortgage without
handling the sale: Fees to be not more than 0.25% per cent of the capital value
of the mortgage.

If the
above rates drive you to get into real estate, you can start by registering to list your property for
free. Also remember to get your letter of authority to sell as described so that you do not miss your commission.

As you continue engaging in real estate, remember to
register with the Estate Agents Registration Board(EARB). This way, you have legal protection in
case the seller does not meet their obligations. We have had cases of real
estate agents getting low commission than what the law mandates since they were
not registered as real estate agents in Kenya. If you are not registered, you
risk losing your hard-earned commission and lack good legal support. You may
also face legal penalties.

Learn more about the benefits and how to register as a real estate agent in Kenya.

Section 18 of the Estates
Agents Act Cap 533, Laws of Kenya provides as follows: –

“1. After the expiration of six months from the commencement of this Act
or such further period as the Minister may, by notice in the Gazette, allow
either generally or in respect of any particular person or class of person: –

(a) No individual shall practice as an estate agent unless he is a
registered estate agent;

(b) No partnership shall practice as estate agents unless all the
partners whose activities include the doing of acts by way of such practice are
registered estate agents;

(c) …

(2) Any person who contravenes subsection (1) shall be guilty of an
offence and liable to fine not exceeding twenty thousand shillings or to
imprisonment for a term not exceeding two years or to both.”

While the above is developed for a general
understanding, it is not meant to be legal advice. Do not hesitate to contact
your advocate for legal help. If you need one, you can real out to Wanjohi and
Wawuda Advocates on  0726982982 or on email  wanjohi@wanjohiwawuda-advocates.co.ke; info@wanjohiwawuda-advocates.co.ke who are experienced conveyancing
advocates.