In Kenya, you should consider a few things when calculating how much rent to charge for your property. Most investors charge rent in accordance with the area code of their property. For instance, rent for an apartment in Karen differs from the one in Thika. In addition, the size of your property determines how much rent you should charge. 

The Landlord and Tenant Bill in Kenya also has some specifications on how to charge rent in Kenya. In addition, it has both landlord and tenant rights regarding rent payments.

This guide explains:

The factors to consider when charging rent in Kenya

The Average rent in Kenya

Rent negotiations

Let’s start.

Factors to Consider When Charging Rent in Kenya

The property’s location

If it is in a desirable area, you can charge a higher rent. Is it in a popular, central area or a bit further out? Rental properties near colleges and universities have a huge demand. Therefore, rent in those areas can be a bit higher compared to houses in rural areas in the country.

Furthermore, properties in big towns like Nairobi, Mombasa, Nakuru, Eldoret, and Kisumu have higher growth potential. This results from the industrial areas that attract employees across the country. 

As long as an area has a higher demand for housing, the rent is likely to be high than in rural areas with few commercial activities.

The second is the size of the property

A larger property will cost more to rent than a smaller one. Is it a large, luxurious apartment or a smaller, more basic one? These specifications tend to alienate each other on the amount of rent payable. 

For instance, a big luxurious house in Kilelehswa will cost higher than a basic house in the same area. In addition, some big houses cost less monthly rent in rural areas than in urban centers. 

The third is the condition of the property

If it is in good condition, you can again charge a higher rent. The quality goes with the rent range in Kenya. Kenyans like to pay for what they can enjoy. Don’t expect to charge a below-average house a higher rent. 

If your houses are new, you can charge a little higher than an old one. In addition, renovations can help you charge a higher rent. It all depends on the quality of the house.

Consider the market rate for rent in Kenya

This can vary depending on the time of year and the current economic situation. The rent rate in Kenya also varies in different locations. 

In addition, when the demand for housing is high, the rent usually goes up. On the other hand, when the demand is low, especially in less congested areas, the rent is usually low. 

Therefore, you should first study the housing market and trends around your property. It will help you set a reasonable, affordable rent in the area at that specific time. 

What amenities and services are included in the rent price?

Is there a gym, swimming pool, or concierge service included? Some property owners are determined to make renters feel at home. As a result, they provide extra services that the renters are interested in. 

So, if your house has a swimming pool, gym, parking, and a children’s playground, you may have to charge a higher rent. These services should be paid for, but not individually. That is why you have to include them in the rent.

What is the rent range in the area?

Finally, you need to research other comparable properties in the area to get an idea of the going rate. Considering all these factors, you can set a fair and competitive rental price for your property in Kenya.

When comparing rent prices, go for houses similar to your property class. For instance, if the houses are big and luxurious, check similar houses in the neighborhood to compare the rent.

What Are The Average Rental Prices in Kenya?

The average rental prices in Kenya will depend on the location that you are looking to rent in. For example, if you are looking to rent in Nairobi, the average rental price will be higher than if you are looking to rent in a smaller town.

The type of property you are looking to rent will also affect the average rental price. For example, a one-bedroom apartment will typically cost less to rent than a three-bedroom house.

Single houses in Nairobi have a rent starting from Ksh. 2700. These rent amounts vary in metropolitan areas and other towns in the country.

How to Negotiate Rent With Tenant in Kenya

When negotiating rent with your tenant, knowing what you want to achieve is important. You should consider what is important to you, such as the amount of rent, the length of the lease, the type of tenancy, and any other special conditions. It is also important to be realistic about what you can achieve, as the tenant may have ideas about what is fair.

It is often helpful to start by discussing the rent amount that the tenant is willing to pay. You can then negotiate from there. It is important to remember that the tenant may be willing to pay more rent if they are given a longer lease or if they are given a tenancy agreement that gives them more security.

What is Joint Tenancy? Is It Worth the Investment?

Once you have agreed on the rent amount, you should draw up a tenancy agreement. The agreement should include all the details, such as the rent amount, the length of the lease, the type of tenancy, and any special conditions. Both parties should sign the agreement and keep a copy.

Conclusion

Now, you’ve seen how you should charge rent for your income property in Kenya. Just ensure that you can afford to repay the mortgage with your rent. A 50% rule can help you make the right rental decision after considering the factors in this rule.

Frequently Asked Questions

What is a good rental yield in Kenya? 

A good return on investment in Kenya starts from 7%. But that is subject to many factors, such as the property location and the house’s occupancy rate. Houses in densely populated areas, like near colleges and universities, have a higher yield.

What is the 2% rule in real estate?

The 2% rule implies that the monthly rent should equal 2% of the property’s purchase price. With such an estimate, you will surely get a good cash flow to help you succeed in your property business.

What is the 50% rule in real estate?

The 50% rule implies that 50% of your monthly rental income should cater to all expenses on the property. Pay your mortgage from the remaining 50%, and the balance is the cash flow. If you get a good cash flow, your business is thriving. However, the business is not doing well if you have a negative after deducting all expenses and the mortgage.