Unlisted real estate agents face arrest over property owners dodging tax
Authorities have threatened to arrest and prosecute property agents practicing without permits.
What you need to know:
- Authorities have threatened to arrest and prosecute property agents practicing without permits
- The ongoing campaign aims to net more taxes from the real estate sector.
Kenyan authorities have threatened to arrest and prosecute property agents practicing without permits in an ongoing campaign to net more taxes from the real estate sector.
The Estate Agents Registration Board has warned property owners against procuring services of unregistered agents to avoid disruptions in services at their property.
“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,” Hellen Abuya, the board’s registrar, said in a notice.
The notice comes at a time when the Treasury has pledged more funds to facilitate enhanced registration of agents to help report landlords who are not remitting rental income tax to the Kenya Revenue Authority.
The Estate Agents Act requires practitioners to register with the board and be issued with an annual practicing certificate.
Registration of estate agents is open to full members of the Institution of Surveyors of Kenya practicing in valuation and estate management, building and land management, or a holder of a degree, diploma, or licence from a university or college recognised by the board.
The board can also list a member who does not have the aforementioned qualifications if it is satisfied that he or she is of good character and has not been convicted of fraud or dishonesty, amongst other qualifications.
A person practicing as an estate agent without requisite 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.
The Treasury has sounded an alarm over low compliance levels among landlords in filing and remitting taxes to the KRA even after the process was “simplified”.
Residential property owners generating an average monthly income of between Sh24,000 and Sh1.25 million are under the “simplified” process required to pay tax at the rate of 7.5 per cent of the gross earnings.
The current rate took effect in January following changes in the Finance Act 2023 that lowered it from the previous 10 per cent.
“The simplification was introduced to enhance compliance. Though it has increased the number of taxpayers, it has not achieved the envisaged compliance [in remitting rental income tax],” Treasury wrote in the 2024 Budget Policy Statement.
“To address compliance challenges in rental income taxation, the government will enhance the registration of property agents, mapping of properties, and leveraging on technology. In this regard, and to ensure fairness and equity, the government will review taxation of residential rental income.”
