Signing a commercial lease in Kenya: a tenant’s checklist

A commercial lease is often a business’s largest long-term commitment. Read it carefully — and remember that leases for more than two years must be registered to be fully enforceable against third parties.

The checklist

1. Term and renewal. Is there an option to renew, and on what notice?
2. Rent and escalation. Typical escalations are 5–10% per year. Fix the rate in the lease.
3. Service charge. Ask for the last budget and what it covers. Seek a cap or audit right.
4. Deposit. Usually one to three months’ rent. Confirm when and how it is refunded.
5. Use clause. Make sure it allows your actual and planned business.
6. Repairs. Who repairs the structure, roof and common areas?
7. Alterations and fit-out. Get consent for your fit-out in writing, and agree whether you must remove it at exit.
8. Assignment and subletting. You may need flexibility if your business changes.
9. Termination. Look for a break clause and the landlord’s rights on default.
10. Stamp duty and registration. Leases attract stamp duty. Leases over two years should be registered.

Controlled tenancies

Tenancies of shops, hotels and catering premises that are not in writing, or are for five years or less (or contain a termination clause other than for breach), may be “controlled tenancies” under Cap. 301. Landlords must then use the statutory notice procedure, and disputes go to the Business Premises Rent Tribunal.

This article is general information, not legal advice on your situation.

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