The property management agreement in Kenya, clause by clause

Almost every landlord we take on arrives with an agreement from their last agent, and almost none of them can answer the two questions that matter about it: how much can the agent spend without asking you, and how do you get out. The document is usually two pages, mostly a list of services, and the parts that would decide a dispute are simply absent. This is what those parts should say.

What is a property management agreement?

It is the contract appointing someone as your agent over a property: what they may do in your name, what they are paid for doing it, whose money is whose while it passes through their hands, and how the arrangement ends. In Kenya it has no prescribed form and no statutory template, which is why the quality varies so wildly. Two agents in the same Nairobi building will hand you documents with nothing in common beyond the parties.

It is worth being clear about what it is not. It is not the lease. The lease is between you and your tenant and governs their occupation; the management agreement is between you and your agent and governs their authority. They are different documents with different parties, and an agent who conflates them, or who asks you to sign one document covering both, is telling you something about how the rest of it will go. If the tenancy side is what you actually need, that is covered separately in the tenancy agreement guide.

A management agreement that only describes services is not a contract. It is a brochure that both parties have signed.

The clauses, in order of how much they matter

Not in the order they usually appear. Agreements tend to lead with the service list, which is the least contentious part of the document and the part nobody ever argues about afterwards.

1. Spending authority. The single most important number in the document, and the one most often missing. What can the agent spend on a repair without your written approval? There should be a figure, per incident, in shillings. Without one you are choosing between an agent who cannot fix a burst pipe at 9pm because they are waiting for you to wake up in Dallas, and an agent who has replaced the entire water heater and sent you the invoice. A sensible clause sets a modest per-incident limit for genuine emergencies, a lower one for everything else, and requires quotes above it.
2. Client money. Where does the rent sit between the tenant paying it and you receiving it, and whose name is on that account? This is the clause that decides what happens if the agent becomes insolvent while holding two months of your rent. Money held in a designated client account, separate from the agent’s own trading account, is recoverable. Money paid into the agent’s operating account is a debt owed to you by a company that may not have it. Ask, and get the answer in the document.
3. The payout date, and what happens when it slips. A date alone is a hope. A date with a consequence attached is a term. "Net rent is remitted by the fifth of the following month" is worth having; the same sentence with an agreed consequence if it is late is worth considerably more, because it is the only version you could actually enforce without suing over a small sum.
4. The fee, and what it is charged on. Ten percent of what? Rent collected, or rent due? The distinction decides who carries a defaulting tenant. An agent paid on rent due has been paid for a month in which you received nothing, and has no particular reason to chase. An agent paid on rent collected does not eat until you do. This is covered in more depth in the piece on management costs, because the arithmetic deserves its own space.
5. Termination. How long is the notice, does it run both ways, is there anything payable on exit, and is there a minimum term before you may give notice at all? Three months is common and tolerable. A twelve month lock-in on a service contract is not, and neither is a fee for leaving. The whole of terminating a management agreement is worth reading before you sign one, not after.
6. The deposit. Who holds the tenant’s deposit, in what account, and how is it reconciled at the end of the tenancy? Deposits are the most commonly lost money in Kenyan letting, and they are usually lost at the handover between one agent and the next.
7. Tax. Kenyan residential rental income attracts Monthly Rental Income tax at 7.5 percent, and somebody has to calculate it, withhold it and file it. The agreement should say who, by when, and that the filing reference reaches you. An agent who leaves this to you while collecting your rent has left you exposed to a KRA obligation on money you never touched.
8. Reporting. What you receive, how often, and at what level of detail. "Monthly statements" can mean a figure in a WhatsApp message. A statement worth the name shows gross rent, each deduction itemised with what it was for, the tax withheld with its reference, and the net wired.
9. Maintenance markup. Does the agent take anything on top of what the contractor charges, and if so, is it disclosed? An undisclosed markup is the most reliable hidden cost in the industry, because it converts your agent’s incentive from keeping the property cheap to run into keeping it expensive to run.
10. Re-letting. Is a letting fee charged again when the existing tenant renews? A renewal is a signature, not a letting, and being charged a month’s rent for it every year is one of the quieter ways a headline percentage becomes untrue.

The five clauses that quietly cost you money

These are all common, all legal, and all worth striking out or pricing in before you sign.

• Automatic renewal with a long notice window. An agreement that renews for another year unless you give notice ninety days before the anniversary is designed to be missed. Diarise it or refuse it.
• Sole and irrevocable authority. Language appointing the agent as your attorney over the property, or as sole agent irrevocably, goes far beyond what managing a flat requires. Authority should be specific and revocable.
• Fees charged on rent due rather than collected.Covered above, and worth repeating because it reads as a technicality and behaves as a transfer of risk.
• Indemnities running one way. A clause where you indemnify the agent against everything, including their own negligence, and they indemnify you against nothing. Negligence should never be indemnified away.
• Silence on the deposit. Not a clause, an absence, and the most expensive one on the list.

The short-stay version is a different document

A management agreement for a unit on Airbnb or Booking.com has to answer questions the long-let version does not, and a template borrowed from long-term management will be silent on all of them. Who holds the platform account and therefore the review history. Who sets the nightly price and whether you can override it. Who is named as the host for the purposes of the platform’s own guarantees. What happens to confirmed forward bookings if either side terminates, because those are commitments to third parties that outlive your contract.

The last of those is the one that causes real damage. If the agreement ends in March and there are guests booked for July, somebody has to honour or refund them, and if the document does not say who, you will find out during an argument. The account-ownership question is dealt with at length in what an Airbnb co-host actually does, because it decides whether you keep two years of reviews or start again at zero.

What ours says

We publish our fee rather than quoting on a call: 10 percent of collected rent for long-term management, 20 percent of revenue for Airbnb and short-stay, and a one-time fee of one month’s rent if you only want a tenant found. Collected, not due. There is no setup fee, no commission taken from contractors, no letting fee charged again at renewal and nothing payable if you leave.

The parts we would point a sceptical landlord at are the ones with consequences attached rather than promises. Miss a 48 hour response on a request and we waive that property’s management fee for that month. The net payout clears on the fifth and we cover the bank charges if a holiday pushes the wire. A long-term tenant we placed who defaults inside six months is replaced at our cost. The 7.5 percent MRI is calculated, withheld and remitted by the twentieth with the receipt reference on your statement.

We would rather be compared on those than on the percentage, because the percentage is unremarkable and we say so on the pricing page. Nairobi long-term management runs roughly 8 to 15 percent and short-stay 15 to 25 percent. We sit in the middle of both bands. What differs is what sits underneath the number.

Related reading: the questions to ask before you sign, how to terminate an agreement you already have and what management in Nairobi actually gets you.