Poor records deny State millions in rent income

The State raises less than 60 per cent of its rent income potential of Sh1.5 billion every year due to poor inventory keeping, Auditor-General Nancy Gathungu has said.

She now calls for digitisation of government estate management records for its 56,892 houses spread across the country.

“The management of government houses and collection of rent is largely manual as it is yet to be digitised. The benefits that accrue with digitisation such as the ability to establish expectations on rental income from the individual MDAs (ministries, departments, and agencies) or counties, invoicing, rent collections, booking of revenue, reconciliations, and maintenance of houses have not been realised,” Ms Gathungu said.

The houses spread across 47 counties and categorised as institutional, police, and pool have the potential to earn the government Sh127 million in monthly rental income. The report observed that in the year to June 2020, the government only collected Sh873.4 million out of the targeted Sh1.5 billion, leading to a loss of Sh651 million.

Government houses

“Further, for the government houses occupied by the county governments’ staff, deductions made through the respective payrolls were not remitted in full to the State Department,” she stated.

Ms Gathungu further faults the state department for lacking a comprehensive register with key information such as when the house was occupied or vacated, occupants’ details and reason for non-occupancy. She noted that it lacked proper control systems for the assets “and preventive mechanisms to eliminate theft, security threats, losses, wastage, and misuse.”

“Failure to maintain a comprehensive register makes it difficult to keep track of government houses and tenants in relation to occupancy, vacancy of the houses, houses with rent arrears, and their respective maintenance costs,” the report noted.

The proposal comes just a year after the auditor successfully pushed for an upward review of rent on government houses, which had stagnated for two decades.

Unrealised revenue

In January, the State Department for Housing announced a 10 per cent rent increase from April 1.

Ms Gathungu has also noted that boarded houses owned by the government countrywide have been encroached upon, condemned, or demolished, and in other instances transferred to other entities or converted to offices for commercial use.

 “The state department does not have an updated inventory of all houses countrywide which could be used to approximate the rent receivable from government houses. In the absence of updated records, the extent of unrealised revenue from such boarded houses could not be confirmed,” she stated.