Commercial vs Residential Leases in Kenya

Commercial leases in Kenya are governed primarily by the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act (Cap 301). This gives business tenants significant protections including controlled rent increases and the right to compensation for disturbance when a lease is not renewed. Landlords and tenants should both understand these rights before signing.

• Applies to shops, hotels, catering establishments, and similar business premises
• Controlled rent increases — disputes go to the Business Premises Tribunal
• Tenant right to new tenancy at end of fixed term in most cases
• Landlord must give six months notice of non-renewal
• Goodwill and disturbance compensation on eviction in some cases

Key Commercial Lease Terms

Commercial leases involve more complex terms than residential leases. Negotiate these points carefully before signing.

• Base rent and review mechanism — fixed increase percentage or market review
• Service charge — contribution to building maintenance, security, and common areas
• Permitted use — specify your business type precisely; changing use requires consent
• Fit-out and alterations — rights to install fixtures and who owns them at lease end
• Assignment and subletting rights — can you sell or transfer the lease?
• Break clauses — option to terminate early, subject to notice and conditions
• Dilapidations — obligation to return premises to original condition at expiry

Professional Advice

Commercial leases typically run for three to ten years and involve significant financial commitments. We strongly recommend having a Kenyan property lawyer review or draft the final agreement. This template provides a starting framework — it is not a substitute for legal advice on a specific commercial transaction.