Most rental problems begin before the tenant moves in. A tenant who pays late, damages the property or leaves without notice usually showed warning signs that were never checked, and a vague agreement makes every dispute harder to settle. A little structure at the start protects your income, which is also the income KRA taxes, so it is worth doing properly.

Step 1: screen the applicant

Ask every applicant to complete the same form so you treat people fairly. Collect:

  • Full name, national ID or passport copy and a recent photograph
  • Employer, job title and a pay slip or business bank statements for the last three months
  • Two referees, ideally a previous landlord and an employer
  • The reason for moving and the number of people who will live in the unit

Then verify. Call the referees, ask the previous landlord whether rent was paid on time and whether the deposit was refunded, and check that the pay slip matches the stated employer. A common rule of thumb is that rent should not exceed about a third of a tenant's net income. Use the same rule for every applicant, and never discriminate on tribe, religion or gender.

Step 2: agree the money terms

Decide the monthly rent, the due date, the deposit and any service charge before you show the contract. Deposits of one or two months' rent are common, with an extra month sometimes taken for water and electricity. The deposit is the tenant's money held as security, so record where you keep it and what it covers. Our guide to rent receipts and tenant deposits shows how to document each payment, and the rent receipt book gives you numbered receipts.

Step 3: write the agreement

A written tenancy agreement does not need to be long, but it must be clear. Include:

  1. The names and ID numbers of landlord and tenant, and the exact address and unit.
  2. The start date, the length of the tenancy and how it renews.
  3. The rent, the due date, the method of payment and the penalty for late payment.
  4. The deposit amount, what it may be used for and when it is refunded.
  5. Who pays for water, electricity, garbage and service charge.
  6. Repairs: who handles minor repairs and who handles major ones.
  7. Rules on subletting, pets, business use and noise.
  8. Notice to end the tenancy by either side, normally one month in writing.
  9. Entry: the landlord may enter after reasonable notice to inspect or repair.

Attach a signed inventory listing the condition of walls, floors, fittings and appliances, ideally with dated photographs. It is the evidence that settles deposit disputes. For commercial premises, agreements are more detailed, and VAT may apply, as explained in VAT on commercial rent.

Step 4: stamp and register where needed

Longer leases may need stamping and registration to be enforceable against third parties or the next owner, and stamp duty applies to some leases. Check the current rules or ask an advocate for anything beyond a short residential tenancy. Our overview of stamp duty on property transfers covers the related duty on sales.

Step 5: record the tenancy for tax

Rent is taxable. If you are an individual landlord of a residential unit, you can pay Monthly Rental Income tax at 7.5% of gross rent, or elect to be taxed on your profit. Keep your tenancy details in a rental property and tenant register and use the rental income tax calculator to see what you owe each month. If the tenant is a company or an appointed agent, they may withhold tax from the rent: read withholding tax on rent. The records you need for a return are listed in records every landlord should keep.

Step 6: manage the tenancy

Collect rent on the due date with M-Pesa so each payment is traceable, send reminders before the date and issue a receipt every time. Inspect the unit once or twice a year with notice. If rent falls behind, act quickly and follow the steps in unpaid rent and bad debts for landlords. Do not lock out a tenant or remove their belongings: the law requires a proper process, and self-help can cost you more than the arrears.

Ending the tenancy

When the tenant gives notice, do a joint inspection with the inventory, agree deductions for damage beyond normal wear and tear and refund the balance of the deposit promptly with a written statement. Update your register and declare the vacancy so you do not keep paying tax on rent you did not receive.

Frequently asked questions

How many months' deposit can I charge? The law does not fix a figure for most residential lets. One or two months is common. State the amount and its purpose in the agreement and refund it on the terms agreed.

Do I need a lawyer to draft the agreement? A standard residential agreement can be prepared by the landlord, but have an advocate review it for longer leases, commercial units or high rents.

Can I increase the rent during the tenancy? Only as the agreement allows. Include a clause that sets out when and by how much rent can change, with written notice.

Should the agreement mention tax? Yes. State that the landlord is responsible for income tax on the rent, and say whether the tenant must withhold tax if they are a company or an agent.