The Association of Real Estate Stakeholders has dismissed the proposed law compelling its members to be depositing Sh500 million integrity guarantee fee.

A draft Bill by Kirinyaga Central MP Mr Gachoki Gitari proposes that all interested to found land buying and selling companies be depositing the amount in a government sanctioned authority.

"This is where all those facing the risk of losing money in a collapsing company can claim it back from the security. That way, the company can go ahead and go under without risking investors' money," Mr Gitari said.

Mr Gitari told us on Monday that "it has reached a point where happenings in the land buying and selling outfits are runaway crime that must be tamed".

But the stakeholders chairman Mr Kinyua wa Iratu said the ploy is meant to make land buying and selling business an exclusive club for a few actors who will rig the gains to their advantage.

"The proposed amount is punitive and not practical. We have low capital land buying and selling companies that are doing a great job coming up with deals that afford the low income earners to own land and homes," he said.

Mr Iratu added that "we have members whose prices for an eighth of an acre ranges between Sh100,000 and Sh400,000".

He said such companies cannot be worth Sh500 million "since the assets they are dealing in per sale project is not even worth the proposed risk security deposit".

He said "crooks can be found anywhere in the ranks of dealers...where you can deposit that Sh500 million and go right ahead and stage a fraud worth billions of Shillings". 

He said that the solution lies in self censorship where all dealers will come together and develop rules of engagement.

"We will then enter into binding agreements on how to escape cases of fraud executed by our members and also cooperate with the government to be regulating and auditing us in a manner that seeks to promote our growth," he said.

Mr Iratu said if Mr Gitari's Bill is passed the way it has been drafted, "we will remain with super rich companies that will distort the property market a great deal in a manner that will make acquiring property the preserve of millionaires".

Mr Gitari said those small land buying companies can come together and register as a pool.

"We are dealing with a very emotive issue...an issue where poor people have lost their lifetime savings in a very cruel way of theft by some companies. We cannot dilly dally with that risk," he said.

Mr Gitari added that he further proposes that there be a regulator mandated to impose penalties of up to Sh5 million for non-compliance of specified guidelines so as to keep tabs with their operations.

He said the land buying and selling companies must be regulated right from registration, licensing and all aspects of their dealings.

The proposed Bill comes in the wake of several petitions to Parliament by Kenyans complaining of being swindled by fraudsters posing as land investment companies.

Mr Iratu said that "to understand the big challenge in the sector, the petitions in Parliament also involve billionaire companies".

But Mr Gitari said the petitions arise from the vacuum that has persisted in the sector and which he now seeks to gap.

He said "the petitions where complaints are by Kenyans who have lost their money through unregulated investment companies that operate real estate businesses that sell the property in off–plan mode".

Cases of rampant fraud perpetuated by real estate firms last year prompted the Directorate of Criminal Investigations (DCI) to launch investigations into various companies that Kenyans complained about.

The DCI appointed a 26-member special team of investigators with backgrounds in land matters to the Land Fraud Investigations Unit.

The 26 detectives with professional backgrounds in land survey, land economics, land physical planning and administration, among other relevant fields have been deployed to the unit.

Mr Gitari said all these actors should be reconciled by law and given coordination legal frameworks to deliver a safe property market devoid of crooks.