The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/0263-7472.htm

The regulatory environment of real Real estate

professional
estate professional services firms services firms

(PSFs) in Kenya
O.A. K’Akumu 725
Department of Real Estate, University of Nairobi, Nairobi, Kenya
Received 30 July 2021
Revised 11 December 2021
Abstract 14 January 2022
Accepted 21 February 2022
Purpose – This paper brings up the regulatory environment for valuation and estate agency practices in Kenya.
Its main purpose is to assess the regulatory institutions to determine whether consumers of real estate services are
protected from risks in the property market and to compare Kenya’s situation to other markets in the world.
Design/methodology/approach – This is a qualitative study of institutions including bodies and laws that
are involved in the regulation of valuation and estate agency practices in Kenya, using document analysis
method. The roles of professional body, the Institution of Surveyors of Kenya and the registration bodies, the
Valuers Registration Board and the Estate Agency Registration Boards and attendant statutes, the Valuers Act
and the Estate Agents Act are reviewed to gain insights into the regulation practice in Kenya. Benchmarking is
done using regulatory practices in the United Kingdom and the USA.
Findings – Concerning valuation, Kenya uses a hybrid system combining the United Kingdom’s self-
regulation approach and the USA’s state regulation approach. The co-regulation approach is working well for
valuation practice in Kenya. On the other hand, the regulatory system for estate agents is weak because of
limited powers of enforcement, thereby allowing an unknown number of agents to practise outside the
regulatory framework.
Originality/value – The paper is unique in its subject matter as it evaluates the external organization
(regulatory) environment of professional services firms (PSFs) in the real estate market. Existing studies have
been done mainly by management scholars focussing on the internal organization environment of PSFs in
general. Secondly, the study brings up to the international audience the regulatory system and practice in the
real estate professional services market. This has not been done for Kenya and perhaps for many other
countries. Lastly, it makes a novel recommendation that emphasis should be placed on registration and
regulation of PSFs rather than individual practitioners to enhance quality in the provision of services where
real estate agency is concerned.
Keywords Fit-for-purpose, Document analysis, Valuation, Estate agency, Regulation policy,
Theory of organization
Paper type Research paper

Introduction
In the economic realm, firms exist to produce goods and services, but according to Freeman
and Sandwell (2008), production and marketing of goods differ from production and
marketing of services; hence, it is necessary to look at each differently. Management scholars
have observed that a large and growing share of employment and economic output now come
from services sector as opposed to the traditionally predominant manufacturing; hence, it is
important to focus on management of service firms (see McAdam and Canning, 2001; Clark et
al., 2005; Javalgi et al., 2003). Within the services sector, the professional services firms (PSFs)
have gained prominence as knowledge-based organizations (see Von Nordenflycht, 2010;
Reihlen and Apel, 2007; Teece, 2003).
An organization in this context refers to a social unit (a group of humans) deliberately
constructed to meet specific goals (see Etzioni, 1964; Robbins, 2007). Organizations can be
social or formal (Blau and Scott, 1963). Formal organizations have two distinct aspects:
structure and design (Robbins, 2007). Depending on their profit motives, formal organizations Property Management
can be classified into for-profit and not-for-profit. For-profit organizations include commercial Vol. 40 No. 5, 2022
pp. 725-738
firms, industrial firms and service-sector firms including PSFs. The latter are restricted to © Emerald Publishing Limited
0263-7472
offering professional as distinct from general services. DOI 10.1108/PM-07-2021-0055
PM Cohen (1979, p. 580) defined the firm as an organization that sells goods or services “in
40,5 exchange for what we judge to be an accurate approximation of their actual worth”. PSFs are
unique organizations that stand out from the other firms. Von Nordenflycht (2010) has
theorized that PSFs have three distinct characteristics: knowledge intensity; low capital
intensity and professionalized work force. Regarding the knowledge characteristics, Von
Nordenflycht (2010, p. 156) further defined PSF as “any firm reliant on a workforce with
substantial expertise”. This places PSFs among knowledge-intensive firms or knowledge-
726 based organizations.
A professionalized work force means that the workers are bound to have certain
professional qualifications and experience and focus to attain goals in a certain professional
discipline. Von Nordenflycht (2010, p. 156) has listed PSFs including accounting, law,
management consultancy, IT consulting/design, HR consulting, engineering consulting/design,
architecture, advertising, marketing/public relations, physician practice, investment banking,
real estate agency, insurance brokerage, actuarial science, project management and quantity
surveying. The other common real estate profession it left out is valuation surveying.
This study focusses on PSFs within the real estate sector in Kenya involving professionals
such as real estate appraisers, estate managers, building surveyors, land administrators/
managers and estate agents. Management studies mainly focus on the internal structures and
governance of PSFs (Clark et al., 2005); however, this study looks at the external environment
of real estate PSFs, particularly the regulatory institutions. This has the potential of
generating an enabling environment for the growth and development of PSFs in this sector.
According to Kibunyi et al. (2017), real estate is a lucrative business in Kenya that has
expanded as a sector to become the fourth largest contributor to national wealth, thereby
becoming an attractive portfolio for local and foreign investors. For this reason, it is important
to examine the legal and occupational organization for the conduct of its professions.
Additionally, Njuguna (2018) pointed out that provision of estate agency services is a
constitutional right of Kenyans as anchored in Article 46 regarding consumer rights. The
Article provides that consumers have a right to goods and services of reasonable quality, to
the protection of their economic interests and to compensation for loss or injury arising from
defects in goods and services. Real estate professional services are some of the services
envisaged in the Constitution. It is therefore important to establish to what extent the existing
institutional frameworks can achieve this.
To achieve its goal, the paper critically reviews institutional arrangement for regulation of
real estate PSFs in Kenya. It relies on the theory of organization to frame PSFs in the context
of regulatory environment and then examines the agencies and operational laws involved in
the regulation of real estate PSFs.

Organizational environment of PSFs

Campbell (1997) provided a taxonomy of business organization that includes non-
incorporated and incorporated firms as shown in Figure 1 below.
Under non-incorporated organizational setups, there is the sole proprietorship. According to
Greenwood et al. (2007), PSFs can fall under three main typologies public corporation, private
corporation and partnership but under real estate, sole proprietorship also is possible.
Partnership is another non-incorporated type of firm where two or more persons come together
to operate a business in which they are personally liable for the risks and profits. They also are
liable for the debts and business actions of the others to the full extent of their own resources.
On the other hand, a private limited company or private corporation is an incorporated
organization in which equity shares are not traded, but rather, held by the owners who are
active in the management of the firm. Conversely, a public limited company or public
corporation, also known as joint-stock company, is a limited liability business entity whose
 Business Real estate
Organizations
professional
services firms

Non-incorporated Incorporated
organizations organizations 727

Figure 1.
Sole proprietors Partnerships Private limited Public limited A taxonomy of private
companies companies sector business
organizations
Source(s): Campbell (1997: p. 36)

shares are traded in the stock market and are held widely by external owners. All the four are
possible in the real estate sector in Kenya. Concerning real estate agency in England, Bragg
(1992, p. 368) observed that the organizational structure of PSFs varies widely from “large
corporations down to one-man businesses”.
PSFs, like any other business organizations in Kenya, are regulated by the general business
environment laws. For instance, the non-incorporated firms may be registered under the
Registration of Business Names Act (Republic of Kenya, 2012) while the incorporated firms are
registered under and regulated by the Companies Act (Republic of Kenya, 2016). Another law
was enacted in 2015, the Business Registration Service Act to “establish the Business
Registration Service to ensure effective administration of the laws relating to the incorporation,
registration, operation and management of companies, partnerships and firms” (Republic of
Kenya, 2015, p. 223).
Apart from the registration laws, businesses in general must pay for a host of licences. The
Single Business Permit is payable to the local authority. Besides, the businesses must adhere to
tax laws including the Kenya Revenue Authority Personal Identification Number (KRA PIN),
Value Added Tax (VAT) compliance and Withholding Tax requirements. The withholding tax
rates for management and professional fees are 5% for residents and 20% for non-residents.

Regulation of real estate PSFs

Occupational regulation can be in the form of self or state regulation (Gee, 2004). For instance, in
the United Kingdom, the regulation of the valuation profession is by self-regulation through
Royal Institution of Chartered Surveyors (RICS) whose charter requires members to promote
the usefulness of their profession for the public advantage (Crosby et al., 2018). In the USA, prior
to the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) in 1989, the
appraisal profession as they know it there was unregulated (see Colwell and Trefzger, 1992).
However, since FIRREA regulation is carried out through the Appraisal Foundation, a
professional organization authorized by Congress to set appraisal standards and appraiser
qualifications that are implemented by state regulatory authorities. The foundation operates
through two boards: the Appraisal Standards Board (ASB) and the Appraiser Qualifications
Board (AQB) (The Appraisal Foundation, 2021). Federal laws require the state regulatory
agencies to impose licensure and certification criteria that are no less than those promulgated
by the foundation.
PM In the USA, because of a vibrant housing market, valuers of appraisers are certified and
40,5 licenced for home valuation or for general valuation. Since FIRREA, regulation of valuation
practice has increasingly become a matter of concern due to the volatility of the housing
mortgage market resulting into the Home Valuation Code of Conduct and the Dodd–Frank Wall
Street Reform and Consumer Protection Act (see Ding and Nakamura, 2016; Tzioumis, 2017).
Whereas governments have been successful to some extent in regulating valuers or
appraisers, this is not the case with real estate agents. In most cases there are no rules, and
728 where there are, they are lax. Ke et al. (2008, p. 256) observed that setting up an estate agency
was easy in England and Wales because estate agents “require no professional qualifications
[. . .] and there are few rules about who can set up such a business”. Similarly, Markoc and
Cizmeci (2021) writing about real estate brokerage in Istanbul observed that the profession
“can be conducted by anybody willing to do it [. . .] because laws do not define the
qualifications and professional competencies that [real estate] agencies should have”.
In the USA, the occupation remains unregulated (see Woodall and Brobeck, 2006), while in
British Columbia, Gee (2004) has disputed the conduct of the profession under self-rule. In
Africa, the story remains the same. In Nigeria, Oloke et al. (2017) and Mahama and Dixon (2006)
and Obeng-Odoom (2011) writing about Ghana all have recommended regulation of the
practice. Njuguna (2018) argued that one of the weakest links in the regulation of estate agency
in the country is the clause that allows any person to be registered and licenced to practise as an
estate agent without any requisite academic or professional qualification. In its own
assessment, the agency that regulates estate agents in Kenya has flagged up some of the
challenges it faces in its regulatory endeavour. These include political interference and a
limiting legal framework that lacks enforcement mechanism (EARB, 2012). In the later sections,
we look at the institutions that are responsible for regulating real estate professional services in
Kenya. These include the Institution of Surveyors of Kenya (ISK), the Valuers Registration
Board (VRB) and the Estate Agents Registration Board (EARB).

Methodological approach
Real estate is one of the applied sciences that draws from a variety of disciplines. The
principal disciplines in this case are accounting, construction technology, economics, law,
management and surveying while subsidiary disciplines would be anthropology,
psychology and sociology, among others. This implies that, as a social science, research
in real estate will involve plural methods. Seymour and Rooke (1995) wrote a journal article
that blamed the “rationalist paradigm” for causing problems in the UK construction
industry and called for applications of interpretivist methods in construction management
research. This sparked reactions and counter reactions that marked a fierce ontological
quarrel among researchers in construction disciplines in the United Kingdom (see Raftery
et al., 1997; Runeson, 1997; Rooke et al., 1997; Seymour et al., 1997, 1998). However, what
came up in the arguments was that qualitative methods could be considered in built
environment studies. Dainty (2008) and Tembo and Akintola (2021) have made follow-up
studies to confirm this need. Our study is guided by the argumentations for interpretivist
paradigm as brought up in this debate.
Law can be considered a humanity or social science. Whatever the case this study involves
evaluation of the regulatory environment which includes interpretation of the enabling
statutes. There are three approaches, textualism, intentionalism and purposivism, in the theory
of statutory interpretation (see, for instance, Aalto-Heinil€a, 2016; Choi, 2020; Healy, 1999;
Krishnakumar, 2020). In textualism, the person applying the law restricts its interpretation to
the text of the statute, while in intentionalism, the interpretation is guided by the question, what
was the legislature’s intention? On the other hand, in purposivism, statutory interpretation is
guided by the question: what was the purpose of the law? Purposivists consider the policy the
statute seeks to advance; in case a decision would contradict the said policy (Aalto- Real estate
Heinil€a, 2016). professional
This study is about public policy; hence, purposivism relates to it most. The aim of this
study is to translocate purposivism from the arena of judicial decision-making to statutory
services firms
interpretation regarding public policy analysis. The main argument in this study is that
purposivism is a coin whose only one side has been seen. Purposivism has been used in the
judicial system in the face of a crisis of decision. At that juncture, the judicial practitioners
would pose the question: what was the purpose of the legislation? In this study, as public 729
policy analysts, we flip the coin and ask the question: “Does the statute meet its purpose?” in
other words, is the statute fit for purpose? This is the side of the coin that has never been
examined and underlies the contribution to knowledge in this study. This is the concept of
purposivism that is mainstreamed in this study to guide its outcomes.
The study mainly uses document analysis method as explained in the next section, to
establish whether the statutes are fit for purpose. This is partly informed by the OECD’s
recommendations that ex post regulatory impact assessment should be done for existing
regulations to establish their effectiveness and relevance (OECD, 2014; Malyshev, 2006).

Data sources and analytical method

Document analysis, also referred to in literature as document review, is a valid tool of
qualitative research although its use and meaning may vary from discipline to discipline
depending on how it is applied and the attitude of researchers regarding qualitative methods
(see Kayesa and Shung-King, 2021). It is recognized as one of the emergent fields of research
in the social sciences (Altheide et al., 2008; Prior, 2008). Bowen (2009, p. 27) defined document
analysis is “a systematic procedure for reviewing or evaluating documents” used in
qualitative research to examine and interpret data “in order to elicit meaning, gain
understanding, and develop empirical knowledge”. Document analysis sometimes may be
confused with literature review but O’Leary (2017, pp. 216–7) has made clear distinction
between the two:
Please note: a literature review is not a document analysis. It is, for the most part, an overview of
research studies that have been conducted by past researchers. Document analysis is a form of
indirect data analysis [. . .]. If you want to explore things like policy documents, legislation and
organizational protocols, in order to gather data and look for evidence, it should not be included in the
literature review. If the exploration of documents is warranted as a credible approach to answering
your research question, then my advice is to include it in method, and report on it in your findings
section.
This sums up the remit of this study. Document analysis is popularly used in policy studies;
see, for instance, Kayesa and Shung-King (2021) on health policy and Kutsyuruba (2017),
Cardno (2018) and Owen (2014) on education policy.
Kayesa and Shung-King (2021) gives examples of a wide range of documents that can be
used in documentary analysis including public and private documents, media reports, research
reports, personal letters, emails, diaries and policy documents, in the context of policy
development. However, the context of this study is relatively narrower. It analyses the
outcomes of the regulatory policy of real estate PSFs. Therefore, it restricts itself to three main
regulatory documents the ISK Constitution, the Valuers Act and the Estate Agents Act and two
other sets of supplemental material, the EARB’s strategic plan and Gazette Notices, as shown in
Table 1.
According to Bowen (2009), there are three main steps in document analysis; the first
being selection and categorization of relevant documents as indicated in Table 1. This is
followed by extraction and analysis of data to draw insights and conclusion about a concept,
PM Policy document Purpose/Long Title
40,5
Main Material
The ISK N/A
Constitution
The Valuers Act An Act of Parliament to provide for the registration of valuers and for connected
purposes
730 The Estate Agents An Act of Parliament to provide for the registration of persons who, by way of
Act business, negotiate for or otherwise act in relation to the selling, purchasing or letting
of land and buildings erected thereon; for the regulation and control of the professional
conduct of such persons and for connected purposes
Supplemental Material
EARB’s Strategic N/A
Table 1. Plan
Sources of data Gazette Notices N/A

which is what is done in the next three sections. And lastly, use the insights and conclusions
to answer the research question, which is done under discussion and conclusions.
This research has asked a single question: Are the regulatory statutes of the real estate
PSFs in Kenya fit for purpose? We proceed to answer the essential question in the next
sections of this paper where empirical results of policy document analysis is laid out.

The institution of surveyors of Kenya (ISK)

The ISK is a professional organization bringing together all landed property (surveying)
professionals including real estate, that is, estate agency, property management and
valuation, among others. It was established in 1969 along the outfit of the RICS owing to
Kenya’s colonial past. The regulatory roles of ISK include:
(1) Promotion of ethical professional practice among members for the benefit of public
interests
(2) Training and certification of members for initiation into survey profession and the
carrying on of its practice.
According to the ISK’s Constitution, the Council is the executive organ of the organization.
The Council also has permanent committees. The one relevant to regulation is The
Professional Practice and Ethics Committee (ISK, 2019). This committee is responsible for
among other things:
(1) Setting standards for, and discipline of, the members of the Institution
(2) Addressing complaints raised against any member or the Institution touching on
professional performance.
The Constitution allows the ISK to suspend or expel any member “who is guilty of any conduct
which may, in the opinion of the Council, prejudice the professional standing of the Institution”
(ISK, 2019, p. 15). Further, the Constitution provides for Rules of Professional Conduct that
every member must conform to. These rules are established in adaptive by laws of the ISK,
currently considered under Rule 9 on Discipline and Code of Conduct. Members apply annually
for renewal of their practicing licences, but the relevant licencing authorities can issue new
licences only after a member has been cleared by the ISK through issuance of Certificate of
Good Standing by the institution.
 Another Council committee that is relevant to regulation is The Education Foundation Real estate
and Research Committee. This is responsible for, among other things: professional
(1) Organizing courses for continuing professional development services firms
(2) Recommending modalities for examinations
This committee is at the heart of the body of knowledge of surveying professions in the
country. It is this body of knowledge that gives distinction to surveying PSFs. Further, as a 731
professional organization, the ISK has strongly pronounced itself on the issue of
examinations by an article in its constitution that states:
(1) The Council shall administer such examinations as it may deem necessary for
qualification of the various categories of membership.
(2) Curricular for such examination shall be formulated by each Chapter of the
Institution and approved by the Council.
(3) The Council may appoint such examiners and officials as it deems necessary for the
holding of any examinations for membership of the Institution.
There are qualifications criteria for ISK’s membership. There are various categories of
membership, but the most relevant to operations of PSFs is Full Membership. To become a
Full Member, an applicant must have served as a Graduate (Associate) Member for at least 2
years and trained and sat for ISK’s examinations and obtained its post graduate diploma. A
certificate of equivalent qualification also can be accepted. There are several membership
chapters relevant to real estate. These include Building Surveyors, Land Administration,
Estate Agency, Property Management and Valuation. It is important to note that the first two
are mainly practised in the public service realm; hence, they will not feature under PSFs. The
remaining three are practised in the private sector involving several PSFs.
The practice of these three is regulated by the provisions of two statutes: the Valuers Act
and the Estate Agency Act. Basically, being a Full Member of the relevant chapter is the
primary qualification for registration in the relevant statute and licensing to practise the
profession. Although it has its headquarters in the Capital city Nairobi, the ISK has presence
in other commercial regions of Kenya namely Western, Mombasa and North Rift branches.
Additionally, it is worth noting that the ISK’s Constitution also allows for PSFs to be
members under Corporate Membership defined to include: “corporates engaged in practice that
include Valuation, Facilities management, Estate Agency and property management, Land
Surveying, Engineering surveying, Geospatial Information Management, land management
services, Building inspection services and other landed professional consultancy services” (The
Institution of Surveyors of Kenya, 2019, p. 4). For a PSF to qualify for admission as a member, it
should be at least 25% owned by ISK members who are employed in it and should be heading
its relevant departments in line with their professional practice.

The Valuers Act Chapter 532 of the laws of Kenya

This Act of Parliament provides for the establishment of the Valuers Registration Board
whose main purpose is to register valuers in Kenya. It also provides for the appointment of
registrar whose purpose among other things would be to create a register of valuers within
the country. Upon registration, the Registrar is supposed to issue the valuer with a
registration certificate and Gazette the name. The qualifications for registration are as
follows. The applicant must be:
(1) A full member of the Institution of Surveyors of Kenya (Chapter of Valuation and
Estate Management Surveyors); or
PM (2) A corporate member of the Royal Institution of Chartered Surveyors (in the General
40,5 Practice or Land Agency or Agriculture Sections), and he is qualified to be or is a full
member of the Institution of Surveyors of Kenya (Chapter of Valuation and Estate
Management Surveyors); or
(3) The holder of a degree or diploma from any university or college which is recognized
for the time being by the Board and qualifies him to be a full member of the Institution
732 of Surveyors of Kenya (Chapter of Valuation and Estate Management Surveyors).
Qualifications 2 and 3 give foreigners chance to practise in Kenya. Further provisions for
registration of foreigners are made at section 14. It states that where a person is not ordinarily
resident in Kenya but is or intends to come to Kenya and engage in practice as a valuer, the
board can allow the person to be registered for a period.
Apart from these professional qualifications, the registration board requires the applicant
to meet integrity standards. The law provides that “the Board may require an applicant for
registration under this Act as a valuer to satisfy it of the fact that his professional and general
conduct has been such that, in the opinion of the Board, he is a fit and proper person to be
registered under this Act” (Republic of Kenya, 2010a, p. 7). The board can deregister a valuer
on grounds that render the registration untenable, such as:
(1) If the professional qualification has been withdrawn or cancelled by the body through
which it was acquired or by which it was awarded
(2) If the valuer has been adjudged bankrupt
(3) If the Board has found the valuer guilty of an act or omission contrary to the public
interest or misconduct in terms of dishonest practices
(4) If the valuer has been convicted of an offence under the act
(5) For a PSF, if it has been placed under receivership or in liquidation compulsorily or
voluntarily.
The board also can suspend registration if the registered valuer is convicted of an offence
under the act or where the board has found him “guilty of an act or omission amounting to
professional misconduct or activities contrary to the public interest” (Republic of Kenya,
2010a, p. 10). In this context, the board may proceed to caution or censure the registered
valuer, direct that his registration be suspended for a specific period or impose a fine. Further,
the law allows the board to conduct an inquiry over the conduct of a registered valuer. The
inquiry is conducted in the form of a tribunal and the valuer involved is allowed to appear
with an advocate. Moreover, the law allows for appeals against the decision of the board, that
is, where it has refused to register a name, where it has removed a name from the register,
where it has suspended registration or where it has refused to restore a name on the register.
The appeal can be done to the High Court and the court’s decision shall be final.
Specifically, the law does not allow the practice of valuation without registration. It makes
express provisions that:
(1) No individual shall carry on business as a practising valuer unless he is a registered
valuer
(2) No partnership shall carry on business as practising valuers unless all the partners
whose activities include the doing of acts by way of such practice are registered valuers
(3) No body corporate shall carry on business as valuers unless the directors thereof
whose duties include the preparation of valuations in respect of any type of movable
or immovable property are registered valuers.
Any person contravening the above provision is liable to fine and jail term under this law. For Real estate
purposes of practising valuation, the law requires professional indemnity in terms of a professional
business guarantee bond or insurance policy. This is to cover any monetary loss that a person
may undergo under the professional negligence of a practising valuer. Therefore, no
services firms
practising certificate can be issued to a valuer without evidence of professional indemnity. In
terms of operations of PSFs, the law has made provisions of how it can be wound up, where a
valuer ceases to carry on business by reason of death, insolvency or being of unsound mind.
In this case, another registered valuer may be appointed to carry on the practice for a period 733
not exceeding 12 months for the purposes of winding up.
The implementation of the law is left in the hands of the Minister in charge of land. The
minister constitutes the board, appoints the registrar and can make rules, by laws and
subsidiary legislations for operationalization of the law. Among the things, the Minister can
do is to provide for definition of professional misconduct and to determine the fees that
valuers charge for their services. For that matter, valuers charge scaled fees in Kenya.

The Estate Agents Act Chapter 533 of the laws of Kenya

This law establishes the Estate Agents Registration Board and a registrar who holds the
responsibility of creating and maintaining a register of estate agents (Republic of Kenya, 2010b).
The qualifications for registration as an estate agent are like those of the registration of valuers
except for ISK membership. In this context, apart from the Valuation, membership of other
chapters, namely Estate Management Surveyors, Building Surveyors and Land Management
Surveyors can be considered. Further, the board can also register anybody else regardless of
training in real estate so long as the person has not been convicted of any offence involving fraud
or dishonesty.
After the board has considered applications for registration, it allows the registrar to Gazette
the names of registered estate agents. The board also can deregister a person who is found
guilty of any act or omission contrary to the public interest or misconduct under Regulation of
Practice or convicted of an offence under the Act, or a person whose qualification has been
withdrawn or cancelled by the body through which it was acquired or who has been adjudged
bankrupt. Any appeals against the compilation of the register may be made to the high court.
Under the Regulation of Practice clauses, the board is mandated to declare acts of omission
or commission that may be contrary to public interest or constitute professional misconduct.
This section of the law also allows the board to determine the fees to be charged for estate
agency services. The board also can give practising estate agents directions on the keeping of
accounts and to the opening of separate bank accounts for money held on behalf of clients and
the accounting for interest thereof.
Like the VRB, this board also can conduct inquiry into the act of omission or commission
by a practising estate agent. If found guilty in the inquiry the board may suspend, caution,
fine or deregister the agent. The law has provided an elaborate disciplinary procedure for
practising agents under The Estate Agents (Disciplinary Proceedings) (Procedure) Rules.
These proceedings will start with the filing of a complaint against a practising estate agent.

Discussion
From the foregoing, it becomes apparent that in the context of valuation, Kenya is using a
hybrid model combining state regulation (the US model) and self-regulation (the United
Kingdom) model. As noted earlier, the ISK is an organization that was modelled in the like of
the self-regulating RICS. What comes out is that the ISK is playing the leading role in policing
the valuation profession in a symbiotic co-regulation arrangement with VRB. The ISK is
rightly the custodian of knowledge of the valuation profession. It trains and certifies valuers.
The VRB relies on ISK certification in terms of knowledge base to register and licence valuers.
PM The ISK’s other role is to ensure discipline in the profession. One of its objectives is
40,5 promotion of ethical professional practice among members for the benefit of public interests.
It has a disciplinary committee that will investigate issues of professional misconduct. Again,
the VRB relies on certification of ISK for registration and licensure of valuers. As noted
earlier, the VRB shall not register a valuer unless the latter presents what they call “Certificate
of Good Standing” issued by the ISK. Similarly, the VRB has mechanism of handling
professional misconduct as laid out in the regulatory statute, but these are duplicate and
734 redundant procedures in law.
Fortunately, the charges for registration and licensure are reasonable. There were 408
valuers licensed to practise in the year 2021 while eight new valuers were registered (Republic
of Kenya, 2021a). The practising licence costs Kenya Shilling 5,000, and registration fee is
only Kenya Shilling 1,000, which brings the total revenue from licensure and registration to
Kenya Shilling 2,048,000. This is not a significant burden to the practitioners.
Whereas the ISK has brought some sanity in the field of valuation in Kenya, chaos reigns
in the field of estate agency. As we have seen the estate agency situation is not unique to
Kenya. Earlier, we noted that the law prescribes the requisite qualifications for registration as
an estate agent and then opens the door to anybody to practise without the qualifications.
Nevertheless, even if registration is open and it is the only legal requirement for practising
estate agency still the EARB (2012) reckons that there are many practising out there without
being licensed due to inadequate enforcement mechanism. Therefore, the law exists on paper
but does not work for the protection of Kenyans consuming real estate professional services.
The existence of unregulated estate agents out there is not only an inconvenience to the public
but also to the registered agents because they give the profession a bad reputation.
Conversely, despite the operating law allowing any one to register as an estate agent, “the
anyone category” of people do not register. According to Table 2, 481 estate agents renewed their
registration certificates to practise from 1st January to 31st December 2021 (Republic of Kenya,
2021b). Of these only 41% were agents without formal training in real estate professions. The
Department of Real Estate at University of Nairobi has striven to professionalize estate agency
practice in Kenya by training “the anyone category” to Diploma level.
Twenty-five of the 59 agents in the category with real estate training but without MISK
are holders of Diploma on Estate Agency and Property Management offered by the
Department. This is an endeavour that should be promoted and supported by EARB. The
agents with MISK qualification are the ones coming through ISK and from the look of it they
are minority at 47% compared to those without MISK.
Generally, what is coming out is that the PSFs are controlled indirectly through the
professionals. The focus of the laws is to register and license individuals and not firms. But
firms are not allowed to operate without ownership by registered professionals. In the estate
agency sector perhaps, things would work well if the law focussed on firms rather than
professionals. The law should come up with criteria for certifying and directly regulating
firms without disregarding their professional composition. Secondly, encouraging corporate
rather than natural persons to practise real estate agency is an added advantage to regulatory

Qualifications category Frequency Percent

Table 2. Real Estate training without MISK 59 12

Qualifications of Real Estate training with MISK 225 47
registered estate Without Real Estate training 197 41
agents for 2021 year of Total 481 100
practice Source(s): Compiled from Republic of Kenya (2021b, pp. 1,279–1,320)
objective as the players will also have to comply with the general corporate regulations. It also Real estate
entails the possibilities of instilling corporate governance best practices such as private professional
voluntary standards or private voluntary regulations such as ISO 9001 for quality assurance
from the International Organization for Standardization (ISO).
services firms

Conclusion
We can conclude that the ISK is doing good work in self-regulation of professionals in the 735
valuation occupation. Therefore, the co-regulatory system for valuation practice in Kenya is
working well. Therefore, we can definitely conclude that the Valuers Act Chapter 532 of the
Laws of Kenya is a fit for purpose statute. The same cannot be said for the Estate Agents Act
Chapter 533 of the Laws of Kenya, the statute is not fit for purpose as it has failed to regulate
the practice of estate agency in Kenya, according to the foregoing discussion.
In conclusion, the regulatory authority and laws in estate agency should focus on the
practices or the PSFs rather than on individual practitioners to build a strong corporate image
for estate agency. It should encourage incorporation of firms that would be subject to further
regulations in the business environment and encourage good practice in order to build a
pleasant corporate reputation. In this context, the EARB could even introduce a quality rating
system for the PSFs to inculcate quality in the practice. Further the education strategy
involving training in estate agency at diploma level is critical in cultivating professionalism
in the sector, and the EARB should leverage on this to gentrify the occupation.
On the other hand, the ISK must not suffer characterization of regulatory capture. It
should find a door to open for those who qualify with diploma in estate agency. The ISK can
then induct them in professional ethics and practice. Thereafter, the ISK can lobby the EARB
to remove the clause that allows “the anyone category” to practise. Despite all, estate agency
is a legitimate profession found in the curricula and reading lists of property studies
worldwide. Therefore, its regulation should go beyond mere registration.

References
Aalto-Heinil€a, M. (2016), “Fairness in statutory interpretation: text, purpose or intention?”,
International Journal of Legal Discourse 2016, Vol. 1 No. 1, pp. 193-211.
Altheide, D., Coyle, M., DeVriese, K. and Schneider, C. (2008), “Emergent qualitative document
analysis”, in Hesse-Biber, S.N. and Leavy, P. (Eds), Handbook of Emergent Methods, The
Guilford Press, New York, pp. 127-151.
Appraisal Foundation (2021), “The appraiser regulatory system in the United States”, available at:
https://www.appraisalfoundation.org/imis/TAF/About_Us/Appraiser_Regulatory_System/
TAF/Regulatory_Structure.aspx?hkey5c41ed3d7-9a16-4e0c-932e-e8375083b587.
Blau, P.M. and Scott, W.R. (1963), Formal Organizations: A Comparative Approach, Routledge and
Kegan Paul, London.
Bowen, G.A. (2009), “Document analysis as a qualitative research method”, Qualitative Research
Journal, Vol. 9 No. 2, pp. 27-40, doi: 10.3316/QRJ0902027.
Bragg, R.J. (1992), “Regulation of estate agents: a series of half-hearted measures?”, The Modern Law
Review, Vol. 55 No. 3, pp. 368-376.
Campbell, D.J. (1997), Organizations in the Business Environment, Butterworth-Heinemann, Oxford.
Cardno, C. (2018), “Policy document analysis: a practical educational leadership tool and a qualitative
research method”, Educational Administration: Theory and Practice, Vol. 24 No. 4, pp. 623-640.
Choi, J.H. (2020), “An empirical study of statutory interpretation in tax law”, New York University Law
Review, Vol. 95 No. 2, pp. 363-441.
PM Clark, K.D., Doh, J.P. and Stumpf, S.A. (2005), “Management and governance of professional service
firms”, in Doh, J.P. (Ed.), Handbook on Responsible Leadership and Governance in Global,
40,5 Business, Edgar Elgar, Cheltenham, pp. 275-304.
Cohen, L.R. (1979), “The firm: a revised definition”, Southern Economic Journal, Vol. 46 No. 2,
pp. 580-590.
Colwell, P. and Trefzger, J. (1992), “Impact of regulation on appraisal quality”, The Appraisal Journal,
July, pp. 428-429.
736
Crosby, N., Hutchison, N., Lusht, K. and Yu, S.M. (2018), “Valuations and their importance for real
estate investments”, in MacGregor, B.D., Schulz, R. and Green, R.K. (Eds), Routledge Companion
to Real Estate Investment, Routledge, Abingdon.
Dainty, A. (2008), “Methodological pluralism in construction management research”, Advanced
Research Methods in the Built Environment, Vol. 1, pp. 1-13.
Ding, L. and Nakamura, L. (2016), “The impact of the home valuation Code of conduct on appraisal
and mortgage outcomes”, Real Estate Economics, Vol. 43, pp. 658-690.
EARB (2012), “The estate agents registration board strategic plan 2013 – 2017”, November 2012,
available at: EARB Strategic plan 2013-2017.pdf (estateagentsboard.or.ke).
Etzioni, A. (1964), Modern Organizations, Prentice-Hall, New Jersey.
Freeman, S. and Sandwell, M. (2008), “Professional service firms entering emerging markets: the role
of network relationships”, Journal of Services Marketing, Vol. 22 No. 3, pp. 198-212.
Gee, K. (2004), “Professionalism, self-regulation, and the problem of dual agency: the residential real
estate industry in British Columbia”, Unpublished Master of Laws Thesis, University of British
Columbia.
Greenwood, R., Deephouse, D.L. and Li, S.X. (2007), “Ownership and performance of professional
service firms”, Organization Science, Vol. 28 No. 2, pp. 219-238.
Healy, M.P. (1999), “Legislative intent and statutory interpretation in England and the United States:
an assessment of the impact of Pepper v. Hart”, Stanford Journal of International Law, Vol. 35
No. 2, Summer 1999, pp. 231-254.
Institution of Surveyors of Kenya (ISK) (2019), Constitution and By-Laws. Adopted at the Special
General Meeting of the Institution of Surveyors of Kenya held on Friday, February 12, 2010,
Revised 2019.
Javalgi, R.G., Griffith, D.A. and White, D.S. (2003), “An empirical examination of factors influencing
the internationalization of service firms”, Journal of Services Marketing, Vol. 1 7 No. 2,
pp. 185-201.
Kayesa, N.K. and Shung-King, M. (2021), “The role of document analysis in health policy analysis
studies in low and middle-income countries: lessons for HPA researchers from a qualitative
systematic review”, Health Policy OPEN, Vol. 2, p. 100024.
Ke, Q., Isaac, D. and Dalton, P. (2008), “The determinants of business performance of estate agency in
England and Wales”, Property Management, Vol. 26 No. 4, pp. 255-272.
Kibunyi, D., Ndiritu, S.W., Carcel, H. and Gil-Alana, L.A. (2017), “Real estate prices in Kenya: is there a
bubble?”, Journal of Housing and the Built Environment, Vol. 32 No. 4, pp. 787-804.
Krishnakumar, A.S. (2020), “Backdoor purposivism”, Duke Law Journal, Vol. 69, pp. 1275-1348.
Kutsyuruba, B. (2017), “Using document analysis methodology to explore educational reforms and
policy changes in post-soviet Ukraine”, in Silova, I., Sobe, N.W., Korzh, A. and Kovalchuk, S.
(Eds), Reimagining Utopias: Theory and Method for Educational Research in Post-Socialist
Contexts, Sense Publishers, Rotterdam, pp. 199-216.
Mahama, C. and Dixon, M. (2006), Acquisition and Affordability of Land for Housing in Urban Ghana:
A Study in the Formal Land Market Dynamics, The Royal Institution of Chartered Surveyors
(RICS), Research Paper Series, Vol. 6 No. 10 October.
Malyshev, N. (2006), “Regulatory policy: OECD experience and evidence”, Oxford Review of Economic Real estate
Policy, Vol. 22 No. 2, pp. 274-299.
professional
Markoc, I. and Cizmeci, F. (2021), “Ethics in real estate: agency practices in Istanbul”, International
Journal of Housing Markets and Analysis. doi: 10.1108/IJHMA-10-2020-0119.
services firms
McAdam, R. and Canning, N. (2001), “ISO in the service sector: perceptions of small professional
firms”, Managing Service Quality, Vol. 11 No. 2, pp. 80-92.
Njuguna, J.K. (2018), A Critique of the Regulatory Framework for Estate Agents Business in Kenya, 737
Unpublished Master of Laws (LLM) Thesis, University of Nairobi.
Obeng-Odoom, F. (2011), “Real estate agents in Ghana: a suitable case for regulation?”, Regional
Studies, Vol. 45 No. 3, pp. 403-416, doi: 10.1080/00343400903241550.
OECD (2014), Regulatory Policy in Mexico towards a Whole-Of-Government Perspective to Regulatory
Improvement, OECD, Paris.
Oloke, O., Ayedun, A. and Oni, A. (2017), “A critique of real estate agency in Nigeria: policy pedagogy
and practice”, Proceedings of International Conference on Education and New Learning
Technologies, Barcelona, 3-5 July, doi: 10.21125/edulearn.2017.1415.
Owen, G.T. (2014), “Qualitative methods in higher education policy analysis: using interviews and
document analysis”, The Qualitative Report, Vol. 19, pp. 1-19, Article 52, available at: http://
www.nova.edu/ssss/QR/QR19/owen52.pdf.
O’Leary, Z. (2017), The Essential Guide to Doing Your Research Project, 3rd ed., SAGE Publication,
Thousand Oaks, CA.
Prior, L. (2008), “Researching documents: emergent methods”, in Hesse-Biber, S.N. and Leavy, P. (Eds)
Handbook of Emergent Methods, The Guilford Press, New York, pp. 117-126.
Raftery, J., McGeorge, D. and Walters, M. (1997), “Breaking up methodological monopolies: a multi-
paradigm approach to construction management research”, Construction Management and
Economics, Vol. 15 No. 3, pp. 291-297, doi: 10.1080/014461997373024.
Reihlen, M. and Apel, B.A. (2007), “Internationalization of professional service firms as learning – a
constructivist approach”, International Journal of Service Industry Management, Vol. 18 No. 2,
pp. 140-151.
Republic of Kenya (2010a), Valuers Act, Revised Edition, The National Council for Law Reporting,
Nairobi.
Republic of Kenya (2021b), The Kenya Gazette Vol. CXXIII—No. 55, Government Printer, Nairobi.
Republic of Kenya (2012), Registration of Business Names Act—Revised edition, The National Council
for Law Reporting, Nairobi.
Republic of Kenya (2015), Business Registration Service Act, The National Council for Law Reporting,
Nairobi.
Republic of Kenya (2016), The Companies Act No. 17 of 2015—Revised edition, The National Council
for Law Reporting, Nairobi.
Republic of Kenya (2021b), The Kenya Gazette, Government Printer, Nairobi.
Republic of Kenya (2021a), The Kenya Gazette Vol. CXXIII—No. 30, Government Printer, Nairobi.
Robbins, S.P. (2007), Organization Theory: Structure, Design and Applications, Prentice-Hall India,
New Delhi.
Rooke, J., Seymour, D. and Crook, D. (1997), “Preserving methodological consistency: a reply to
Raftery, McGeorge and Walters”, Construction Management and Economics, Vol. 15 No. 5,
pp. 491-494, doi: 10.1080/014461997372845.
Runeson, G. (1997), “The role of theory in construction management research: comment”, Construction
Management and Economics, Vol. 15 No. 3, pp. 299-302, doi: 10.1080/014461997373033.
Seymour, D. and Rooke, J. (1995), “The culture of the industry and the culture of research”,
Construction Management and Economics, Vol. 13 No. 6, pp. 511-523.
PM Seymour, D., Crook, D. and Rooke, J. (1997), “The role of theory in construction management: a call for
debate”, Construction Management and Economics, Vol. 15 No. 1, pp. 117-119, doi: 10.1080/
40,5 014461997373169.
Seymour, D., Crook, D. and Rooke, J. (1998), “The role of theory in construction management: reply to
Runeson”, Construction Management and Economics, Vol. 16 No. 1, pp. 109-112, doi: 10.1080/
014461998372655.
Teece, D. (2003), “Expert talent and the design of (professional services) firms”, Industrial and
738 Corporate Change, Vol. 12 No. 4, pp. 895-916.
Tembo, C.K. and Akintola, A. (2021), “A retrospection of methodological pluralism in the journal of
financial management of property and construction (2005-2020)”, Journal of Financial
Management of Property and Construction. doi: 10.1108/JFMPC-11-2020-0074.
Tzioumis, K. (2017), “Appraisers and valuation bias: an empirical analysis”, Real Estate Economics,
Vol. 45 No. 3, pp. 679-712.
Von Nordenflycht, A. (2010), “What is a professional service firm? Toward a theory and taxonomy of
knowledge-intensive firms”, The Academy of Management Review, Vol. 35 No. 1, pp. 155-174.
Woodall, P. and Brobeck, S. (2006), State Real Estate Regulation: Industry Dominance and Its
Consumer Costs, Consumer Federation of America, Washington, DC.

Further reading
Latham, M. (2017), “‘A fraud, a drunkard, and a worthless scamp’: estate agents, regulation, and
Realtors in the interwar period”, Business History, Vol. 59 No. 5, pp. 690-709, doi: 10.1080/
00076791.2016.1261828.

Corresponding author
O.A K’Akumu can be contacted at: owiti.kakumu@uonbi.ac.ke

For instructions on how to order reprints of this article, please visit our website:
www.emeraldgrouppublishing.com/licensing/reprints.htm
Or contact us for further details: permissions@emeraldinsight.com