Relief as fixing of surveyor fees flops

Surveying equipment. CAK has rejected surveyors' application to set minimum fees. FILE PHOTO | NMG 

By MUTHOKI MUMO

More by this Author

Summary

• The Competition Authority of Kenya has rejected surveyors' application to set minimum fees, arguing that the Institute of Surveyors of Kenya did not sufficiently justify the need for minimum prices and that “such fees will reduce competition and increase the costs of land”.

Land buyers have been spared exorbitant transaction costs after the competition watchdog rejected an application by surveyors to set minimum fees.

The decision effectively means the fee scales that the Ministry of Land has been setting for sector players have been rendered ineffective.

The Institute of Surveyors of Kenya (ISK) in 2015 applied to the Competition Authority of Kenya (CAK) for exemption from regulations barring it from setting minimum service fees for its members, arguing that such a move would help weed out quacks in the sector.

But the authority has in response argued that the ISK did not sufficiently justify the need for minimum prices and that “such fees will reduce competition and increase the costs of land”.

“I can confirm that we rejected [the application] on grounds that setting minimum rates usually benefits the service provider, irrespective of their inefficiencies or quality to the detriment of consumers,” CAK director-general Wang’ombe Kariuki said.

Though the decision is directed at the ISK, it has the potential of nullifying existing price scales that are set out in the Surveyors Act and the Valuers Act.

These two pieces of legislation include detailed schedules of fees that professionals may charge, as decided by the minister of lands.

Mr Kariuki said the CAK’s decision means pre-existing fees cannot be executed and are  “null and void”.

ISK chairman Stephen Ambani said such a scenario would open the market to greater competition and would, theoretically, drive down the cost of land transactions.

READ: Public secretaries eye CAK approval in price fixing bid

Mr Ambani said the ISK would not appeal the decision. He said the application had been filed by “mistake” in the first place and ought to have come from the Valuers Registration Board or the Surveyors Registration Board, the sector regulators.

He, however, added that the two regulatory bodies supported the ISK application.  

“We made a mistake in applying to the competition authority but we believe the decision they made is for the good of the public,” said Mr Ambani.

The CAK is empowered to make these decisions based on a 2014 amendment to its constitutive law which requires even statutory bodies whose regulations provide for the setting of minimum prices to first seek exemption for continued implementation of these price rules.

The rejection of the ISK’s application is the latest instructive decision as to the CAK’s policy stance on price-setting.

In 2016 the competition watchdog rejected a similar application by accountants, on near identical grounds, and before that it had taken on lawyers, saying the current scheme of setting legal fees was inflating the price of legal work.

There is an application pending from the Institute of Public Secretaries and reading from this precedent, it seems very unlikely that this professional body will be allowed to set prices.