A process that should be simple as it is guided by comprehensive property and land laws, but buying and selling property in Kenya is far from straightforward. Instead, buyers have to deal with slow documentation processes marred by corruption, where buyers must either know the right people or offer bribes to speed up processes.
All hope is not lost, with the extensive implementation of new reforms such as the New Land Reforms, the buying and selling of real estate in Kenya will improve and existing laws will be enforced to the letter.
To ensure that you comply with Kenyan laws governing property transactions and to avoid pitfalls such as scams, it is advisable to seek legal representation when buying/selling property in the country.
In Kenya, land is registered under:
- Land law
- National Land Commission
- Land Registration Act; offering registration in all districts
Land Control Act
- Formed under the Land Control Act, Land Control Boards are prohibited by law from granting permission to transfer farmland to companies and individuals who are not eligible to hold it.
Foreign and Local Investment in Real Estate in Kenya: The Process
Under the new Constitution, non-citizens and companies whose shareholders are non-citizens are not allowed to own freehold property. The law allows them to own rental property for a period not exceeding 99 years.
- Local and foreign real estate investors are allowed by law to purchase residential and commercial real estate located in cities and municipalities without any restrictions as long as they follow the legal procedures in place.
- However, foreigners and private companies whose shareholders are not citizens of Kenya are prohibited by law from buying farmland unless such purchase is exempted by the provisions of the Control of Land Act, SEC 24.
Once an investor has researched and identified a suitable property, they should endeavor to view and appraise the property to ensure that:
- There is in fact
- It meets your needs and expectations such as physical location and access to infrastructure
- Its conditions are favorable and worth the investment
Note: Visitor fees are applied when visiting properties for sale. Fees vary by type and size.
Perform the required research
A solicitor or the buyer should then obtain copies of the national identity card and the title deed from the seller and carry out the necessary searches at the land office and the people registration office.
- This step is very important to verify that the said owner is indeed the holder of the property.
- To conduct the search, you are required by law to file a copy of the title deed and a search request form and file them with the court office.
- The search fee required is 500 Ksh.
- The Land Registry gets the results within 2-3 days.
Search results should show
- The registered title holder of the property
- Property size
- All outstanding issues registered against the property such as court orders, caveats and prohibitions etc.
Additionally, it is important to:
- Check whether the property is illegal or improperly acquired, as stated in the Ndung’u land report filed by the Commission of Inquiry into Illegal and Irregular Allotted Land.
- Get a licensed surveyor to not only establish the markers of the property, but also to verify the land at the survey office.
Negotiation and sales agreement
Satisfactory preliminary checks must be followed by negotiations on the terms of sale between the buyer and the seller in the presence of their respective legal teams.
- Negotiations involve discussions on the price of the property and payment terms
- 10% of the total amount is paid in advance as a deposit and the balance is paid when the sale transaction is completed
- The agreement of terms by both parties paved the way for the preparation of an Agreement of Sale by the seller’s attorney, who then seeks the seller’s approval.
A sales agreement contains
- Conditions of sale
- Purchase price
- Payment terms
- Payment lead time
- Completion documents that facilitate the transfer of ownership
- The Law Society’s terms of sale are often included
When both parties accept the contract of sale, they execute it with the signature of the buyer first, followed by the seller. Finally the money changes hands.
- A stamp duty at a cost of Ksh 200 is then obtained from the land office as required by law to ensure that in the event of a dispute the signed documents are admissible in court.
Transfer of ownership and stamp duty
Once the buyer’s lawyer has prepared the transfer, both parties approve and sign.
- The seller is responsible for acquiring all required completion documents necessary to complete the registration of the property to the buyer.
- The buyer is then liable for stamp duty payable to the Kenya Revenue Authority in accordance with Chapter 480 of the Stamp Duty Act of Kenya.
- Prior to the determination of duty, the seller must request a valuation of the property by filing a signed valuation for stamp duty form and transfer of ownership form at the Land Office.
- A stamp duty declaration, appraisal and payment slip are then completed at the land office.
Once the stamp duty has been obtained and the transfer process has been completed, the law requires that the transfer documents as well as the following documents be reserved for registration:
- Original title deeds
- Declaration of stamp duty
- Assessment form and payment slip
- Land Rate Clearance Certificates
- Transfer Authorizations
- Stamp Duty Assessment Form
Property Registration: The Final Step in Transferring Ownership
When the buyer obtains the transfer of title registered, the law advises to verify the registration of it by carrying out a property search.
Authorization to develop
In case the owner intends to develop the purchased property, he is required to go to the relevant local authority and obtain the required development permission.
Often the owner will be asked to:
- Commission an environmental impact assessment report to determine if the planned development has any adverse environmental effects
- Obtain an environmental license from the environmental organization NEMA.