According to Robert Kiyosaki (a bestselling author and a successful American businessperson), real estate investing even on a very small scale remains a tried and a true means of building an individual cash flow and wealth. In light of this, the demand for land and other real estate properties has continued to rise not only in Kenya but also across the globe.
Land ownership in Kenya
Cases of people being short-changed in land deals have continued to increase, scaring away those who wish to invest in land for either commercial or residential uses. So what do you really need to know when looking to buy land in Kenya?
In Kenya, like other countries, either the government, legal entities (i.e. a company), an individual or a group owns land. Kenyan land laws provide for tenure systems that dictate how long the land is held.
Currently, land ownership can be on a freehold where the owner is allowed to hold the land for an indefinite term or a leasehold where the owner is conferred a limited term that can often be extended upon expiry.
Leasehold is common for non-citizens and limits ownership term to not more than 99 years. The others are a customary system where a group of individuals belonging to a clan or an ethnic community holds the rights to the land.
The final tenure system in Kenya is public or state land where the government privately owns the land. This ownership system originates from the Crown Lands Ordinance of 1902 that declared unoccupied land the property of the crown.
Can foreigners own land in Kenya?
In Kenya, land ownership is not only restricted to citizens. Foreigners to can legally own land and other real estate properties. The ownership can be for either a group or an individual.
Lack of information on how to own land as a foreigner has led to many of them being duped. Most are made to believe that they cannot legally own land on their names thus the need to create a local partnership that oftentimes ends up in ugly court cases.
However, unlike for citizens of Kenya, Land ownership for foreigners is often subjected to some limitation. One of such limitations is that the tenure or the right to hold the land is only limited to ninety-nine years.
What this means, therefore, is that foreigners can only own land under a leasehold of not more than ninety-nine years. If for any cases, a foreigner buys land with a lease interest of more than 99 years, by law he or she is deemed to hold the same peace on a ninety-nine- years lease.
Another limitation is that individual foreigners or wholly owned corporations cannot acquire agricultural land unless at the discretion of the president, often done through a gazette notice. What then is the right procedure for owning land in Kenya?
The process of buying land in Kenya
Land in Kenya is a delicate issue, for a long time now cases of land-related conflicts continue to increase. The high demand for land for commercial and residential areas has made potential real estate investors vulnerable to con men who pose as genuine land brokers.
So, what is the right process of buying land in Kenya?
Having operated in the market for some years now, we understand the hustle land buyers go through. For those starting out, here are some steps you need to follow to avoid being duped when buying land in Kenya.
1. Land search at the ministry of land
The first step is to do a search at the ministry of land. With the advent of technology you no longer have to go to their offices, you can simply do this in the comfort of your house or your office using the e-citizen platform.
All you need to use the system is valid title number and an active e-citizen account.
Start by logging into your e-citizen account or sign up for an account
From the dashboard, click on “Ministry of land, Housing, and Urban development”
Click on Land search options
On the new window, key in the title number and complete the online land search form
Confirm your details and pay for the service using M-pesa. The cost Ksh 520
Confirm payment and print the result
A land search should help ascertain whether the title has been charged or has a caveat (in cases where it has been used to secure a loan).
2. Confirm unpaid land rates
The next thing you need to do is to make sure that the land you seek to buy does not have any unpaid land rates. In case it has, then you should be able to factor the amount when paying for the land.
In Nairobi for instance, land rate clearance certificate costing Ksh 7,500 can be issued within a day.
3. Land map for the place
The next step is to visit a surveyor to get a land map drawn to scale of the area you look to invest in. It is encouraged to have two maps, one drawn to scale and the other a general representation of the neighboring farms.
Though this can also be available at the ministry of lands, we often encourage potential buyers to visit a surveyor as it is first and better.
4. Ground Verification
Now that you have the map, and you have confirmed that the seller is the genuine owner of the land, you will need to do a ground verification. What this means is that you need to actually go and see the land for yourself.
For this step, it would be great to carry a tape measure so that you can confirm the actual dimensions of the land. A surveyor will charge about Ksh 1,000 for every beacon.
When out in the field make sure that all those bordering the land are in agreement with the boundaries.
5. Written agreement
We often encourage land buyers to have the transaction in writing. It is advisable to engage a lawyer (they will charge 3000 ksh for transaction less than 1,000,000 and 8,000 ksh for a transaction above 1,000,000 ksh).
Legal fees are to be shared equally between you and the seller. Depending on the terms of the agreement, you can pay for the land either in cash or in installment.
“By the time you are making the initial payment, the title deed and other documents should be in the custody of a lawyer of a third party”
6. Schedule a meeting with the Land control Board
The next step is to book a special land control board with the areas assistant county commissioner. The meeting will involve you, the seller, and the assistant county commissioner.
Unlike the Land Control Board Meeting held once a month, SCLB cost Ksh 5,000 and takes about two hours depending on assistant county commissioners’ schedule.
7. Land transfer process
The seller after receiving all the payment for the land, he or she should now sign a land transfer form or initiate the process of transferring the land. To do that, you will need the following documents:
• Signed land transfer form
• A land search not older than 6 months
• Land rate clearance form from the municipality
• Passport photos
• KRA pin
• The sale agreement
• The old title deed
With all these documents, head to the lands ministry to change the ownership. It cost about Ksh 5, 000 to process the new title deed.
8. Capital gains tax
After the payments has been made and the piece has now been transferred to you, you will need to pay capital gains such as stamp duty and transfer fees. The amount is often 4% for Municipalities on the purchase price of the land.
The seller is advised to pay the capital gains tax and share the information with the buyer as when paying stamp duty through the I-tax system.
9. Post-purchase land search
Finally, after all the above steps have been completed, we encourage you to do a final online search after say a week or two to make sure that the new details are your own.
Remember, due diligence should be carried out when seeking to invest in real estate from time to time.