Kenya Real Estate: Laws and procedures for buying / selling
However, a process that should be straightforward, as it is guided by comprehensive property and land laws, buying and selling real estate in Kenya is far from straightforward. Instead, buyers have to deal with slow documentation processes that are marred by corruption, where buyers have to meet the right people or have to 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 property in Kenya will improve and existing laws will be applied to the letter.
To ensure compliance with Kenyan laws governing real estate transactions and to avoid pitfalls such as being scammed, it is recommended that you seek legal representation when buying / selling property in the country.
In Kenya, the land is registered under:
- The Land Law
- Lands of the National Lands Commission
- Land Registry Law; offering registration in all districts
Land control law
- Formulated under the Land Control Act, land control boards are prohibited by law from granting consent to transfer agricultural land to companies and individuals who are not eligible to own it.
Foreign and local real estate investment in Kenya: the process
Under the new Constitution, non-citizens and companies with non-citizen shareholders are prohibited from owning freehold property. The law allows them to own rental properties for a period not to exceed 99 years.
- Both local and foreign real estate investors are authorized by law to buy residential and commercial real estate located in cities and municipalities without any restrictions, provided they adhere to established legal procedures.
- However, foreigners and private companies with shareholders who are not Kenyan citizens are prohibited by law from purchasing agricultural land, except where such purchase is exempted by the provisions of the Land Control Act, SEC 24.
Once an investor has searched for and identified a suitable property, they should endeavor to visit and evaluate the real estate to ensure that:
- really exist
- It meets your needs and expectations, such as physical location and access to infrastructure.
- Its conditions are favorable and worthy of investment.
Note: A viewing fee applies when viewing properties for sale. Rates vary by type and size.
Carrying out the required search
A lawyer or the buyer should obtain copies of the National Identity Card and the property title from the seller and carry out the necessary searches at the land office and the Personnel Registration Office.
- This step is very important to verify that said owner is really the owner of the property.
- To conduct the search, you are required by law to submit a copy of the title deed and a search request form and deposit it with the registry.
- The charges for the required search are Ksh500.
- The property registry obtains the results in 2-3 days.
Search results should show
- The registered owner of the property
- Property size
- Any pending matters filed against the property, such as court orders, warnings and prohibitions, etc.
In addition, it is important to:
- Check if the property is illegal or has been acquired irregularly, as stated in the Ndung’u Land Report presented by the Commission of Inquiry on Illegal and Irregular Allocated Lands.
- Get a registered surveyor not only to set property markers, but also to check the land at the Surveying Office.
Negotiation and sale agreement
Successful preliminary verifications should be followed by negotiations on the terms of sale between the buyer and the seller with the presence of their respective legal team.
- Negotiations involve discussions about the price of the property and the terms of payment.
- 10% of the total amount is paid in advance as an advance and the balance is paid when the sale transaction is completed.
- The terms agreement of both parties laid the groundwork for the preparation of a sales agreement by the seller’s attorney, who then seeks the seller’s approval.
A sales agreement contains
- Terms of sale
- Purchase price
- Payment conditions
- Payment completion period
- Completion documents that facilitate the transfer of ownership.
- The conditions of sale of the Law Society are usually included
When both parties accept the sales agreement, they execute it with the signature of the buyer first and then the seller. Finally the money changes hands.
- Then a stamp tax costing Ksh200 is 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
Once the ombudsman has prepared the transfer, both parties approve and sign.
- The seller is responsible for acquiring all the completion documents necessary to register the property with the buyer.
- The buyer is then responsible for the stamp duties payable to the Kenya Revenue Authority in accordance with Chapter 480 of the Stamp Act of the laws of Kenya.
- Before determining the fee, the seller must request the property appraisal by submitting the signed appraisal for the stamp tax form and the property transfer form to the Land Office.
- A stamp, appraisal, and proof of payment tax return is then completed at the Land Office.
Once the stamp tax is obtained and the transfer process is complete, the law requires that the transfer documentation along with the following documents be reserved for the record:
- Original property deeds
- Stamp Tax Return
- Evaluation form and proof of payment
- Certificates of settlement of land fees
- Transfer of consents
- Valuation form for stamp duty
Property registration: the final stage of property transfer
When the buyer obtains the transfer of registered property, the law advises to verify the registration of the same by conducting a property registration.
Permission to develop
In case the owner intends to develop the purchased property, he must go to the relevant local authority and obtain the necessary development authorization.
Often times, the landlord will be asked to:
- Commission an environmental impact assessment report to determine if the planned development has adverse environmental effects.
- Obtain an environmental license from the environmental agency-NEMA.