How to Buy Property in Kenya: A Step-by-Step Legal Guide

How to buy property in Kenya is a question of law as much as price. A purchase is governed by the Land Registration Act, No. 3 of 2012, the Land Act, No. 6 of 2012, the Land Control Act, the Stamp Duty Act, and the Constitution. The most costly mistakes, such as missing a statutory deadline or assuming a clean search means a clean title, usually happen at the legal stage.

How to Buy Property in Kenya: Step 1, Search and Due Diligence

Search the title at the relevant Land Registry to confirm the registered owner, the nature of the title, and any charge, caution or restriction. A search is the start of due diligence, not the end of it. Section 28 of the Land Registration Act lists overriding interests that bind registered land without appearing on the register, so a clean search does not guarantee a clean title. Visit the site as well, and for larger parcels commission an independent survey, to confirm the land matches its registered description and to see whether anyone is in occupation.

Step 2: Check Land Control Board Consent

Under Section 6(1) of the Land Control Act, the sale, transfer, lease, mortgage, exchange or partition of agricultural land situated within a land control area is void for all purposes unless the land control board for that area has consented. The test is whether the parcel lies within a land control area, which is a question of fact to confirm early rather than assume.

Section 8(1) requires the application for consent to be made to the land control board within six months of the making of the agreement. The High Court may extend that period where it considers there is sufficient reason, on such conditions as it thinks fit, but an extension is not automatic. Diarise the six-month deadline the day the agreement is signed.

Step 3: Sign the Sale Agreement

A sale agreement should be in writing and signed by both parties. It should identify the parties, describe the land by title number, and state the price, deposit, payment terms, completion date and the consequences of default. Have an advocate prepare or review it before signing. An agreement that is silent or ambiguous on the point later in dispute is a common cause of delay at completion.

Step 4: Pay Stamp Duty

Stamp duty on a conveyance or transfer on sale is set by the Schedule to the Stamp Duty Act. On the current text on Kenya Law, immovable property situated in a municipality is charged at the rate in item 12A of the Schedule, which works out at four per cent of the consideration, while other property falls under item 11, which works out at two per cent. Check the current Schedule and any later Finance Act amendments before budgeting, because the rates and exemptions change.

The price in the agreement is not the only figure that matters. Under Section 10A of the Act, the Collector of Stamp Duties may refer a conveyance on sale of immovable property to the Chief Government Valuer or an appointed valuer to establish its true open market value, and may demand additional duty, payable within twenty-one days of the written notice. A buyer should therefore allow for a valuation that differs from the agreed price.

Step 5: Register the Transfer

Under Section 43 of the Land Registration Act, an instrument effecting a disposition of land must be in the prescribed form. The transfer is lodged at the Land Registry with the original title documents, evidence of stamp duty, Land Control Board consent where required, and the prescribed fees. Registration, not signing the agreement or paying the price, is the point at which the buyer becomes the proprietor. Section 24 provides that registration vests the interest described in the register in the proprietor, and Section 25 protects the rights of a proprietor, subject to the exceptions it lists.

Until registration, the buyer holds only a contractual interest. A buyer who has paid a deposit can protect it by lodging a caution under Section 71. Our land registration guide explains cautions and the register in more detail.

Foreign Ownership Restrictions

Under Article 65(1) of the Constitution, a person who is not a citizen may hold land on leasehold tenure only, and any lease may not exceed ninety-nine years. Article 65(2) provides that any provision purporting to confer a greater interest is treated as conferring a ninety-nine year lease and no more. Article 65(3)(a) treats a body corporate as a citizen only if it is wholly owned by one or more citizens, so a Kenyan company with any foreign shareholder is a non-citizen for this purpose. Article 65(3)(b) applies the same logic to trusts, which count as held by a citizen only if all the beneficial interest is held by citizens.

A purchase by a non-citizen, or by a company with foreign shareholding, therefore needs structuring advice before any agreement is signed. The steps for how to buy property in Kenya are otherwise the same for every buyer: title verification, agreement, duty and registration.