Leasehold Reversion: What Happens When a 99-Year Lease Expires in Kenya

Most commercial and residential property in Kenya is not held freehold. It is held on leasehold title, and the great majority of those leases, whether granted by the national or a county government, a former local authority, or a private landowner, run for 99 years. Buyers, developers, and lenders often treat a 99-year lease as functionally permanent, but it is not. The lease has a fixed end date, and when that date arrives, the land does not simply stay with the person who has been using it. Understanding what “reversion” means, who benefits from it, and what a leaseholder can do before the term runs out is essential for anyone holding, buying, or financing leasehold property in Kenya.

Why 99 Years Is the Standard Leasehold Term

The 99-year figure has two legal roots. The first is constitutional. Article 65 of the Constitution of Kenya, 2010 provides that a person who is not a Kenyan citizen “may hold land on the basis of leasehold tenure only, and any such lease, however granted, shall not exceed ninety-nine years.” Article 65(2) goes further: if a document purports to grant a non-citizen a longer interest, the law automatically reads it down to a 99-year leasehold and no more. This is why foreign investors, and Kenyan companies with significant non-citizen shareholding, cannot hold freehold land directly and instead structure their landholding through 99-year leases.

The second root is administrative practice going back to the colonial period, when government land was routinely granted on 99-year leases regardless of the grantee’s citizenship. That practice continues under the Land Act, 2012, which recognises “long term leases exceeding twenty-one years created out of private land” as one way title to land can be acquired. A great deal of leasehold land held by Kenyan citizens, not only non-citizens, therefore also carries a 99-year term simply because that is how it was originally allocated.

What “Reversion” Actually Means

A lease is, in law, a grant of exclusive possession for a defined period, after which the interest in the land returns, or “reverts,” to whoever granted it. For leases of public land, the Land Act, 2012 makes this explicit. Section 12(6) provides that “at the expiry, termination or extinction of a lease granted to a non-citizen, reversion of interests or rights in and over the land shall vest in the national or county government as the case may be.” The same principle applies to leases of public land generally: once the term ends, the leasehold interest collapses back into the underlying government title, and the former lessee has no automatic right to remain in occupation.

This is the point many buyers miss. Purchasing a leasehold property with, say, 40 years left on the term gives the buyer only whatever remains of the original grant, not a fresh 99-year term. At the end of that residual period the land reverts to the grantor unless renewal or extension has been secured in advance.

Renewal, Extension, and Pre-emptive Rights

The Land Act, 2012 does not leave existing lessees with nothing when a lease of public land nears its end. Section 13(1) gives the immediate past holder of a leasehold interest a pre-emptive right to apply for allocation of the land once it reverts, but that right is conditional: it applies “provided that such lessee is a Kenya citizen.” A non-citizen lessee, or a company that does not meet the citizenship threshold for landholding, does not get the same statutory preference and must instead negotiate a fresh grant, if one is available at all. The National Land Commission must also notify a lessee of the impending expiry and of the pre-emptive right, and may make rules on extension, including factors such as compliance with lease conditions and payment of rent and rates.

None of this is automatic. A lessee who waits for the expiry date to arrive risks losing the pre-emptive right window, or finding renewal refused because of breaches of the lease terms, unpaid land rent, or a change in the applicable physical development plan for the area.

Buildings and Improvements: Who Owns What at Expiry

A separate and often overlooked question is what happens to buildings on leased public land when the term ends. Section 25(1) of the Land Act, 2012 answers this directly: unless the lease says otherwise, where the term exceeds thirty years, all buildings on the land “shall pass to the national or county governments without payment of compensation” on expiry. For leases of thirty years or less, the lessee may remove buildings within a set period unless the relevant government elects to purchase them instead. A lessee who has invested heavily in construction on a long-term leasehold plot therefore cannot assume that investment will be compensated when the lease ends; ownership of the structure follows the land back to the grantor.

This matters for developers financing construction on leasehold land close to the end of its term, and for lenders taking security over such property. A charge over a leasehold interest is only as good as the years remaining on the lease, so a lender’s due diligence should always confirm the residual term and any renewal history before advancing funds.

Registering and Protecting the Leasehold Interest

Leases are registered against the parent title under the Land Registration Act, 2012. Sections 54 and 55 of that Act govern how dealings with a registered lease, such as assignment, subletting, or charging, must be noted in the register and, where the lease requires it, cannot proceed without the lessor’s written consent. This register, not informal arrangements between the parties, is what a buyer, lender, or successor relies on during due diligence. A lessee approaching the end of a term should confirm the register reflects the correct residual period, clear any outstanding rent or rate arrears, and apply for extension or renewal well before the expiry date rather than after it.