Looking for land for sale in Kenya, as a local or a foreigner, can be very overwhelming, especially if you are doing it alone without professionals. This is because there are many people offering to sell you land in Kenya, and without proper counsel from a property lawyer in Kenya, you can easily fall for land scams.
Owning freehold property in Kenya is a dream of many people. This really does provide you with full control and a very secure financial base for the long-term future. Although it may seem overwhelming, it is completely attainable with a few simple steps in place.
What is Freehold Property Ownership in Kenya?
Freehold property ownership or freehold land tenure in Kenya means absolute ownership of the property by the landholder either as an individual or entity, giving them full rights to use, sell, lease the land without any obligation to pay rent or rates once the title has been processed fully.
Title Deed for Freehold Property Ownership
The holder of freehold land receives a title deed, a legal document as proof of ownership issued by the government through the land registry offices present in all the counties in Kenya.
Rights and Responsibilities of Property Ownership in Kenya
The owner of the freehold land can use the land for legal purposes, such as building, cultivating, leasing, or even leaving it.
The owner is also free to subdivide the land, dispose off, lease out, or mortgage the same.
While the freehold tenure from the Land Act of 2012 grants the land owner significant autonomy over land usage, the land owner must follow environmental regulations and other legal requirements.
Security of Tenure for Freehold Property Ownership
Freehold tenure offers the owner a high degree of security since the landowner cannot be taken away without due process, including compensation in public use.
Most of Kenya allows for freehold, especially in rural or communal areas.
There has been recent land policy development with efforts to address land registration to improve land governance.
How to Transfer Freehold Land in Kenya
Transferring freehold land in Kenya involves several legal steps provided for under the law to ensure the process is completed successfully.
Before land transfer, the seller and buyer agree on the terms, including the purchase price, payment mode, and the parties’ particulars in a written contract.
Title Search for Freehold Property Ownership
Before entering into a land contract, a legal search at the Ministry of Land should be conducted for the land, which will confirm the ownership of the property and check any existing caveats or encumbrances to ensure the title is genuine.
This is part of due diligence in land transactions to confirm the land status for the purchaser’s safety for a successful land purchase
Legal Process to Transfer Land in Kenya
Consent
To transfer freehold land, you must obtain Land Control Board (LCB) consent from the land registry.
The seller makes the application to ensure the transaction is fair and legal. If the party is married, the law requires that spousal consent be obtained from the land seller.
Stamp Duty Assessment
The land is assessed to determine its value for stamp duty purposes, calculated at 2% for agricultural land.
The buyer pays the stamp duty charge to the Kenya Revenue Authority through the e-citizen online platform.
Transfer Documents
Once the purchase has been issued with a Land Control Board (LCB) consent and stamp duty payment has been made, the transfer forms are signed by both parties and witnessed by an advocate.
Registration Documents
The following documents are presented before the Ministry of Land office for title registration.
- A dully Filled transfer forms
- Original title deed
- Land Control Board consent
- Proof of stamp duty payment
- Identification document for both parties
- Passport photos
- Certified copies of Identity card
- KRA pin
- Certificate of incorporation in case it is a company
- Company KRA pin
- Director identity card
- Directors KRA pin
The documents are then booked for registration and consideration by the land registry.
Issued a New Title Deed
After the registration, the buyer is issued a new title deed in his name, signed by the registrar. The buyer needs to conduct a final search at the land ministry to confirm that it is official that the land is in their name.
The process underscores the importance of legal representation throughout the land process to ensure compliance with the procedural and legal requirements leading to the transfer of the freehold land in Kenya.
What are the Benefits of Freehold Tenure over Leasehold Tenure in Kenya?
Freehold tenure offers several advantages over leasehold tenure in Kenya, making it a preferred choice for many landowners. Here are the key benefits:
Key Benefits of Freehold Tenure
Permanent Ownership
Freehold land grants absolute ownership without any time limitations, allowing owners to hold the land indefinitely unless they choose to sell it.
No Annual Rent
Unlike leasehold properties, freeholders do not pay annual ground rent or other fees to a lessor, making it financially more straightforward in the long term.
Inheritance Rights
Freehold land can be easily passed down to heirs, ensuring that families can retain ownership across generations. This is not as straightforward with leasehold, where ownership reverts to the lessor upon lease expiration unless renewed.
Flexibility and Control
Owners of freehold land have greater freedom to use and develop their property as they see fit, within local zoning laws. This contrasts with leasehold properties, which often come with specific usage restrictions imposed by the lessor.
Investment Potential
Freehold properties are generally viewed as more stable investments due to their indefinite nature and lack of renewal concerns. This stability can enhance their value over time, making them attractive for long-term investment strategies.
Exclusivity for Citizens
Freehold ownership is limited to Kenyan citizens, which helps protect local interests and promotes national sovereignty over land resources.
Less Bureaucratic Hassle
Freeholders do not need to navigate the complexities of lease renewals or negotiations with lessors, simplifying property management and ownership responsibilities.
Freehold tenure in Kenya provides significant advantages such as permanent ownership, financial simplicity, and greater control over land use, making it a favorable option for many individuals and families.
Stamp Duty
This is a tax levied on legal documents, especially those used in property transactions, to validate them legally. It ensures that the transaction is recorded and recognized by the government.
The buyer typically bears the responsibility for paying stamp duty, although this can be negotiated in the sale agreement.
Stamp duty must be paid before the transfer of property can be registered officially.
Payment of stamp duty is now processed through the Ardhisasa portal or the e-Citizen platform under the State Department for Lands and Physical Planning, rather than through the Kenya Revenue Authority (KRA) as of November 27, 2023.
Exemptions and Considerations
Exemptions might apply, such as transfers between spouses or to charitable organizations, but these are subject to specific conditions under the Stamp Duty Act.
How to Pay:
To pay stamp duty, you would log into the Ardhisasa portal or use the e-Citizen platform to generate a payment slip after property valuation, then make the payment via the specified methods (bank or M-PESA).
FAQs
Can you Convert Leasehold to Freehold Property in Kenya?
No, you cannot convert leasehold property to freehold in Kenya. Leasehold tenure is typically governed by specific terms and conditions set out in the lease agreement, and converting it to freehold is not generally permitted under Kenyan law.
What is the Difference Between Leasehold and Freehold Property in Kenya?
In Kenya, the key differences between leasehold and freehold property lie in ownership duration, financial obligations, and control. Freehold ownership grants permanent ownership with no ongoing fees, allowing for unrestricted use and easy transfer or inheritance.
In contrast, leasehold ownership provides temporary rights to use land for a specified period, requiring annual ground rent and often imposing usage restrictions.
Freehold is typically associated with residential and agricultural properties, while leasehold is more common in commercial settings. Understanding these distinctions is essential for potential land buyers in Kenya.
What is the Stamp Duty for Freehold in Kenya?
Urban Areas and Municipalities: The stamp duty rate is 4% of the property’s market value or the sale price, whichever is higher.
Rural Areas: The stamp duty rate is 2% of the property’s market value or the sale price, whichever is higher.
For example, if you purchase a property valued at Ksh10 million within a municipality, the stamp duty would amount to Ksh400,000.
The buyer is responsible for paying this tax during property transactions, and it must be paid within 30 days to avoid penalties or invalidation of the transaction.
