Yes, a foreigner can buy land in Kenya under a leasehold tenure. Leasehold tenure is where land ownership in Kenya is for a limited period of 99 years. At the leasehold tenure’s expiry, the land owner can renew it for another term.
Upon expiry of the leasehold title, the Land Commission offers priority rights to the past lease holder provided you are a Kenyan citizen unless there are national or county interests in using the land.
The Kenyan Constitution allows foreigners to buy land in Kenya on a leasehold basis, with the maximum lease period being 99 years. This means you can’t buy land in Kenya as freehold land directly as a foreigner.
Freehold Tenure
Under the law, any dealing in agricultural land is considered a controlled transaction. You need to get consent if you want to buy land in Kenya in the area where the land is situated.
However, they cannot grant permission if the person is not a Kenyan citizen or a private company whose shareholders are not Kenyan citizens.
This means that foreign investors or private companies owned by foreigners cannot buy land in Kenya that is considered agricultural land in Kenya.
A Kenyan who owns land under freehold tenure can engage in a lease contract with a foreigner for up to 99 years.
If a freehold title is sold or leased to a foreigner, this interest is automatically converted to a 99-year leasehold by law.
This conversion ensures that the foreigner’s rights over the land do not exceed what is permissible by Kenyan law.
For a Kenyan leasing freehold land to a foreigner, it’s crucial to understand that while the documentation might still refer to the land as freehold for historical or transaction purposes, legally, the foreigner’s interest will be a leasehold.
This affects how the land can be used or developed, especially concerning permissions for change of land use or further transactions.
Steps for Foreigners to Own Land in Kenya:
Leasehold Agreement
The long-term lease provides a sense of ownership similar to the freehold with a legal framework of leasehold ownership.
The government prepares the lease document detailing the duration of the lease, the annual rent or any payment required, conditions for the lease renewal if applicable and any restrictions on its usage.
Once a lease agreement has been made, the activities to be carried out by the leaseholder can be laid down.
The leasehold tenure allows a foreigner to enjoy quiet and peaceful possession of the land, including making it their home.
The lease also contains the terms for modification and improvements on the land as per the lease terms.
- Sub-Leasing: While you can’t buy land in Kenya outright, you can often sub-lease or rent out property you build on the land within the terms of your lease.
- Buildings and Improvements: Any structures or improvements made during the lease period generally belong to the lessee (you) for the duration of the lease.
- Termination and Renewal: Understanding the terms under which the lease might be terminated or renewed is essential to govern its use for the lease period.
- Rights at Lease End: Unless otherwise agreed, you might not have any claim to the land or structures built on it at the end of the lease. However, legal practice and some agreements may allow for a form of compensation or buy-back for improvements made on the leased property.
Lease registration is done at the relevant land registry in Kenya. You need to know the jurisdiction of the land where the records are maintained and the county lands offices for rates and rent clearance.
Once all the required documents have been provided, the required fee is paid at the relevant registry, approval is done, the lease is formally registered, and the registrar of land issues a lease certificate.
Due Diligence
Title Deed Verification
Always conduct thorough legal search of the title of the land and all the land rates to ensure compliance. This process is what is known as due diligence in land transactions.
Physical Inspection
Visit the land to confirm its condition, boundaries, and any current use or disputes. Foreign investors may face challenges in verifying land ownership and identifying potential encumbrances.
Check for any legal issues such as outstanding debts or disputes related to the property, to protect yourself from frauds and other hidden liabilities if you want to buy land in Kenya.
Alien Land Holding License
Although not explicitly mentioned in recent updates, historically, foreigners might need an Alien Land Holding License from the Land Control Board for land transactions, especially if it involves agricultural land.
Considerations
- Trusts and Companies: Some foreigners use trusts or incorporate companies in Kenya, where shareholders are Kenyan citizens, to bypass direct ownership restrictions.
This method requires careful legal advice due to its complexity and potential for legal challenges. With proper structuring of the company, a foreigner’s interest can be taken care of.
- Taxes and Rates: Be aware of land rates, property taxes, and any new taxes proposed by legislation that might affect you if you want to buy land in Kenya.
Where the foreigner has established a business, tax implications will be attached to the trust or the company.
- Cultural and Community Awareness: Understanding communities in Kenya, as well as their legal status, is also crucial. Some properties are held in trust or communally owned by particular communities.
- Local Engagement: Recommendations often include engaging locals or companies rather than individuals for transactions to minimise risks associated with land disputes.
Post-registration
Once a lease is registered, the owner must adhere to the lease terms. You might need a legal expert to help navigate the lease terms from time to time for consideration where consent or notification is required under the lease agreement.
Owning land in Kenya as a foreigner involves navigating legal steps around leasehold tenure.
Understanding some of the legal implications equips the foreigner to ensure informed negotiation of terms and compliance to secure your investment if you plan to buy land in Kenya.
What are the Main Legal Risks of Buying Land in Kenya Without a Lawyer?
Buying land in Kenya without the assistance of a lawyer can expose you to several significant legal risks. Here are the main concerns:
Fraud and Misrepresentation
Without legal expertise, you may inadvertently fall victim to fraudulent schemes, such as purchasing land from someone who does not actually own it.
Lawyers conduct thorough due diligence, including land searches, to verify ownership and uncover any potential fraud or misrepresentation regarding the property’s title and history.
Undisclosed Encumbrances
Land may have existing encumbrances, such as mortgages, liens, or disputes that are not immediately apparent.
An experienced lawyer will identify these encumbrances through proper searches at the land registry and local authorities, protecting you from unexpected liabilities that could arise after you buy land in Kenya.
Non-Compliance with Legal Requirements
The process of buying land in Kenya involves multiple legal requirements, including obtaining consent from the Land Control Board and ensuring all documentation is in order.
A lawyer ensures compliance with these regulations, minimizing the risk of legal challenges or disputes that could arise from non-compliance.
Poorly Drafted Contracts
Engaging in a land transaction without a lawyer may lead to vague or incomplete contracts that do not adequately protect your interests.
A qualified lawyer will draft clear and comprehensive sale agreements that outline all terms and conditions, reducing the likelihood of misunderstandings or disputes in the future.
FAQs
Can an American own property in Kenya?
Yes, Americans can own property in Kenya via 99-year leasehold. Freehold is reserved for citizens. Agricultural or beachfront land needs presidential approval.
Can an American buy a house in Kenya?
Yes, Americans can buy houses on 99-year leasehold land. Freehold titles convert to leasehold for foreigners. Due diligence and legal checks are required.
Can a foreigner own land in Kenya?
Foreigners can own land via 99-year leasehold only. Freehold is for citizens. Agricultural land requires presidential exemption.
Can a foreigner become a permanent resident in Kenya?
Yes, after 7 years on a work permit and 3 years continuous residence. Spouses of citizens or major investors also qualify. Apply via eFNS portal.
Can a foreigner own a bank account in Kenya?
Yes, with valid visa or permit, KRA PIN, passport, and proof of address. Non-residents may need a local reference. Banks like KCB allow it.
Can an American become a Kenyan citizen?
Yes, after 7 years of lawful residence and good character. Spouses qualify after 7 years of marriage. Apply with Form 19 and take oath if approved.
Final Words
For a foreigner looking forward to buying land in Kenya or manage a company in Kenya, you have to understand the work permit system for the operational requirement in Kenya.
To protect your interests and ensure a smooth transaction, it is essential to engage a qualified advocate who understands the local legal landscape.
By doing so, you can confidently navigate the process of buying land in Kenya, secure your investment, and focus on realizing your goals in this vibrant market. Don’t take unnecessary risks—partner with a legal expert to safeguard your future in Kenyan real estate.
