Your Guide to Buying Property in Kenya as a Foreigner: Key Considerations and Expert Insights
Are you considering investing in property in Kenya as a foreigner? Navigating the real estate market in a foreign country can be a daunting task. Having access to the right information and guidance can make all the difference. Whether you’re eyeing a piece of land for investment purposes or dreaming of owning your slice of paradise, understanding the intricacies of property ownership in Kenya is crucial. In this comprehensive guide, we’ll walk you through everything you need to know about buying property in Kenya as a foreigner. From legal requirements and regulations to due diligence and practical considerations, we’ve got you covered.
Let’s embark on this exciting journey together and unlock the potential of property ownership in Kenya.
#1 Owning Land/Buying property in Kenya as a Foreigner
As a foreigner, can you own land or any other form of real estate in Kenya?
Non-citizens are restricted from owning land outright, but they are permitted to enter into lease agreements for up to 99 years under leasehold tenure. This essentially prohibits non-citizens from owning freehold property.
Furthermore, the Constitution stipulates that if a non-citizen possesses any title document implying ownership beyond a 99-year lease, it will be interpreted as granting a leasehold interest for 99 years, and no longer.
In other words, even if the title document seems to grant ownership rights beyond the 99-year leasehold period, the law will disregard any claim to ownership beyond that duration. Instead, it will treat the individual as if they hold a lease for 99 years. This ensures compliance with the legal restriction on land ownership by non-citizens in Kenya.
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#2. The Difference Between Freehold and Leasehold Land
Freehold land represents the highest level of ownership one can have over land, granting the owner absolute and perpetual control for their lifetime. This ownership can be passed down to descendants indefinitely, ensuring that the land remains within the family lineage for generations to come. Typically, a freehold title deed comes with minimal restrictions, allowing the owner full autonomy over how the land is utilized and occupied.
In contrast, leasehold interest in land entails the right to use and occupy the property for a specified duration, contingent upon the payment of rent or fees to the landowner, known as the grantor. Non-citizens in Kenya are generally limited to obtaining leasehold titles, with the lease period typically set at 99 years. This arrangement grants them a long-term stake in the property, albeit with certain limitations compared to freehold ownership.
#3 When A 99-Year Lease Runs Out, What Happens?
Section 13 of the Land Act says that when a leasehold title ends after 99 years, the Land Commission must give the previous leaseholder first dibs on buying the land again. But there’s a catch: only Kenyan citizens can get this offer, and the land shouldn’t be needed by the government for public use. This means if you’re not a citizen, you can’t extend the lease after 99 years.
#4 Ways to Own Land or Real Estate in Kenya
Foreigners can own land in Kenya through different means: firstly, by owning it in their name, referred to as “In-Person”; secondly, by having someone else or an entity hold the property on their behalf, known as “In Trust”; thirdly, through ownership by a foreign company in its name. However, it’s essential to note that there are limitations to property ownership by foreigners in Kenya.
As a way to circumvent the law, many non-citizens have attempted to establish and form companies to hold freehold property in Kenya. However, the Constitution is clear in its provisions, that a body corporate shall be regarded as a citizen only if it is wholly owned by one or more citizens. This means, that for a company to own freehold property, it must be wholly owned by one or more citizens.
Additionally, the Constitution further prevents non-citizens from freehold ownership of land through trusts. It states that if a trust holds property, it’s only considered owned by a citizen if all the benefits from that property go to citizens.
#5 Foreign Ownership of Agricultural Land In Kenya?
According to the Land Control Act, the Land Control Board won’t allow the transfer of agricultural land to someone who isn’t a Kenyan citizen. However, the Act does say that a non-citizen can own agricultural land if they get it as a first-time grant from the Government or if they get special permission from the President to buy it.
But here’s the thing: the only saving exception seems to be that a public company can own agricultural land, even if some of its shareholders aren’t Kenyan citizens. But if it’s a private company, every single person who has a stake in it must be a Kenyan citizen for it to own agricultural land.
#6 Foreign Ownership of Land/Real Estate for Commercial Purposes?
Non-citizens are allowed to invest in land in Kenya to make money or earn an income. However, it’s important to remember that foreigners can only use the land for business reasons. That is; setting up shops or offices, and not making money from renting them out for personal use.
#7 Conducting Due Diligence
It’s crucial to conduct thorough due diligence before investing in property. Start by considering and doing the following:
A. Laws & Regulations
Understanding the laws and regulations governing land ownership in Kenya is essential. Familiarize yourself with the Constitution, the Land Act, and other pertinent laws to ensure compliance. While foreign land purchases are allowed, certain strategic areas, such as coastal regions and border areas, have restrictions for national security reasons.
B. Title Search
Personally viewing the property, performing a title deed search, and completing all necessary land ownership documents. Be sure to request a copy of the leasehold title deed and conduct a search before making any investment decisions.
C. Consent to Transfer
Before purchasing land, foreigners must obtain a “consent to transfer” certificate from Kenya’s Ministry of Lands. This certificate confirms that the government has reviewed the proposed transaction and has no objections to it. Additionally, conducting thorough due diligence is imperative to identify any liens, encumbrances, or disputes associated with the land. This may involve a comprehensive title search, survey, and other investigations.
D. Purchase Process
The purchase process typically involves a deposit, signing a sale agreement, and registering the property transfer at the Ministry of Lands. Foreigners may also need permits for commercial or residential land development, adding complexity to the process. Working with professionals, such as conveyancing lawyers, ensures legal compliance and facilitates smooth transactions. A conveyancing lawyer can assist with agreement signings, transfer forms, and safeguarding your interests while mitigating risks associated with property transactions.
E. Other Considerations
In general terms, Here is how to go about the process of owning land or real statement:
- Obtain an Alien Land Holding License: Foreigners interested in leasing land in Kenya must first obtain an Alien Land Holding License from the Ministry of Lands and Physical Planning.
- Gather Required Documents: Prepare several documents, including a valid passport, proof of income, and a detailed proposal outlining the intended use of the land, as these are necessary for the license application.
- Conduct Due Diligence: Before proceeding with the lease agreement, conduct due diligence on the land. This involves checking for any outstanding debts or disputes over ownership to ensure a smooth transaction.
- Seek Legal Assistance: It is advisable to hire a reputable lawyer experienced in land transactions to guide you through the process and ensure compliance with legal requirements.
- Consider Costs: Understand that the cost of leasing land can vary depending on factors such as location, size of the property, and proposed use. As such, prepare to budget accordingly.
- Be Aware of Government Policies: Familiarize yourself with government policies that may restrict foreign ownership of land in certain areas, such as coastal regions. Stay informed to avoid any complications during the transaction.
- Consult with the Ministry: Before finalizing any agreements, consult with the Ministry of Lands and Physical Planning to stay updated on regulations and laws that may impact the process of buying or leasing land in Kenya.
Read More: Things You Need to Know About Investing in Real Estate In Kenya
Let’s Wrap it Up!
Non-citizens aren’t allowed to own land outright, but they can lease it for up to 99 years. To lease land, you’ll need to get an Alien Land Holding License from the Ministry of Lands and Physical Planning. This involves a thorough process and requires documents like your passport, proof of income, and a detailed plan for how you’ll use the land. Before you commit to leasing or buying property in Kenya as a foreigner, conduct due diligence. Ensure you research the land or real estate property, and check for any debts or ownership disputes.
For a smooth process of buying property in Kenya as a foreigner, consider hiring a trusted lawyer experienced in land transactions. The cost of leasing land varies based on factors like location and size. Keep in mind that the Kenyan government has rules limiting foreign land ownership in certain areas, such as coastal regions. Stay informed about these rules by consulting with the Ministry of Lands and Physical Planning. For the latest regulations and laws affecting land transactions in Kenya, reach out to them.