By Nichodemus Mwania
Land is the most important factor of production, besides labour and capital in Kenya. It is not only a critical resource, but also the foundation of economic development for the country (MLHUD, 2016). The major land-cover types in Kenya are forests, savannahs, grasslands, wetlands, fresh and saline water bodies, and deserts. These are used for agriculture, pastoralism, water catchments, nature reserves, urban and rural settlements, industry, mining, infrastructure, tourism, recreation. Other uses include cultural sites, fishing, forestry, energy. A larger population in the country derives their livelihoods from land based activities (MLHUD, 2016).
Just like buying clothes in a shop where you have to perform relevant assessments to ascertain whether they fit your tastes and size, so does purchasing a parcel of land or a plot also involve performing relevant assessments to ascertain authenticity of ownership and whether it fits your desires. However, before I proceed to discuss the fundamentals of purchasing land in Kenya, lets us first take a look at some facts below.
Urban population increase
Since independence, the urban population in Kenya has been on the increase. The urban population grew to 1 million in 1969, increasing at a rate of 7.1 percent per year. At the time of Kenya's first population census in 1948, there were 17 urban centres with an aggregate population of 285,000 people. The urban population was proportionately small (5.3 percent of the total population), with majority of the urban dwellers being non-African. Since then the number of urban centres, the urban population and the proportion of people living in urban centres have been increasing. The number of urban centres increased to 91 in 1979 and to 230 in 2009. The urban population increased from 2.3 million in 1979 and to 12 million in 2009. The proportion of people living in urban centres increased from 15.1 percent in 1979 and to 31.3 percent in 2009. In all Censuses, the urban population has been disproportionately concentrated in Nairobi and Mombasa (Kenya Republic, 2012). Being a Capital City, Nairobi is the most urbanised County in Kenya, with its entire population being urbanised. Nairobi is followed by Coast and Central provinces with more than one-third of the population living in urban centres respectively. Nyanza, Rift Valley and Eastern provinces have between 21 and 25 percent of urban population. North Eastern and Western are the least urbanised provinces in Kenya with less than 20 percent of the population living in urban centres (Kenya Republic, 2012). Nairobi and Mombasa, which are the same time the two largest towns in Kenya, are wholly urban. These two counties are followed by Nakuru (45 percent), Isiolo (44 percent); Kajiado (41 percent); Uasin Gishu (39 percent); Kericho (38 percent); Migori (34 percent); Vihiga (31 percent) and Kilifi (25 percent). The rest of the counties have less than one-quarter of their populations living in urban areas. Meru, West Pokot and Narok are the least urbanised counties with less than 10 percent urban population (Kenya Republic, 2012).
The Kenya Vision 2030 anticipates that more than half of our nation’s population is going to be residing in urban areas following the current population trends. Thus, Kenya will need to plan for decent and high quality urban livelihoods for her population. The NSP creates a hierarchy of urban areas as national, regional and urban growth areas and anticipates the emerging metropolitan areas (MLHUD, 2016).
The housing shortage
One of the main problems that accompanies this rapid urbanization is a lack of adequate housing for the urban populations. In a press statement released in early 2016 by the Cabinet Secretary to the Ministry of Lands Housing and Urban Development, Prof. Jacob Kaimenyi, Kenya was found to be facing a major challenge in the housing sector. It was noted that the country is experiencing an annual housing deficit exceeding 250,000 units. So what does this portend? A bright future by way of more opportunities.
A number of opportunities present themselves. For example, it has been noted that there has been occurrence of rapid urbanization which is as a result of devolution and the realization of Vision 2030. Another opportunity is access of prime and virgin lands for housing which have provided a perfect opportunity for investors in the sector. Another opportunity is in the construction industry. Where land is being bought especially in urban areas, a housing or commercial development is usually in the offing. As noted in the NCA strategic plan 2012-2018, the construction industry is a key growth sector in Kenya economy and has consistently posted the second highest growth. The industry also offers direct employment to a significant proportion of the labour force spread throughout the country. The industry comprises of various ministries, construction material manufacturers and supplies, contractors, construction professionals, construction workers, transport providers in addition to related industry, banking and insurance sectors (National Construction Authority, 2012).
THE FUNDAMENTALS OF BUYING LAND OR A PLOT IN KENYA
Exercising formal due diligence while buying land in Kenya is as follows:
a) Preliminary land identification and informal due diligence
Under this step, a prospective buyer identifies a piece of land that meets their criteria including size, location, soil type etc. They need to have a clear picture of what they want, before starting the search. In doing so, they need to be aware that there are different kinds of properties i.e. agricultural land, residential, controlled development, commercial etc. They need to exercise some basic preliminary due diligence about the property, especially by using a government surveyor to verify the land dimensions. Government surveyors are available at the Ministry of Land Housing and Urban Development, at the County Level (Kituo Cha Sheria, 2015). As noted by Wahome (2014), Wanjiku (2016) and Boniface (2015) in their articles, land in Kenya is identified by Plot Number (P.N.) or Land Reference (L.R.) number. It is important that the prospective buyer exercises the preliminary informal due diligence personally by verifying the status of the Beacons on the land which they intend to purchase and by consulting professionals such as land surveyors and physical planners. If it is impossible to do that because of constrains beyond the control of the prospective buyer such as distance for foreigners and people working and living abroad, we can exercise the assessment on your behalf at a fee by capturing coordinates, taking pictures and videos, seeking relevant maps/plans and documentations and contacting relevant authorities as evidence.
From where I seat, your independent informal due diligence is adviced. A wordpress article by Legal Basics Kenya (2015), concures with this. So what do I mean by " independent informal due diligence"? Independent informal due diligence entails seeking information from informal sources such as people living in a particular area concerning lets say historical land injustices in that area, news coverage of a particular area concerning lets say security among other factors. Local leaders and elders or even the provinical administration i.e. the chiefs and their assistants can have more reliable information concerning land in a particular area.
As far as non-citizens are concerned, the Kenya Constitution 2010 allows them to own land in Kenya too. But on a leasehold basis. The lease expires after 99 years. They need to consult Article 65 clause (1) of the Kenya Cosntitution 2010 and law firms for interpretation before commiting their money to purchase any land. A little advice will go a long way here, "Do not leave any stone unturned".
b) Conduct a search at the lands registry
The next step is carrying out an official search at national level at the Ministry of Land Housing and Urban Development and the County Registry in which the land falls. The search will state the ownership and status of the land. To do a search, ask the seller for a copy of the title deed. You will then be required to fill a search application form and attach on it single copies of the title deed, ID card and PIN certificate and pay Kshs 500 at the Registry and get an official receipt. The search takes two to three days and is designed to give you the following information: the registered owner of the property, its size and any hindrances against the land such as court orders, caveats, cautions and loans taken against it, the title and search numbers, date the search was done, nature of title (freehold or lease), approximate area in hectares, name and address of proprietor and whether a title has been issued. A title with any unresolved issues of the above is not transferrable (Kituo Cha Sheria, 2015). The search results must be signed and sealed by the Registrar. If all is clear, then you may proceed to the next step which is writing a sale agreement (Kituo Cha Sheria, 2015). An article by Wahome (2014) seems to corroborate with this. He urges a prospecting buyer to conduct a search at either the Ministry Land Housing and Urban Development or at the County in which the land is located. Just as Kituo Cha Sheria, he points out that the search will reveal the true owners of the land in question, enable the buyer ascertain whether there are middle men involved in its sale and establish whether the title deed has been charged or has a caveat.
So why waste time and go out of your way to conduct all these checks yet there are other "important things" to do? Article 61 clause (1) of the Kenya Constitution 2010, proclaims that all land in Kenya belongs to the people of Kenya collectively as a nation, as communities and as individuals (Kenya, Republic, 2010). Clause (2) outlines the classification of land in Kenya as either public, community or private (Kenya, Republic, 2010). In conducting these checks, a prospecting buyer is able to verify that such land exists in reality and that it’s not public land, community land, a road or railway reserve, land earmarked for a major government infrastructural project or someone else's land some fellows are trying to sell you. A good example of such a scenario is a story of a kenyan athlete in Eldoret which surfaced late last year of how some "trusted" partner of his swindled him of his property.
c) Sale agreement
The next step is to individually or through your agent, or your advocate/solicitor/lawyer, engage the seller or his agent or lawyer/advocate/attorney/solicitor for purposes of tabling, discussing, and agreeing on sale terms and coming up with a Sales Agreement (Boniface, 2015). Make sure you read and understand (the English used) in the agreement before you append your signature on it.
According to Kituo Cha Sheria (2015), the sale agreement is prepared by the seller’s lawyer and it indicates the terms of sale including the names of the buyer and seller, price of the land, mode of payment and documents to be supplied by the seller to facilitate registration of the transfer of land to the buyer. In order that the process is above board, a the willing buyer appoints a lawyer to represent him/her in the signing of the sale agreement. At this point the buyer may be required to pay a 10% deposit (in form of cheque, banker’s draft) with the balance payable within 90 days after signing of sale agreement. After the parties have signed the sale agreement, the document must then be stamped to make it legally abiding. This stamp is two hundred shillings (Kshs. 200) for the original and twenty shillings (Kshs. 20) for the others Kituo Cha Sheria (2015). For further details concerning the payments, you can consult the Ministry of Lands Housing and Urban Development downloads page and check on the "Registration of transfer of land revised" document.
d) Transfer and procurement of completion documents
According to Kituo Cha Sheria (2015), the transfer document is usually prepared by the buyer’s advocate and approved by the seller’s lawyer. The seller is supposed to procure the completion documents at his costs, including the: original title deed, 3 copies of transfer of land duly completed by the seller, ID Card of certificate of registration of the seller and PIN certificate, 3 passport sized photos of seller (if company, photos of two of its directors) land rent clearance certificate (for leasehold land) rates clearance certificates, and consent to transfer and valuation form duly completed by the seller. The document should also be signed by the buyer who is also required to produce copies of his ID card, PIN certificate and passport photos.
e) Stamping the transfer
The buyer is required to apply for the valuation of the land by the government valuer using valuation form duly completed by the seller. Lands office will use these documents to determine stamp duty payable. The stamp duty should be paid to the Commissioner of Domestic Taxes through National Bank, Kenya Commercial Bank or any other appointed bank. Once payment is done, the buyer should lodge the documents at the lands office for stamping with duty. Thereafter the buyer should book the following documents for registration: title deed, land rent and rates clearance certificate, valuation report, consent to transfer, stamp duty declaration and pay-in-slip (Kituo Cha Sheria, 2015).
f) Registration of the transfer
This is the last process of the land purchase and it involves the registration of the transfer in favor of the buyer (Kituo Cha Sheria, 2015). However, Boniface (2015) advices that once the transfer has been completed, it is important that the buyer conducts a fresh search for the same property. This is just to ensure that this new search will reflect their name.
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