Land, a foundational resource, underpins societal organization and economic function.  Its ownership and management are subject to complex and jurisdictionally diverse legal regimes. This article provides a legal analysis of the multifaceted concept of land ownership, examining the spectrum of land tenure systems, the legal complexities associated with equitable access and distribution, and the evolving legal discourse concerning the equilibrium between individual property rights including those held by foreigners.

The analysis will consider the permissible forms of foreign land ownership, any restrictions or limitations imposed, and the legal implications thereof.

PART ONE (1) OF THREE (3):

1.        What are the legal steps involved for a non-Kenyan citizen to purchase land in Kenya, and are there any differences in the process if the buyer is a non-resident or if neither party holds Kenyan residency? Additionally, are there specific restrictions or requirements for non-citizens, such as limitations on the type of land they can purchase (e.g., leasehold vs freehold)?

Non-citizens in Kenya are allowed to hold land, but their land rights are governed by specific provisions under Kenyan law. According to Article 65 of the Constitution, non-citizens may only hold land on a leasehold basis, with the lease period limited to a maximum of 99 years. As a result, non-citizens are restricted to leasehold tenure for up to 99 years.

Additionally, non-citizens are prohibited from owning or dealing with agricultural land, as outlined in Section 9 of the Land Control Act. Agricultural land is classified as all land not located in municipal areas or townships or land gazette as such by the Cabinet Secretary. Therefore, non-citizens cannot hold freehold titles or own agricultural land in Kenya.

The process of acquiring land in Kenya is generally similar for both citizens and non-citizens save for the differences expounded on above. The following is the step-by-step process of a non-citizen purchasing land in Kenya:

a.       Due Diligence - The buyer verifies the title and property ownership by conducting a search at the Land Registry to ensure the land is free from encumbrances, such as disputes or unpaid rates.

b.      Contract Stage - The buyer and seller negotiate and formalize the terms of sale, often with the assistance of legal counsel. A sale agreement is drafted and signed by both parties, and consideration paid.

c.       Transfer Stage – The buyer completes the full payment, and the necessary documents are submitted to the Land Registrar. These include the dully filled valuation forms, the certificate for consent to transfer (after application is done), a duly executed and franked transfer form after stamp duty has been paid. Upon completion, the Certificate of Title is registered in the buyer’s name.

2.      Can owning property in Kenya affect a non-citizen's residency status or eligibility for residency permits?

The ownership of land may affect eligibility for residency permits particularly Class B permits for agricultural investors whose requirements include proof of land ownership or leasehold interest in land for purposes of carrying out the agricultural business.

However, under section 24 of the Land Control Act, the President by notice in the Kenya Gazette may exempt non-citizens from the restriction on owning agricultural land. A non-citizen may therefore apply for the exemption on owning agricultural land if they wish to apply for a Class B permit. Additionally, a non-citizen is free to buy shares in a public company that owns agricultural land.

3.       What are the key practical differences between leasehold and freehold ownership in Kenya?

Freehold land in Kenya is held indefinitely, granting the owner permanent rights to the land. In contrast, leasehold land is held for a specified period, with the duration determined by the terms of the lease, typically up to 99 years for non-citizens.

The financial obligations associated with these two types of land ownership also differ. For freehold land, the primary levy is land rent. However, for leasehold land, the owner is responsible for both land rent and land rates, which are paid to the relevant authorities based on the lease conditions.

4.      Does the tenure system impact the rights and obligations of landowners, particularly for non-citizens, and are there any restrictions on the length of leasehold titles for non-citizens? Additionally, can these leases be renewed or converted to freehold?

Yes, the tenure system in Kenya significantly impacts the rights and obligations of landowners, particularly for non-citizens. Under Kenyan law, non-citizens are restricted to holding land on a leasehold basis, with leases capped at 99 years, as outlined in Article 65 of the Constitution. This limitation affects their ability to own freehold land, which is indefinite and offers more permanent rights.

For non-citizens, the leasehold tenure imposes additional obligations, such as the need to comply with lease conditions, including the payment of land rent and rates, which are not typically required for freehold owners beyond land rent. Furthermore, non-citizens cannot own agricultural land, restricting their ability to acquire certain types of property. These restrictions shape both the extent of their ownership rights and the financial and legal obligations they must fulfill, distinguishing their landholding experience from that of Kenyan citizens.

5.      In what scenarios might leasehold be more advantageous than freehold, or vice versa, particularly for foreign investors?

As foreign investors cannot hold freehold land, leasehold is the only option available for foreign investors.

6.      Does owning property in Kenya offer any advantages or pathways to obtaining residency or other legal statuses, and are there any legal obligations tied to property ownership for non-citizens that could affect their residency or visa status?

No, owning property in Kenya does not confer any advantages or legal status with regards to residency. The legal obligation tied to property ownership that may impact residency or visa status may be the payment of land taxes whose failure leads to the accrual of penalty which does not reflect good standing for a residency or visa application.

This article is part of an ongoing series examining the multifaceted concept of land ownership touching on foreign individuals.

We invite you to follow along as we continue this important discussion.

Alakonya Law LLP Real Estate and Conveyancing Department

Partner: Barbara Malowa