Investing in real estate, particularly land, is a significant milestone for many individuals and businesses in Kenya, where land ownership holds cultural, social, and economic significance. Kenya boasts diverse landscapes, from bustling urban centers to serene rural areas, making it an attractive destination for land investment. Whether you’re considering to buy land for residential, commercial, or investment purposes, navigating the process can be both exciting and challenging. Thus, understanding the intricacies of land acquisition in Kenya is crucial for making informed decisions and safeguarding your investment.
1. Research and planning
Before diving into the market, it’s essential to conduct thorough research and define your objectives. Start by identifying the location where you intend to purchase land. Consider factors such as proximity to amenities, infrastructure development, accessibility, and potential for future appreciation. Researching market trends and property values in the area will provide valuable insights into pricing dynamics and investment potential. Familiarize yourself with the location in where you want to buy the land. There are areas that everyone is preferring purchasing land due to the high appreciation rates.
When making a decision to invest in an area ensure you gather all the information regarding the upcoming investment opportunities in Kenya in the long run. This will ensure your investment is assured of the expected returns. Compare the prices of land in the area of your interest because you may find different property companies offering the same size of properties in the same area but with different prices. A comparison will help you avoid purchasing an overpriced property whereas you can get a more strategic property at a fair price.
2. Budgeting and financing
Determine your budget based on your financial capacity and the prevailing market prices in your chosen location. Factor in additional costs such as legal fees, taxes, surveying, and land preparation. If financing is required, explore various options available, including mortgages, bank loans, or partnerships with investors. Ensure that you have a clear understanding of the terms and conditions associated with each financing option to make an informed decision.
3. Conduct due diligence
Performing due diligence is crucial to ascertain the legitimacy and suitability of the land for purchase. This involves verifying the land’s ownership status, title deed authenticity, survey records, zoning regulations, and compliance with local planning laws. Engage professionals such as land surveyors and valuers to assess the physical condition and market value of the land. Additionally, inquire about any planned infrastructure projects or developments that may impact the property in the future.
a. Seek professional advice
Throughout the entire process of buying land in Kenya, it’s crucial to seek professional advice from qualified experts such as real estate agents, lawyers, surveyors, and financial advisors. They will provide valuable insights, guidance, and support to ensure a smooth and successful transaction. A competent lawyer will conduct due diligence to verify the ownership status, title deeds, and any existing encumbrances or disputes associated with the land. The lawyer will play a critical role in preparing and reviewing the sale agreement, ensuring that all terms and conditions are fair and legally binding.
b. Background research of the property vendor
Engage a real estate company that has a solid portfolio of the projects they have offered in the past. This includes the number of projects they have done and the title deeds they have issued. Have a draft of the information you require such as the project location, size, and price you can easily identify them as you go through the social media pages and websites. Be keen to identify any inconsistency in details that may raise a red flag. Testimonials and reviews from other investors who have experience with the investment company.
This will give you first-hand information on what to expect in your investment journey with the vendor. If there is a clear indication of frustration due to unfulfilled promises do not commit your money to such an investment. After you are satisfied with the background search of the company you can go ahead to contact the investment company and express interest to purchase the land. When purchasing a property from a company, it is essential to have copies of the company’s PIN certificate, Certificate of Incorporation, and copies of PIN Certificates and IDs of the company’s Board of Directors.
It’s also important to know the exact location of the real estate company you are investing with. This will eliminate the risk of purchasing a property from imposters who may be out to con you. Identifying the exact location for easier follow-up of the documentation process will ultimately ensure legal adherence to the land purchase process. You will also get the opportunity to interact with the staff members of your investment company, get your questions answered and this will give you peace of mind knowing your investment is safe.
c. Examine the land property
Any potential investor should physically visit any property on sale and experience first-hand on-ground information. This is possible during property site visits and open days. This is an opportunity for a potential investor to see the exact physical location, view the plots, the beacons, the value additions such as the fence, gate, water, road networks, and electricity connection. Avoid anyone selling land in Kenya without willing to show it to you.
d. Confirm property boundaries
Buy land that has been thoroughly surveyed and demarcated. Know where your land starts and ends to prevent any confrontations. Have the exact measures whether it is an eighth, quarter, half an acre, or an acre, and ensure it is well beaconed and the plot numbers are visible. Genuine real estate companies have registered surveyors who you can meet and ask questions about property sizes.
You can also visit a local surveyor who can issue a survey map of the area and help you identify the exact location and the sizes. There are cases where developers are sell properties on riparian land. The Kenyan laws define riparian land as being a minimum of 6 meters and up to a maximum of 30 meters on either side of a riverbank from the highest watermark. This land is public land and cannot be sold to anyone. A survey map will help you identify the existence of any rivers next to your potential investment.
e. Laws and regulations
National and county rules regulate the building, construction, and development of real estate properties. Do these laws allow you to put up certain structures in the future? If you are buying agricultural land and intend to put up residential apartments, you will need to apply for a change of use approval. Real estate companies that provide legal advice in and around their projects are the best choice when it comes to land investment. It is important to engage a lawyer and ask any questions regarding the land that may affect your future interests in the property.
f. Tenure of land
A lawyer will help you to know the tenancy of the property you are interested in purchasing. A freehold title deed gives you absolute ownership of land, while a leasehold title deed is owned for a specific period of time and requires renewal upon expiry, normally 99 years for non-Kenyan citizens. For a leasehold title deed, ensure you receive Land Rates Clearance Certificate to ensure there are no pending land rates and if there are any pending land rates, ensure they are paid for by the land seller.
g. Conduct a title deed search
The details of every property in Kenya are in the Lands Registry which can be done through eCitizen portal. Conducting a title deed search is free of charge. You visit the Registry fill in a search form, attach copies of your KRA PIN, ID, and a copy of the title deed you are conducting a search on. This process takes a single working day and it will establish the true landowners and whether they have all the necessary rights to transfer ownership of the property to you. It also indicates whether the title deed has a caveat placed for various reasons such as security for a loan or if the Court of Law has barred the sale of the property you are interested in.
4. Negotiate terms and conditions
Once satisfied with the due diligence findings, negotiate the terms and conditions of the sale with the seller or their agent. This includes the purchase price, payment schedule, deposit amount, and any contingencies or conditions precedent. Be prepared to compromise and seek mutually beneficial solutions that align with your budget and investment objectives. Document all negotiations and agreements in writing to avoid misunderstandings or disputes later on.
5. Secure financing and payment
If financing is involved, finalize the loan or mortgage arrangements with the lending institution and ensure that all necessary documentation is in order. Coordinate with your lawyer and the seller’s representatives to facilitate the transfer of funds and complete the payment process. It’s essential to adhere to the agreed-upon payment schedule and ensure that payments are made through secure and traceable channels to minimize the risk of fraud or misappropriation.
6. Transfer of ownership
Upon completion of payment, initiate the transfer of ownership process by preparing the necessary legal documents, including the sale agreement, transfer forms, and consent letters. It is important to have a lawyer present when you are signing the land purchase documents. The documents include a letter of offer, sale agreement, and title transfer documents. A sale agreement fully protects the rights and interests of the buyer and the seller because if one party fails to adhere to the contract the other party can take legal action to recover the damages caused.
It also states the terms and conditions of the sale. A title transfer is the legal proof of transfer of the title deed from the seller to the buyer and can be used when tracing the history of a property in the Lands Registry. Your lawyer will liaise with the relevant government authorities, such as the Ministry of Lands and the Lands Registry, to facilitate the transfer of the title deed into your name. It’s important to follow the prescribed procedures and obtain all requisite approvals to ensure the validity and enforceability of the transaction.
7. Registration and stamp duty
Once the transfer of ownership is completed, register the transfer and pay the requisite stamp duty at the Lands Registry. Stamp duty rates vary depending on the value of the property and are calculated as a percentage of the purchase price. Failure to register the transfer and pay the stamp duty may result in legal implications and complications in the future. Obtain the stamped transfer documents as proof of ownership and safeguard them in a secure location.
8. Obtain the title deed
Ensure you receive your title deed and retain copies of the letter of offer, sale agreement, and title transfer. The title deed is the ultimate proof of property ownership. After receiving your title deed, conduct yet another search to ascertain that the details on your title deed match with the records at the Lands Registry. There are Kenyans who are living in the diaspora and have invested back home, upon completion of payment ensure the title deed is sent to you via a courier service of your choice.
9. Post-purchase obligations
After acquiring the land, fulfill any post-purchase obligations such as land rates, property taxes, and compliance with local regulations. Consider investing in land improvement projects such as fencing, landscaping, or construction of access roads to enhance the value and usability of the property. Stay informed about developments in the surrounding area and actively participate in community initiatives to safeguard your investment and contribute to sustainable development.
Conclusion
Purchasing land in Kenya is a significant undertaking that requires careful planning, thorough research, and adherence to legal procedures. Whether you’re a first-time buyer or a seasoned investor, the process that demands attention to detail and indepth understanding of the intricacies involved. By following the steps outlined above, prospective buyers can navigate the complexities of land acquisition with confidence and ensure a smooth and successful transaction. Ultimately, purchasing land in Kenya is not just a financial transaction but also a long-term investment in security, stability, and prosperity.
