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How to Buy Property in Kenya

Most of us dream of having a property that we can call our own. While this is exciting, it can be daunting especially if you are unsure about the process. Nonetheless, you’ll be pleased to know that the process is straightforward, and this blog seeks to provide insight into the purchasing process to help you make informed decisions.

 

Before diving into the details of purchasing property in Kenya, it's important to note that working with a reputable real estate agent and experienced legal professionals is essential to assist you navigate the process. From finding the perfect property to understanding the legal requirements, having the right partner by your side is crucial.

 

The sales process typically takes 90 days from the date of signing the sales agreement up to completion. The following is the process:

 

1.       Identify a property: The process begins with a buyer identifying a property they are interested in based on their needs, preferences, research and budget.

 

2.       Formal intent of interest: Once the buyer has found a suitable property, they can make a formal intent of interest which stipulates their offer price, terms of payment and the advocate’s details. This intent is, however, subject to the contract.

 

3.       Letters of Offer: When the seller accepts the offer, the agent handling the sales process prepares a Letter of Offer (LOO) to reaffirm the important details agreed upon the transaction. It is, however, not legally binding and may vary. In certain circumstances it may stipulate that the buyer should at least deposit 10% of the buying price as downpayment. In other cases, it may stipulate that both parties open an escrow account where the advocates from the two parties oversee the purchase funds until the sale’s completion. It is signed between 7 - 14 days.  

 

4.       Due diligence is subject to contract: After the signing of the Letter of Offer (LOO), buyers must verify ownership and documentation of the title of the property from the seller. They can conduct this through searches at the Land Registry, Company Registry, Probate Registry, Court Records and Survey Department which is a physical investigation of the property. The buyer can also consult a licensed surveyor to verify if the land size and boundaries of the property coincide with those indicated in the deed plan.

 

At the same time every buyer must be aware that all the registered land is subject to certain overriding interests. These include spousal rights over matrimonial property, trusts, right of way, right of water, etc. The seller must share with the buyer important documents including the seller’s personal identification documents (ID/Passport copies) and PIN certificates. If it’s a company purchase, the certificate of incorporation and PIN Certificate would form part of the identification documents.

 

5.       Sales Agreement: Depending on whether the property is off-plan or a completed property the transaction process varies. For ready-to-occupy properties, the transaction is completed once the deposit has been paid within a specific timeframe of 90 days from the date of signing the sale agreement. For off-plan properties, the buyer must pay a deposit followed by equal installments until the project is completed.

 

6.       Completion: On completion, the buyers pay the full balance of property transactions in exchange for completion documents from the seller. Those opting for mortgage funding must provide a bank guarantee usually issued by the bank’s advocate. Once the buyer’s advocate receives the completion documents, they have the property assessed for stamp duty by a government valuer and subsequent stamping of transfer documents. After registration is completed, the seller’s advocate releases sale proceeds, and the buyer receives the Certificate of Title issued by the registrar to a purchaser of land.  

 

Some Frequently Asked Questions:


1.       Can foreigner’s buy property in Kenya?

Foreigners in Kenya like the citizens themselves are allowed to buy land, commercial and residential property that is located within a town or municipality. As per Article 65 of the constitution, foreigners are allowed to own land through leasehold for a maximum of 99 years which is subject to renewal.


2.       What are the other costs involved when buying property in Kenya?

Beyond the cost of the property, there are other transaction costs that you would incur when purchasing a property in Kenya. They include the following;


Transactional Costs


a.       Land Rates & Land Rent clearance certificates.

Land rents and rates of a given property are dependent on how the parcel of land has been registered. They must be paid before a clearance certificate is issued. The registered proprietor of a parcel of land must ensure that they have paid the Land Rates and Land Rents and have acquired the necessary certificates, except if otherwise agreed.

 

b.      Stamp Duty

A stamp duty is a levy centered around a property’s value and the State depends on the amount returned by the Government Valuer or the purchase price agreed upon; whichever is higher:

• 4% for land/property within a municipality

• 2% for agricultural land or property outside a municipality

• 1% if a property is registered as a company and transfer is by way of shares rather than title


c.       Legal fees

The Advocates Remuneration Amendment Order,2014, stipulates a scale that dictates the percentage of the purchase price that covers the legal fees that each party must pay. However, if a buyer is buying an apartment from developers, then they must pay legal fees for both parties. This is based on the fact that the seller’s lawyer is the one who does the registration for all the leases on behalf of the buyer.


d.      Agency fees

The agent is paid by either party. It can be the seller if they instructed the agent to market the property or the buyer if they instructed the agent for a property acquisition. The charge is determined on a scale where 3% of the property’s value is the maximum limit.


e.       Registration and disbursement fees

Generally, buyers are responsible for the registration cost of the title in their name(s) as well as disbursement costs as may be directed by the seller’s advocate.


3.       What else should I consider when buying property?

When buying a property there are important consents that must be completed in each transaction. The common consents required include the Land Control Board Consent, County Land Management, Board Consent and Spousal Consent.


This blog has been put together as a guide for potential property buyers. It does not intend to replace the legal advice that the buyer should obtain, nor is it meant to have any contractual effect. For any questions or additional information you may need, feel free to reach out to us. We're here to support you every step of the way.

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