Frequently Asked Questions
What is the difference between a short let and a long let in Kenya?
Short lets are usually classified as anything less than six months, while long lets are constituted as anything from an year. This may vary slightly depending on the landlord in question, so it makes sense to discuss this with your letting agent before you make your decision.
What are the legal requirements for registration or recording conveyances, leases and real estate security interests?
Before registration the following must be done:
- the instrument to be registered, and transfers or leases, must be properly prepared and executed;
- all land rates and land rents (if applicable) must be paid and clearances obtained;
- consents such as Land Control Board consent and National Land Commission consent should be procured;
- in the case of a sale, the vendor should compute the capital gain and pay the relevant capital gains tax; and
- the instrument must be presented for assessment of stamp duty and the stamp duty paid.
Having satisfied the above, the documents can be booked for registration.
The following fees and taxes are payable in a dealing with property:
- stamp duty: a tax payable by the buyer, lessee or chargee to the government on any instrument listed in the Stamp Duty Act, including transfers, leases and security instruments. The type of instrument and the transaction value determine the stamp duty payable;
- land rates: a tax payable by the registered owner to the county government in accordance with the Value for Rating Act (Cap 266);
- land rent: a tax payable by the registered owner to the head lessor on leasehold property.
- capital gains tax: a tax payable by the seller of a property, being 5 per cent of the difference between the excess of the transfer value of the property over the adjusted cost of the property at the point of transfer; and
- value added tax (VAT): VAT is payable by a tenant or the buyer of a commercial property. It is calculated at 16 per cent of the sale value.
Parties to a transaction structure the transaction in myriad ways to minimize tax obligations or avoid the same entirely. This can be achieved by the parties either choosing the right entity or entities to transact through, or acquiring the property through a purchase of shares, rather than a direct purchase of the property.
Is there a planning process or zoning regime in place for real estate?
Planning and land use are controlled mainly through the:
- Constitution of Kenya 2010;
- conditions of title;
- Land Act 2012;
- Physical Planning Act (Cap 286);
- Urban Areas and Cities Act 2011;
- Environmental Management and Coordination Act (Cap 387);
- County Governments Act 2012; and
- Land Control Act (Cap 302).
The responsibility for planning has been apportioned to both national and county governments. The national government is charged with the responsibility of formulating general principles of land planning, and the Land Control Act and the Physical Planning Act establish a system of physical planning both at the district and at the national level. The Physical Planning Act bases its planning at national level, but its implementation is done through local authorities.
The following are required in an application to vary a zoning regime:
- copies of ownership documents (title deed, certificate of lease, certificate of grants);
- current official certificate of search of the property;
- current land rates clearance certificate;
- current land rent clearance certificate;
- proof of payment of statutory fees and charges;
- duly completed form PPA1;
- planning brief prepared by a registered physical planner;
- comprehensive location plan; and
- proof of advertisement of the proposed plan on the site and in two newspapers of national circulation.
The National Museums and Heritage Act 2006 deals with the identification, protection and conservation of the cultural and natural heritage of Kenya. Under this Act, a building, area or zone can be declared a national monument and preserved.
Prior to undertaking a development, approval must be sought from the relevant county government, the Physical Planning Authority, the National Construction Authority and the National Environment Management Authority.
Any party aggrieved by a development planning decision can apply to appeal against the decision to the relevant county Physical Planning Liaison Committee. This decision can be further appealed to the National Physical Planning Committee. Where a development of land has been or is being carried out without the acquisition of the necessary development permission, the county, through its planning authority’s enforcement unit, shall issue a notification of non-compliance to the owner, occupier or developer of the land specifying the:
- conditions of the development permission alleged to have been contravened;
- measures required for the developer to rectify the non-compliance, which may include restoring the land to its original condition;
- time within which the above measures should be taken; and
- consequences for non-compliance.
An appeal may be lodged by the person served to the relevant county Physical Planning Liaison Committee. Where an appeal Is not lodged and the time to rectify the non-compliance has elapsed, the enforcement notice shall take effect. The enforcement notice may require the demolition or alteration of the building or works or the discontinuance of any use of the land or construction on the piece of land.
What are the initial payments required when renting an apartment long-term in Kenya?
When you and the landlord agree on the terms of your rental you will be required to pay one month’s rent in advance, as well as a deposit. The amount of the deposit will be confirmed by your landlord, but is usually equivalent to one month’s rent.
What is a Deed Plan?
This is a signed plan by the Director of Surveys showing the precise particulars of a surveyed piece of land. It shows the details such as the shape of the plot, the distances and bearings all-round the plot, scale of plotting, Deed plan number, land reference number, size of the plot in hectares, signature of the Director of Surveys, the date of authentication by the Director of Surveys and above all, it shows if the plot is a New Grant or an extension of lease.
This in practice is under the provisions of Registration of Titles Act (RTA). The Deed Plan once duly prepared is attached to a certificate defining the current owner and any endorsements by the relevant Registrar in the event the property has changed hands or there are encumbrances therein whatsoever relating to the plot.
Do lawyers usually review leases or are they reviewed on the business side?
It is within the purview of lawyers to review leases. In reviewing leases, lawyer seek to establish the scope of liability of their respective clients. Issues such as use, improvement and maintenance of the property, insurance, consequences of default and yielding up of the property are negotiated in a lease.
In addition to reviewing leases, advocates review any headleases, easements, caveats and restrictive agreements noted against the title. They also review licences and approvals, service agreements, valuation reports and zoning reports. Lawyers also ordinarily review the Ndung’u Report and Kenya Gazettes to try to ascertain whether the property was possibly illegally acquired.
The closing of sale, lease and financing transactions is very different. On the completion date for a sale, a typical list of deliverables will include:
- the original title;
- an executed transfer in respect of the property in favour of the buyer;
- spousal consent (if applicable);
- land rent clearance certificate;
- rates clearance certificate;
- consent to transfer;
- colour passport photos of the seller or the seller’s directors;
- copies of the seller’s personal identification number certificate;
- copies of the seller’s identity card, certificate of incorporation or certificate of registration (as applicable); and
- a map of the property.
In respect of financing, the above documents are required, save that a duly executed security instrument is required in place of a transfer and the photos are not required.
Following completion, valuation and stamping commences and thereafter registration. This process ordinarily takes between two to five weeks form the completion date.
Land rent and land rates are typically apportioned as at the completion date.
Breach of lease terms
What remedies are available to tenants and landlords for breach of the terms of the lease? Is there a customary procedure to evict a defaulting tenant and can a tenant claim damages from a landlord? Do general contract or special real estate rules apply? Are the remedies available to landlords different for commercial and residential leases?
As a matter of practice, a lease agreement will generally include the remedies that each party is entitled to in case of any default or breach by the other party. A tenant’s remedies are mainly:
- termination of the lease;
- a suit for breach;
- injunctive relief against the landlord to compel the landlord to:
- carry out required repairs; and
- cease entry of the premises at unreasonable times; or
- to stop an eviction without notice or a court order.
A landlord may, on the other hand, terminate a lease and enter into possession, which results in the eviction of the tenant. To evict the tenant, the landlord has to apply for an eviction order from a court of law. The landlord may also demand interest or bring an action for recovery of rent arrears and damages or ‘distress for rent’ (the latter allows the landlord to seize and sell movable goods on the leased premises for payment of rent arrears due).
An injunction can also be sought to restrain the lessee from committing a breach or further breach of the lease terms.