How To Own A Property In Kenya As A Foreigner

The Law Allows Foreigners To Own Land In Kenya Through Leasehold Tenure. Allowing Foreigners To Lease A Piece Of Land Promotes Economic Growth. Read On For More Details On How To Own A Property In Kenya As A Foreigner. Foreigners Can Lease Land In Kenya In Their Name. An Alien Land Holding License Is A Must-Have To Obtain A Leasehold Tenure. Here Is Everything Else You Should Know About How To Own A Property In Kenya As A Foreigner.

Can foreigners own property in Kenya?

Yes, a foreigner can own land in Kenya under a leasehold tenure. If you are a foreigner looking to lease land, it would be best to learn the laws and regulations in Kenya. Other details to understand are the building permits, consent of transfer, and land purchase process.

Does the Kenyan law allow foreigners to own land in Kenya?

Certainly! The Constitution (2010), the Lands Act (6/2012), and the Land Registration Act (3/2012) entail the legal provisions for land ownership. Article 65(1) of the Constitution stipulates a "person who is not a citizen may hold land on the basis of leasehold tenure only, and any such lease, however granted, shall not exceed ninety-nine years."

Can a foreigner own freehold land in Kenya? Foreigners cannot own land on freehold tenure, that is, land owned for an indefinite period. Only Kenyan citizens can own freehold land.

Therefore, even if you, as a foreigner, decide to form a company, the law does not permit you to own land as a "freeholder." The same applies if you create a trust. Instead, you can choose different lease agreements, such as a periodic or general lease.

Factors foreigners need to consider when investing in Kenya

There are several things to consider as a foreigner before buying property in Kenya. Note that you cannot own land. However, you may acquire it under leasehold tenure.

·        You must obtain an Alien land-holding license in Kenya from the Ministry of Lands and Physical Planning.

·        Make sure you understand the restricted areas where you cannot lease land. For instance, some areas along the coast or Kenyan borders are off-limits for national security reasons.

·        Set realistic expectations regarding the land ownership process. You must provide critical documentation to obtain an Alien land-holding license. Also, the process can be extensive.

·        Ensure you have a licensed and reputable lawyer to handle the nitty-gritty.

·        Factor in the property costs based on the size and geographical area.

Detailed explanation of the Leasehold tenure

Two types of land ownership in Kenya exist—Freehold and Leasehold land. If you own freehold land, you have total control and can use the land as you wish. However, it must be in line with Kenyan regulations.

Owning land under a leasehold tenure means you have the right from the owner to use the land for a specified period. As mentioned earlier, the Constitution outlines that a foreigner can acquire a 99-year leasehold tenure.

Upon this agreement's expiration, the land returns to being freehold unless you renew the lease agreement. The common elements of leasehold land are:

·        Conditions: the lessee uses the land based on what was agreed at the signing of the leasehold tenure

·        Period: The leasehold tenure is valid for the time indicated in the agreement.

·        Renewal and reversal. The lessor can choose to renew the lease agreement. Otherwise, the land reverts to freehold ownership.

·        Ground rent. The lessee may have to make annual payments

Foreigners under leasehold tenure experience various benefits. For instance, the land is typically in strategic locations. Leasehold properties enjoy unique government benefits.

Also, you enjoy similar security of ownership as a "freeholder." Leasehold tenure allows you to develop the land by building something helpful for the locals or yourself. Remember, you can always renew a lease.

What does the leasehold tenure contribute towards the country's economic growth?

The leasehold tenure brings capital into the country. Also, foreigners owning land in Kenya help diversify the real estate market. Let us not forget job creation and an increase in the demand for high-quality infrastructure and housing.

Availability of the leasehold property

You can acquire leasehold property in any part of Kenya. The majority of Kenyan land falls under freehold ownership. Even so, you can obtain large property for sale in Kenya once it is converted from freehold to leasehold ownership.

Taxes and Fees related to leasehold property

Stamp duty is one of the requirements for foreign investors in Kenya when buying leasehold property. The Kenya Revenue Authority levies stamp duty on land transactions. Also, you must pay a fee for land that is converted from freehold to leasehold tenure.

Once you secure that lease, you must pay the county and national government rates. The government's valuation determines the tax rates and rents. Upon selling the land, you must pay capital gains tax. This amount comes from the net profits gained from this land.

Limitations of property ownership

The Constitution and the Land Control Act (Cap 302) stipulate the limitations of private land ownership in Kenya for foreigners. According to Article 65(1) of the Constitution, you can only own land on the basis of leasehold tenure. As per Article 8(1) in the Sixth Schedule to the Constitution, "any freehold interest in land in Kenya held by a person who is not a Kenyan citizen shall revert to the Republic of Kenya."

Can I buy agricultural land in Kenya?

Agricultural land falls under 'controlled transactions' as per the Land Control Act.

"The issue, sale, transfer, mortgage or any other disposal of or dealing with any share in a private company or co-operative society which, for the time being, owns agricultural land situated within a land control area, is void for all purposes unless the land control board for the land control area or division in which the land is situated has given its consent in respect of that transaction in accordance with this Act."

Therefore, if you are a foreign investor, you cannot buy agricultural land in Kenya. The only exception is if you receive an exemption from the president. Once received, this exemption will appear as a notice in the Kenya Gazette.

Dummy companies and nominees

Some foreign investors attempt to illegally own freehold land. One of the ways to do this is by incorporating local shareholders. These Kenyan shareholders then become part of a declaration of trust with foreigners.

The particular Kenyan shareholders will appear as the legal owners. However, they will not benefit from this agreement. Another common approach is the use of nominees. These nominees will carry out land transactions on behalf of foreign investors.

These two methods are unlawful. According to the constitution, "any property held in trust shall be regarded as being held by a Kenyan citizen only if all of the beneficial interests of the trust are held by persons who are Kenyan citizens." You will, therefore, end up putting your investment at risk by using these unlawful approaches.

FAQS about how to own a property in Kenya as a foreigner

What does a foreigner need to buy property in Kenya? Foreigners must obtain a "consent to transfer" certificate from the Ministry of Lands.

How can a foreigner invest in Kenya? A foreigner can invest in the real estate market. They must meet the requirements, including a formal registration with the Kenya Revenue Authority.
Can a foreigner own a car in Kenya? Yes, a foreigner can own a car using their Alien ID and passport.

Can a foreigner get a mortgage in Kenya? Yes, you can secure a mortgage with a tax pin, a good credit history, and by meeting specific requirements.

With this comprehensive guide on how to own a property in Kenya as a foreigner, you can begin the process of securing a leasehold tenure. AMG Realtors have prime properties for sale in strategic locations. Reach out to us at +254 796 888 555 today!