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Welcome to Kenyan Lawyer blog, an informative and educative blogs that is meant to educate and inform you on legal development in Kenya and on business issues. You can reach me via mainacy@gmail.com

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Thursday, July 5, 2012

Kenyan laws on Foreign Ownership of Land


Ownership of Land by Foreigners in Kenya 
       
The Kenyan Constitution and the Lands Act (Act No. 6 of 2012) and the Land Registration Act (Act No. 3 of 2012) provide that foreigners or non-citizens can only own land under a leasehold tenure not exceeding ninety nine (99) years.  In other words, it is only Kenyan citizens who can hold land on freehold tenure basis. 
Chapter 5 of the Kenyan Constitution is that make provisions of Land and Environment. Under Article 65(1) the Constitution, ‘person who is not a citizen may hold land on basis of leasehold tenure only, and any such lease, however granted, shall not exceed ninety nine years.’ Under subsection (2) thereof, if any provision in any agreement, deed, instrument or any other document of whatever nature which purports to confer a non-citizen an interest in land greater than a ninety nine (99) year lease, ‘the provision shall be regarded as conferring on the person a ninety (99) year leasehold interest, and no more’.    
 Under sub-article (3) thereof:
  • a body corporate shall be regarded as a citizen only if the body corporate is wholly owned by one or more citizens; and
  • property held in trust shall be regarded as being held by a citizen only if all the beneficial interest of the trust is held by people who are citizens.
In effect, private companies whose shares are not wholly owned by Kenyan citizens cannot own freehold land.  Moreover, a trust cannot be form to obviate this requirement. 
The Kenya Constitution was promulgated on 28th August, 2010 (the effective date).
Under Article 8(1) in the Sixth Schedule to the Constitution, on the effective date, any freehold interest in land in Kenya held by a person who was not a citizen shall revert to the Republic of Kenya to be held on behalf of the people of Kenya, and the state shall grant to the person a ninety nine (99) years at a peppercorn rent.
This means that from the effective date, any freehold land or absolute proprietorship held by a foreigner was truncated to a ninety nine (99) years lease with a rent of a peppercorn.  The Government will therefore forced to call for these titles, and issue the foreigner with leasehold titles whose commencement date shall be 28th August, 20123.
Under sub-article 2 thereof, on the effective date, any other interest in land in Kenya greater than a ninety nine (99) year lease held by a non-citizen shall be converted to a ninety nine (99) year lease.    This covers the 999 years leases that were initially granted to the white settlers under the Crown Land Ordinance of 1902 and 1915 as well as lease for flats or apartment over such properties.    
 Under section 13 of the Land Act, if a leasehold title expires by effluxion of time, the Land Commission shall offer to the immediate past leasehold owner thereof pre-emptive rights to be allocated the land provided that such lessee is a Kenya citizen and that the land is not required by the national or the county government for public purposes. This provision implies that a non-citizen cannot be granted an extension of lease after expiration of the ninety (99) years leasehold interest.  

It should also be noted that, under the Land Control  Act (Chapter 302 of the Laws) of Kenya, a non-citizen can only own agricultural land if it is an initial grant from the Government or after obtaining a presidential exemption  to acquire the land under section 24 thereof. It should be noted that a public company registered in Kenya is not affected by this restriction even where some of its shareholders are foreigners.  However, for a private company to own agricultural land in Kenya, except in the cases stated before, all of its shareholders must be Kenyan citizens.  

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