alexa Let’s debunk the myth of buying land in Kenya - Daily Nation

Let’s debunk the myth of buying land in Kenya

Wednesday December 7 2016

With the little money you have, you can get

With the little money you have, you can get that piece of land - without bribing anyone. GRAPHIC | NATION 

ROSE ODENGO
By ROSE ODENGO
More by this Author

When you think of land, the first thing that may come to mind is “expensive”. Land value in Kenya has appreciated exponentially, and the acquisition of land at times seems tedious, convoluted and saturated in corruption.

We had a talk with two experts in the field who broke down the entire process of land purchase and answered other land-related questions that some of you have sent us.

You will also find out that with the little money you have, you can buy land, and no, you do not have to bribe anyone to get it.

We talked to SOLOMON WANGWE, the CEO, Goshen Acquisitions, a Kenyan real estate trading and Investment Company, and CAROLINE WAIYAKI, senior partner at Kittony Waiyaki Advocates, and a conveyance and commercial lawyer who specialises in land and property transactions.

WANGWE:

Q: How do you calculate appreciation of land value?

Advertisement

There are numerous variables, and no single formulae. First you have the perceived value of an area for example Karen Vs. Rongai [Nairobi County]. Secondy, land valuation in terms of its use, agricultural land has the lowest valuation compared to residential land. Commercial land has the highest valuation because it is believed to be more productive. And there is what I like to call the ‘X’ factors which are just based on human interest which influence supply and demand.

Q: What qualifies an area as prime land?

A: Prime land is determined based on how quickly you can liquidate it if you need the cash. This is also very subjective.

Q: How can one invest in land with minimal savings?

A: Many young people feel that it is beyond their reach because you have been made to believe that. You can pool your resources with others, find others with similar financial goals and buy the first thing you can acquire with the resources you have. Don’t wait until you have the parcels of land you really want. [Kitengela boda boda riders saved 100 shillings daily and now own homes]

Q: What should I consider before buying land as an investment?

A: First be clear on your investment goals, - what is your intent with the land? Do you want to build a house to rent or to live in now or is it a retirement home? Once you’re clear with what you want to do, then you need to think about two things simultaneously: your budget and the location of the land you want to buy. This is because sometimes, not always, it is necessary to blow your budget to get land in what is the right location for your long-term plans.

Q: Can you legitimately buy land without bribing anyone?

We have never paid a bribe not once, not a single shilling. It is possible. And the reality is even the people who would frustrate you in the process know what they are doing is wrong. If you stand your ground and insist on what the laws and the policy state are your right, eventually they have to give in. We have gone as far as writing letters of complaint to the Cabinet Secretary for Lands and copied everyone down the chain and named names and amounts that were being demanded for specific things. Sometimes it takes ruffling feathers and stepping on toes to get what is due to you. And that also presumes you are doing the right thing from the beginning. It’s difficult to call someone out when you have skipped out on the due process. The biggest cost with doing the right thing is time; we once waited a year for a title deed from a registry. If most of us demand that the right thing is done and hold people to account, things will change.

Q: What are the different types of land available for sale?

A: In terms of zoning, first there is residential and second, commercial, which are both categorised as high, medium or low destiny. Places like South ‘B’ or ‘C’, Nyayo Embakasi, in Nairobi County are considered high density residential areas. Then third, you have industrial land, areas for example where commercial industries are built, and finally, there is agricultural land. Each of these has policies that determine how the land can be subdivided.

Q: What can you do with freehold land to appreciate its value and bring reasonable returns with little presence on site?

A: It is simple, for starters, fence the land. Fencing alone increases the value because of perceived security. And your fencing material increases the value of the property by a factor of the overall cost of the property. Landscaping is also another way; you are making it more desirable to a potential buyer. You can also connect the land to utilities such as to the national electricity grid, or solar panels, local county water, sink boreholes among others. You don’t have to be there, make a one-time investment. And over time, the value of your land will increase faster than your neighbours who haven’t done the same.

Q: What will reduce the cost of housing?

A: Increase purchasing power of the population or lowering the cost for the developer by actually functioning like a government is supposed to, by providing the utilities that we pay taxes for. If the developer doesn’t have to worry about sinking boreholes to provide water to his buildings, or adding solar panels or generators to supply power or doing their own cabro roads for access to the property, the cost comes down and that is passed on to the consumer, which means more people can afford housing. Ideally, you should have both happening at the same time. Empower the market to afford and lower the cost for the developer. And those are government policy issues.

WAIYAKI:

Steps of land purchase process

This is the ideal process you should follow when buying land, according to Ms Waiyaki.

1. Visit the area where you hope to buy land

2. If it pleases you, express interest of purchase and request for a copy of the title deed from the landowner and present it to your lawyer.

3. Your lawyer will then take it to the land registry and conduct a land search.

4. Ask the owner to show you the beacons on the property which mark the land’s boundaries.

5. Depending on how large your land portion is, it would be advisable to get your own surveyor through a referral or the Board of Registration of Architects and Quantity Surveyors of Kenya to ensure that the beacons on the land are in the right place and the title you are buying is what is on the ground.

6. The seller then drafts the sales agreement once you have discussed the terms of the sale. The prescribed standard is 10 per cent deposit and the 90 per cent balance in 90 days.

a. Special conditions in the terms of sale that need to be included are the passport photos of the seller, copies of his PIN certificate and ID, which should all match the documents.

b. If it is a company, it should provide you with a certificate of incorporation, the company PIN certificate and the PIN certificates and IDs of the company’s board of directors.

c. It is easier to get this information at the negotiating stage before you sign the sale agreement.

7. Sign the finalised sale agreement and then make the agreed deposit.

a. The deposit could be held by the lawyer as a stakeholder and held safe.

b. Alternatively, you can write an agreement to have the money paid directly to the buyer, however, if something goes wrong during the process, getting your money back might be difficult.

8. Once the sales agreement is signed, ensure you take it to a Huduma Centre and have it stamped. That authenticates the contract.

9 You then raise the balance over the agreed upon time in the contract.

10 Your lawyer prepares the land transfer document. Not that you need to go before the Land Control Board if the land is located in rural areas. In major cities, you go to the land commission to get consent from the land registrar to consent to the transfer of land.

11 You go before the board, which sits once a month, and fill in the required forms. Both the buyer and seller sit in or can send representatives to get consent for transfer. You cannot transfer land ownership without the consent from the board.

12 Once you get consent, you then sign the transfer documents and attach the pictures of both the buyer and seller. You then come to the date of completion.

a. Date of completion is the date you finally exchange documents and make the final installment.

b. Balance is normally paid by bank transfer to the seller’s lawyer’s account

13 Once the transfer is successful at the Lands office and the title is successfully transferred to the buyer, the seller’s lawyer then releases the money into the sellers account. 

a. If the buyer is unable to register the transfer at the Land’s office due to a dispute on the land, the seller’s lawyer may have to refund the buyer the final deposit.

b. It is normally advised to the seller of the land to ensure that all interested parties on the land such as the seller’s children or wives sign a sales consent form with the buyers.

c. Land has to be valued by a government surveyor to agree on the parties’ sale that determines the stamp duty value which is 4 per cent of the property cost in urban areas and 2 per cent of the property cost in rural areas, which also affects the price of the property.

14 At the end of the land sale process, carry out another search at the Lands office to ensure that what is reflected in the file at the registry matches what you have in your hand.

Q: What happens if the land you have invested on is on the Standard Gauge Railway route or KETRACO is putting up electrical pylons, how does one seek compensation?

A: First, government advertises in the local newspaper dailies stating their need for land acquisition. Local government officials such as chiefs, DOs and DCs will then  meet you in person and discuss with you just how much of your land the government needs. It is then published in the Kenya gazette, which is mandatory. Compensation will then be discussed and you will be paid.

Q: How do you discuss compensation with the government?

A: First, valuation is done, they gauge how much land they will take and pay you commensurate to the valuation of the amount of land being acquired. Most of this tends to happen in rural areas with local administration. It is advisable to work with lawyers, such as through Kituo Cha Sheria who can offer free services. If it happens during Kenya’s judicial week, you can then get free legal services then, though it is only once a year.

Q: What is the difference between Freehold and leasehold titles?

A: For a freehold title, you own the land for life, in perpetuity like ancestral, which is mostly considered agricultural land. Land titles do state this. And the leasehold is mainly in urban areas. There are two types of leasehold, the 55 years and the 99 years; the government, however, wants to reduce that to 55 and 60 years respectively.

Q: Are people in rural areas required to pay land rates?

A: Land rates are only chargeable to leasehold titles. Freehold, you do not pay any charges.

Q: There is a colonial law that states that if you have squatters living on your land for a protracted period of time, they had a right to ownership. Does that apply today?

A:  In Mombasa especially, it is a very dire situation. The general challenge is that you have absentee land owners, and you have people who have lived on a parcel of land for generations. At times, as an owner, you are forced to cede some of the land, which you can discuss with government. The cost of kicking them out is more costly.

Q: Why isn’t land price regulated?

A: We have the government and market value. Unfortunately, now the government valuers  value the same as independent valuers because of demand and supply.

Q: How do you ensure you have an authentic and legal title?

A: You should carry out a normal land search costing Sh500 at the Lands office. Unfortunately because of duplicity of titles caused by corruption, you find that one parcel of land could have more than one title. In areas like Kajiado, this is very rampant. The best thing to do is to ask for a green card search at the Lands office. The green card is the authentic document in the file on a specific parcel of land which contains proper ownership. In registries like in Nairobi, you deposit the copy of the title of the land you intend to buy and the Lands office gives you the one from the file certified as the copy of the original. This helps you compare the two to ensure everything is the same. As lawyers, we also go a step further and go to the Survey of Kenya, which you can only do in Nairobi, to be sure.

Q: What is considered communal land and can it be bought?

A: Communal land does not have titles, neither are they offered titles. For example in Isiolo or Turkana, nobody owns it, and no one has a title. A title offers you proof of ownership of a given parcel of land. With communal land, no one owns it, thus it can’t be sold because no one has a right to a title.

Q: At what stage of land sale should one involve a lawyer?

A: Once you have seen the land and you have expressed an interest in buying it, you need to then get in touch with a lawyer. Once you get a copy of the title, you give it to your lawyer to carry out a search and view the property together.

Q: How do you trace your title deed which is supposedly ‘lost’ at the ministry of lands?

A: You write a formal letter of complaint to the land registrar and copy all the superiors in the department, someone will take action.

 

POINTERS ON LAND PURCHASE

  • You need to ensure you have a certified Surveyor from Board of Registration of Architects and Quantity Surveyors of Kenya.

  • Avoid brokers, deal with the actual owners of the land.

  • You do not have to bribe anyone in the land purchase process. Yes, corrupt entities in government or private sector may exist and demand bribes, but you can simply refuse to pay the bribe and write a formal complaint to the authorities concerned.

  • You may have to wait for a longer time to finally complete the process, but you can still buy land legally through this process and not pay a bribe.

  • If you want to know what the actual charges are for any legal service, visit the Law Society of Kenya’s website- www.lsk.or.ke  or www.kenyalaw.org website. It provides you with a copy of the advocates remuneration order, which provides all this information.

—Solomon Wagwe

 

Advertisement