WAMAE AND ALLEN LLP
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
According to Kenyan law, Real Estate can only be owned by foreigners for a 99-year maximum Leasehold Tenure. Therefore, any freehold interest in land in Kenya held by a person who is not a Kenyan citizen is automatically assumed to be held for 99 years only. Further, non-citizens are also not permitted to own agricultural land in Kenya of a freehold basis. Where a foreigner is a shareholder in a Company that wishes to own property in Kenya, the Company is limited to ownership via Leasehold tenure.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
A Foreign company is not permitted to conduct any business transaction in Kenya unless it is incorporated in Kenya either register a branch or a subsidiary as per the Companies Act. A foreign company that has been registered as a branch or a subsidiary can borrow, however different lenders have different requirements that must be met prior to advancing facilities.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
Purchasing property comes with a myriad of costs payable by both the Purchaser and the Seller.The Purchaser bears the costs during performance of due diligence such as searches at both Lands and Companies Registry, procuring requisite consents where required, the Advocates Legal fees, Stamp duty costs which is calculated at a rate of 4% of the value of the property upon government valuation and transfer fees with regards to payment for the transfer to be registered.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner
Upon owning Real Estate in Kenya, the owner who receives Rental Income is obligated to remit rental Income tax to the Kenya Revenue Authority. The obligation to pay rental income tax is vested on both Residential Property owners and Commercial Property owners. Non-resident Landlords are exempt from paying Monthly Rental Income; however, they are obligated to declare and remit the same at the end on the year as an Income tax. It is mandatory for Landlords to correctly declare and pay rental income tax to avoid any penalties or charges.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so, what are they?
Kenya is invested in attracting foreign investments through providing tax incentives and exemptions that Real Estate investors can benefit from. Although there are no direct incentives at the point that a Foreigner is procuring Real Estate in Kenya, there are various avenues where a Foreigner can invest and receive incentives. These incentives are granted upon meeting specific provisions. These provisions include investment in Special Economic Zones (SEZ), Affordable Housing Projects and Developments promoting tourism.
How is the ownership of Real Estate evidenced in your jurisdiction?
A Certificate of Title or a Certificate of lease is conclusive evidence of ownership of property in Kenya. The Kenyan Land Act 2012 provides that the person whose name is indicated on the proprietorship section of the title has the prima facie ownership interest.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
All title documents registered under the Ministry of Lands are kept in a Lands registry. This Land registry is subject to the general right of inspection via a search or physical perusal by a party who lodges a search application. This therefore means, that where an individual conducts a manual search, they can see the registered proprietor of the said Title/Lease.
However, through the Ardhisasa Platform (a platform that integrates all land transactions online) the Owner must verify the search application to enable the other party to receive the search information with regards to the owner’s property.