LAND LAWS IN KENYA.
There are laws that govern the land, and of course one can’t tell the entire meaning of land without understanding what land is,
According to the Constitution, land can be defined as the surface of the earth and the subsurface rock or any body of water on or under the surface.
Then there’s a land tenure which is a set of rules that determine how land is used, processed and even sold
Below are Key aspects of the land laws in Kenya:
Ownership Of Land By Non-Kenyan Citizens
Under article 65 of the current Kenyan constitution, non-citizens can only hold land for a period of 99 years under the leasehold tenure.
The lease hold tenure is a form of land tenure or property where one party buys the right to occupy land or a building for a given period of time.
And so this means that a non-citizen can’t hold freehold property. Freehold property entails that the holder has absolute ownership of the land for life, which then means that the title deed generally has no restrictions as to the use and occupation of the land.
Repealing of Earlier Statues
a) Land Act 2012 states that there are various laws on land into one substantive law that governs land in Kenya
b) Land Registration act 2012 provides for the revision, consolidation and rationalization of the law governing the registration of the title to land.
c) National land Commission act 2012 states that the ambit of the act provides for the functions of the commission, qualifications and the procedures for the appointment of members of the commission, including the chairperson.
Spousal Rights
Land Registration act provides for spousal rights thus between partners and also gives a spouse the privilege to acquire an interest in his/her spouse’s land if the spouse contributes by labour or any other means to the productivity.
The Spouse’s interest also matter and are recognized as if it is registered against the title to the land.
Consent of Spouse also matters
On the Section 93 of the Kenyan Constitution pf land registration act, there’s a section that says a spouse who owns land or a dwelling house under his/her name individually and undertakes a sale of that land the purchaser shall be under a duty to inquire whether the spouse has consented to the sale. This also applies when one chooses to lease their land, the spouse’s consent also matters here and is not only enstringed or restricted to matrimonial property alone.
Protection of Tenants
A tenant is one who resides on that particular piece of land, or we can say a client then or the owner. If it happens that he or she has been evicted contrary to the terms of his lease, then, or she is excused from paying rent or other monies due under the lease.
Types and systems of Registration of Titles
Title deeds are always issued under one of the following statues always be keen when being issued with title deeds, ensure they are under the following statues that are:
The Registered land Act
The Registration of Title Act
The Land Titles Act
The Government Lands Act7. Formation of an Environment and Land Court
The Environment and land court will have the full jurisdiction to hear and determine disputes related to land.
Real estate taxes generally entail taxes on real property only, in the sense that this is money paid on the property owned by an individual or other legal entitlement that one holds, i.e. corporation.
This tax is calculated by a local government where the property is located, and it’s paid by the owner, entailing the value of the owned property including land.
The money is used to help pay for local and state governmental services.
The Kenya Revenue Authority (KRA) introduced this measure with the key focus of implementing the tax base expansion strategy that seeks to recruit new taxpayers.
There are quite a variety of real estate taxes charged in Kenya, and below are the taxes charged:
Land Rent
This is a levy imposed on leasehold parcels of land where the annual rent has been reserved at the time the grant is being issued. (Tax imposed on land by the Government)
The above funds are paid to the Ministry of Lands and Physical Planning.
After the payment has been made, the ministry of lands and physical planning issues a clearance certificate as evidence that you have paid the land rent
Land Rate
This is basically a tax imposed by the county governments within a municipality, that’s payable to the county government.
After which, a clearance certificate is issued that’s detailed and conclusive, showing that interests accrued have been fully taken care of.
The money is paid to the Government because the land you own as a buyer is being serviced with social amenities that include: County water, sewerage system and even presence of better streetlights and accessibility to your area which is the better road.
Income Tax
There are funds that are made by individuals or corporations to a government’s entity based on their taxable income.
Basically they are a type of tax governments impose on income businesses and individuals within their jurisdiction generate.
In the sense of landowners, the Income tax act provides the framework for imposition of taxes on income from among others land.
These funds are payable in respect of Land that are capital gain tax.
Capital Gains Tax is a tax chargeable on the gain on the transfer of land, building and shares, they charge only 5% of the income gain.
The Income Tax act also provides ways of taxing rental income that include:
Where the rent is payable to a non-resident, the tenant is required to withhold 30% of the rent and remit it to the Kenya Revenue Authority.
Where the rent is payable to a resident, if the property is commercial, the tenant being an appointed agent is required to withhold 10% of the rent.
Where the rent is payable to a resident and the property is residential, the landlord may opt to either pay a monthly rental income tax
Stamp duty
Stamp Duty, Land Tax, is payable on sale of property leases and mortgagees.
A stamp duty is a tax that governments place on legal documents, which involve the transfer of real estate or other assets.
Governments can impose stamp taxes on documents that are needed to legally record those types of transactions.
These taxes are used as a source of revenue to fund government programs and activities.
The Stamp Duty act states that documents must be stamped within 30 days of acquisition, or they are likely to attract a penalty.
For transactional instruments that are prepared locally, the tax should be paid within 30 days.
However, for documents executed abroad and sent for registration locally, Stamp Duty must be paid within 30 days of receiving the documents.
If, for whatever reason, payments exceed the charged amounts, applications for refunds should be made within one year.
When Stamp Duty is not paid within that time frame, this results in the invalidity of the relevant transaction, any agreement signed between the parties becomes null and void, and the same is inadmissible in a Court of Law as evidence.
Back in the year 2018 the court had ruled that taxes should not be paid by land owners, something that now the KRA thought should be revisited.
As a property tax payer this should be a key area of consideration by policy makers to ensure that the objectives of the affordable housing agenda are realised as envisaged by the Government. The tax regime in Kenya can be a little bit messy unless you are a seasoned real estate or tax professional. Consider seeking expert opinion when conducting your real estate transactions.
