Published on 22 January 2006 at 02:16 pm
Filed under: Africa:- Kenya Property Guides » Kenya Property Buying Guide
Of all the advice given to investors considering the booming Kenyan real estate market, the most pertinent is ‘employ a recommended lawyer to assist you with the entire investment property buying process in Kenya!’
An investor’s consulate or embassy in Kenya may be able to supply details of qualified and reputable law offices; if not it’s wise to take personal recommendation or to conduct a certain amount of due diligence on any company or individual you’re considering. And no property investor should make an offer to purchase or enter into any contact before getting expert legal guidance.
In terms of regulations governing either the real estate purchase process or estate agents working in Kenya, there is very little in terms of legislation to protect the purchaser therefore Kenya is most certainly a country an investor should approach with caution.
In terms of restrictions placed on the foreign freehold ownership of land and property in Kenya they are as follows: -
Land or property designated as ‘commercial class’ can be purchased by foreign investors.
Land or property designated as ‘agricultural class’ cannot be purchased by foreign investors unless the investors establish a local company structure in Kenya that has a majority Kenyan holding and then purchase the agricultural land or real estate in the company’s name.
If a company chooses to purchase agricultural real estate it is possible to apply for a change in classification but acceptance of the change is not guaranteed.
There is a clear distinction in Kenya between land that is freehold and land that is leasehold. The majority of land is owned by the government and available for leases of between 50 and 99 years.
If an overseas investor requires finance to buy in Kenya they should ensure any leasehold land or property they consider has at least 50 years left on the lease otherwise domestic lenders will be reluctant to grant a mortgage on the property.
The land registry system in Kenya is far from perfect with many properties unregistered and the true owners of large parcels of land untraceable. Therefore the fundamental key to buying investment property in Kenya successfully is searching the title of any potential real estate acquisition carefully before making an offer or signing a contract to purchase.
Ideally the vendor will be able to give the investor’s solicitor the title deeds that should show the vendor listed as the owner of the property, if should show the class of the property and finally it should show the exact dimensions or size of the land and property. Only when such deeds have been located and examined and found to be in order should an offer to purchase be made.
Once a price for the property sale has been agreed upon a conditional preliminary contract can be sighed and a deposit of up to 10% of the purchase price be paid. It is then usual for the final contract to be signed within a 90 day period at which time the outstanding purchase price will be paid by the property investor and the buyer’s solicitor will register the final contract with the land registry and apply for a transfer of the title deed into the new owner’s name.
Taxes and lawyer’s fees will be payable within 30 days after the final contract is signed. All fees in Kenya tend to fluctuate and are usually based on the underlying purchase price of the investment property being bought. Therefore an investor should speak to their lawyer about the expected additional costs before beginning the search for real estate.
And finally, it’s possible for an investor to give their solicitor complete power of attorney in Kenya so that they can handle the entire buying process while the investor remains outside of the country.
Africa:- Kenya Property Reports
Complete listing of all current property reports for region: Africa:- Kenya
