I have received many queries from foreigners on investing in property in Kenya.
Question: Can I, as a foreigner own land in Kenya?
The provisions of law regulating landholding by non-citizens is found in the Constitution of Kenya, the Lands Act (Act No. 6 of 2012) and the Land Registration Act (Act No. 3 of 2012).
Under the provisions of the Kenyan laws above, non-citizens can only hold land for a period of 99 years under a leasehold tenure. This essentially means that a non-citizen cannot hold freehold property.
The Constitution further provides that in the event that a non-citizen holds any title document which purports to confer a non-citizen an interest in land greater than a 99 year lease, the provision shall be regarded as conferring on the person 99 year leasehold interest, and no more.
Question: What is the difference between freehold and leasehold land?
Answer: Freehold land It is the greatest interest a person can have on land as it gives the holder absolute ownership of the land for life. This means descendants can succeed the owner for as long as the family lineage exists. A freehold title deed generally has no restrictions as to the use or occupation.
On the other hand, a Leasehold interest in land is for a specific period subject to payment of a fee or rent to the grantor. In the case of non-citizens, leases are granted for a period of 99 years.
Question: What happens when a 99 year lease expires?
Answer: Section 13 of the Land Act provides that after 99 years when a leasehold title expires, 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. The key word being “citizen”, it then means that a non-citizen cannot be granted a further extension after the expiry of the 99 year term.
Question: Can I then form a Company or a body corporate which can hold freehold land in Kenya?
Many non-citizens have attempted to establish and form companies in order to hold freehold property in Kenya. However, the Constitution is clear in its provisions in that a body corporate shall be regarded as a citizen only if it is wholly owned by one or more citizens. This essentially means that in order for a Company to own freehold property, the Company must be wholly owned by one or more citizens.
Question: What about if I form a trust?
The Constitution also prevents a non-citizen from owning freehold property under a trust and provides that any 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.
Question: Can I buy agricultural land in Kenya?
Answer: Under the Land Control Act, the Land Control Board shall refuse consent to the transfer of any agricultural land to a person who is not a citizen of Kenya. However, the Act also provides that 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 agricultural land.
The only saving exemption seems to be that a public company can own agricultural land even if some of its shareholders are foreigners.
The same cannot be said for a private company in which all of the shareholders must be Kenyan citizens in order to own agricultural land.
Question: As a foreigner, can I invest for commercial purposes?
Answer: Yes, non-citizens can invest land in Kenya for purposes of revenue making or generating income. However, it should be noted that the said property can only be invested for commercial purposes and not for purposes of generating personal rental income.