Yes.
Many foreign nationals continue to rent, lease and acquire immovable properties in Kenya. Majority of them, however, continue to be duped into believing that they cannot own land in their name unless they form partnerships with the locals.
This is one of the things that has led to an increase in nasty court cases and many of them being duped in land dealings.
Requirements for foreigners to legally buy land in Kenya are as follows:
A foreigner or a non –Kenyan citizen is defined by law as a person belonging to or owing allegiance to a different country.
Trust on the other hand is a legal arrangement where a person known as a trustee holds property as his or her own for the benefit of another individual.
As is the case with foreign individual, the same limitation on ownership also applies to trusts whose beneficiaries are not Kenyan citizens.
By law, a company is a separate entity from those forming it. The Kenyan constitution provided for these legal entities to buy and own land in their name.
A foreign company – with more than one foreign shareholder – can only own land in Kenya on a leasehold of not more than 99 years.
Foreigners can own property in Kenya in their name. The Constitution (2010), the Lands Act (6/2012) and the Land Registration Act (3/2012), subject to certain limitations, grant the right to any person, either individually or in association with others, to acquire and own land in Kenya.
This is important as many foreign investors have been duped into believing that they cannot own land in their own name in Kenya.
LIMITATION OF PROPERTY OWNERSHIP
The limitations of property ownership in Kenya by foreigners can be found in the Constitution and the Land Control Act (Cap 302).
As per Article 65(1) of the Constitution, “ a person who is not a citizen may hold land on basis of leasehold tenure only, and any such lease, however granted, shall not exceed ninety nine years”. However, on expiry of the leasehold term a renewal of the lease may be sought.
Article 65 further provides that any document which purports to confer on a foreign investor an interest in land with a lease of more than 99 years is deemed and regarded as conferring on that foreigner a 99-year lease and no more.
This means that foreign investors can purchase leasehold properties for more than99 years. However, the constitution implies that it will be deemed as conferring only a 99-year leasehold interest on the foreigner.
A company, as per the Constitution and for purposes of property ownership, is regarded as a Kenyan company only if it is wholly owned by one or more Kenyan citizens. Therefore, a company with foreign shareholders is regarded as a foreign company and cannot own freehold land.
Moreover, a trust cannot be formed to obviate this requirement. The Constitution was promulgated on August 28 2010.
Under Article 8(1) in the Sixth Schedule to the Constitution, any freehold interest in land in Kenya held by a person who is not a Kenyan citizen shall revert to the Republic of Kenya to be held on behalf of the people of Kenya, and the state will grant a peppercorn rent for 99 years to that individual.
This means that from the effective date, any freehold land or absolute proprietorship held by a foreigner is truncated to a 99-year lease with a peppercorn rent.
The government has been forced to call for these Real Estate – Kenya Author Mwangi Karume titles and issue foreigners with leasehold titles with a commencement date of August 28 2010.
Under the Land Control Act transactions affecting agricultural land and other land which may be gazetted by the minister of lands are defined as ‘controlled transactions’. Controlled transactions are void in law for all purposes unless the land control board for the land control area or division in which the land is situated has given its consent in respect of the transaction.
As per the act, the land control board cannot grant consent to a transaction in which the land is to be disposed of by way of sale, transfer, lease or exchange or partition to a person who is not:
The effect of this is that foreign investors and private companies owned by foreigners cannot hold agricultural land in Kenya. However, through a notice in the Kenya Gazette, the president may exempt any person from all or any of the act’s provisions. Therefore, foreign investors wishing to acquire agricultural land may apply for such exemption. Further, public companies in which foreigners are members may acquire agricultural land.
One of the ways in which foreign investors attempt to circumvent limitations to property ownership is by incorporation of companies whose shareholders are indicated as local in the Companies Registry. The Kenyan shareholders then enter into a declaration of trust with the foreign investors.
The declaration of trust will usually state that local shareholders are the legal but not beneficial owners of the shares in the company. Another approach is to use nominees to enter into property transactions and own property on behalf of foreign investors.
These approaches are void and unenforceable as they go against the Constitution and the law. The Constitution provides that any property held in trust shall be regarded as being held by a Kenyan citizen only if all of the beneficial interests of the trust are held by persons who are Kenyan citizens.
The use of dummy companies and nominees therefore puts investments at risk.
