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Can foreigners own land in Kenya?

Can foreigners own property in Kenya?

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.

In Hartmann v Mbogo (Civil Case 222/2007), Grounstra v Wanje (Civil Case 284/2007), and many similar cases involving coastal properties, foreign investors have entered into agreements and arrangements with locals with a view to the locals purchasing properties on their behalf. This is usually based on the alleged representation that a foreigner cannot own land in their own name. Such unnecessary partnerships between locals and foreigners often turn sour and should be avoided.

Before a foreigner purchases property, proper research should be undertaken and qualified professionals should be engaged.

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 renewal of the lease may be sought. Article 65 further provides that any document which purports to confer on foreign investor 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.

Agricultural land

Under the Land Control Act, transactions affecting agricultural land and other land that 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:

  • a Kenyan citizen;

  • a private company or cooperative society, all of whose members are Kenyan citizens;

  • a group representative incorporated under the Land (Group Representatives) Act; or

  • a state corporation as per the State Corporation Act.

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.

Below describes the Constitution of Kenya and Land Control Act in depth

Constitution of Kenya

The Constitution provides Article 65 that non-citizens may only own land on a leasehold basis for a term not exceeding 99 years. If a non-citizen currently owns freehold land or leasehold land of a term exceeding 99 years then the Constitution provides that their interest in the land will be reduced to a 99-year leasehold interest. Nonetheless, a non-citizen can apply for an extension or renewal of the lease at the expiry of the 99-year term.

So who is a citizen? One obtains Kenyan citizenship in one of two ways, either by birth or registration. One can become a citizen by registration through marriage to a citizen for a minimum of seven years, through lawful residency in the country for a minimum of seven years, or through adoption. So far as companies are concerned they will only be regarded as citizens if all their shares are held by Kenyan citizens and if the shares are being held in trust if the beneficial interest of the trust is held by Kenyan citizens.

Land Control Act

The Land Control Act (the Act) restricts the ownership by non-citizens of agricultural land or land within land control areas. This land, in general terms, is a land that is situated outside a municipality, a township, or a market or land that the Minister of Lands designates as being controlled and subject to the protections in the act.

The Act in section 9 as read with section 6 provides that any dealing in agricultural land or controlled land the purported effect of which is to sell, transfer, lease, charge, partition, or exchange land with a non-citizen is void for all intents and purposes. A non-citizen for the purposes of the Act is one who is not a citizen either by birth or registration and if a private company or co-operative society, one whose shareholders or members are not all citizens. A non-citizen may however be exempted from the provisions of this Act by the President of Kenya.

The ramifications of the restrictions placed by the Land Control Act are more far-reaching than those in the Constitution. Unless a foreign investor is exempted by the President of the Republic of Kenya, he or she is confined to owning land within or within the vicinity of Kenya's cities and towns. A practice has however developed to try to exploit a certain loophole in the Land Control Act to enable the sale, transfer, lease, charge, partition, or exchange of agricultural land to non-citizens.

A close reading of the Act reveals that it does not restrict dealings in shares in public companies which own agricultural land. A foreign investor may therefore own agricultural land indirectly through owning shares in a public company that owns agricultural land. A foreign investor may therefore own agricultural land indirectly through owning shares in a public company that owns agricultural land.

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