The process of buying land can be simplified into 5 steps. These are land identification, due diligence, offer signature, county clearance and transfer.
Buying land is one of the biggest financial decisions you will make in life. You need to make this decision with all the details necessary to safeguard your money. There are so many stories of people who lost their money and I do not want you to be one of them.
I have listed below the key steps to follow when you are finally ready to buy land. Whether you are buying land from an individual or a company, follow the steps below.
1. Land Identification.
2. Conducting Due Diligence.
3. Offer Letter and Signature.
4. Obtaining County Clearance.
5. Transfer of Ownership.
Step 1. Land Identification
The first step is you need to determine the size, location, budget, and purpose of the land that you need to buy. If you need to buy land for building your home, then this is residential land. Commercial land is where you can put up a rental property. Agricultural property is used for farming. In Kenya, we also have areas that have been zoned for industrial use. The article below gives you more details.
Important: Categories of Real Estate in Kenya
The budget determines the location and size of land you can afford. Generally, bigger land sizes attract a higher price. Locations close to towns or social amenities attract a higher price.
Nowadays, most people start their search online. Here is a list of 7 real estate listing websites in Kenya. Other people rely on real estate agents. The agents browse these listing platforms and narrow the list down for them. If you have friends who have purchased property, you may reach out to them for advice and guidance.
Once you have identified land that meets your criteria, plan to conduct a physical visit. This visit will help you check the surrounding area and the layout of the land. I have seen cases of people buying land in swampy areas because they never made a visit. Visiting the land will help you also see the layout so that you do not buy land that is too steep and will be hard to build on.
When you visit the land, ask neighbors questions about the seller or the history of the land. This will help you identify if there are disputes over the land. Neighbors are well placed to inform you of any boundary issues or any family squabbles.
If you are dealing with a real estate agent, please verify that the agent has the authority to sell the property. There are instances of agents selling land yet the owner did not ask them to. Agents usually have the authority to sell letters from the owner. For some properties, this letter is not issued particularly for the lower end of the market.
Related: Letters of Authorization to sell in Real Estate with an example.
Step 2: Conduct a search in the land’s registry
Once you decide on the property you intend to buy, ask for the title deed and details of the owner. The copy of the title deed helps to conduct a search of the land at the land office. A copy of the national identity card is used to verify the identity of the seller. You can verify the details at the Registration of Persons Bureau.
At the land office, you will use the title to confirm ownership of the land. Additionally, you will learn if the property has any claims or has accrued land rates. The cost of these checks will vary from county to county. This search process usually takes three days. Fr properties in Nairobi, searches are being done online through Ardisasa.
How to Conduct Property Search through Ardhisasa
You do not need to visit every county to get a search done. Your real estate agent or lawyer can do that for you. Searches cost around Ksh 500 and under if you are doing it yourself. Agents and lawyers may charge Ksh 2,000 to help in the process.
While at the land registry, you can buy 2 types of maps. One map is an overview of the land and adjacent plots while the other is a map drawn to scale. With the two maps, you then engage a surveyor to verify the dimensions of the land. The surveyor will confirm if beacons are there and replace any missing beacons. They will also ensure that all beacons are in the correct location. The standard cost of placing beacons is less than Ksh 5,000 per beacon. For a plot with 4 beacons, the price will be about Ksh 20,000.
Step 3: Preparation of offers and price negotiation
If you have verified all details, you then make an offer. If you are not a real estate expert, we recommend that you engage a lawyer to prepare an offer. The lawyer will then prepare an offer letter detailing the terms of sale.
You will need to meet costs for your lawyer. These costs are based on a percentage of the sale price. The Advocates Remuneration Amendment Order, 2014 provides the scale.
Please ensure that all key details discussed are included in the contract. The agreement may include the need to pay a deposit. Deposit if any should be made to the seller’s advocate’s account. It is advisable to wait for clearance from the Land Control Board ( explained in the next step) before paying any deposit. This ensures that if LCB does not approve the sale, you can get your money back.
Step 4: Clearance for the Land Control Board
For the sale of any land to occur, there must be approved by the local land control board. The board exists to ensure that land transfers in are transparent. This includes ensuring that the land being sold is not communal land or subject to a land tussle.
Membership to The Land Control Board is comprised of county staff and area elders. The boards usually hold monthly meetings. Special board meetings can be held but for an extra cost.
Once you have been cleared
by the LCB, you will need to pay for land rates. Once you make any rates that
are due you will be issued with a Clearance Certificate. At this point, you can
make the payment for the land and get signed transfer forms from your seller.
You now have several documents needed for the title transfer process. These are:
· Title deed
· Land search
· Land transfer forms
· Sale agreement
· Board clearance
· Rates Clearance Certificate
Step 5: Transfer of Ownership
When you apply for a transfer of ownership, a valuer will visit the land and place a value on the property. This value may be different from the amount you paid. The value determines the stamp duty payable to the Kenya Revenue Authority.
Depending on the value of the property, a Capital Gains Tax may apply. It is your responsibility to pay the stamp duty. This is paid by the seller. Stamp Duty is charged on the property value or the sale price agreed upon; whichever is higher and is:
- 4% for land/property within a municipality
- 2% for agricultural land or property outside a municipality
This article explains Real Estate Taxes in Kenya. Refer to this detailed guide on Stamp duty payment for real estate transactions in Kenya.
You will be responsible for the cost of registration of titles in your name. The county governments will review the submitted documents. if the documents are complete, a new title is issued.
The law also provides that agents must be paid the agreed service fee/commission. The fee is on a scale capped at 3% of the property’s value. The agent is paid by the party who instructs them. The seller will pay the agent they instructed to market their property. the buyer will pay the agent who linked the buyer to the seller.
Related: Real Estate Agents Remuneration in Kenya: Understanding what Commissions to Charge
It is important to follow up after one week and conduct a search the same way you did when buying the land. This will help you confirm that the property details at the ministry of lands are now showing you as the new owner.
You may consider fencing the land and notifying neighbors of the change in ownership. Fencing will restrict encroachment on the land. The neighbors will also help ensure no one tries to sell the land without your consent.
I hope the above step-by-step instructions help you in purchasing your next property. In case you have any questions, do not hesitate to reach out to your real estate agent, advocate or let us know. You may also comment below, and other community members will be on hand to offer you their thoughts.
What are the Requirements for a Foreign National to buy a piece of land in Kenya?
Are you a foreigner wondering how to own land in Kenya? The legal process of buying land in Kenya remains the same whether you are a Kenyan citizen or a foreigner. There are a few restrictions. Please read this blog that covers the procedure of buying land as a foreigner.
very insightful information that will help Kenyans safe in property dealings. Thanks.