The real estate sector growth in Kenya is on an upward trend due to the increase in population size and unchanging geographical size. Individuals are demanding land for settlement and others for investments. With the low supply and high demand for this product, the prices has escalated to high levels and to some it becomes a challenge to own land in prime areas where they can immediately develop. Majority of these people lack the knowledge on the different types of land tenures that exists within our country, where they buy plots blindly without proper understanding of these requirements. (Differences between Freehold and leasehold Land Tenure)
Due to the rapid demand and increase in the population size, agricultural land has now been converted to commercial, residential, and industrial land. Majority of individuals are purchasing these plots at a high rate without considering the existing land tenure system that is applied in Kenya; thus, most of these plots do not serve the key purpose of their purchase.
Land Tenure System in Kenya
This represents the act, right and, the period one can hold land. In Kenya we have two types of Land Tenure system that is,
- Freehold: Which represents the greatest interest an individual can have on land since it gives the holder or purchaser of the land absolute ownership of the land for life. This means that the buyers descendants and next of kin's can inherit or succeed the owner of the land for a long as the family lineage continues.
A freehold title deed has no restrictions as to the use or occupation for the land. However, there exists some that have conditional freeholds title deeds, which can restrict the individual in the usage of the land, such as for agricultural land or ranching only. A freehold interest is also known as absolute proprietorship or free simple.
- Leasehold: For this one the interest in the land is for a specific period subject to the payment of a fee or rent to the grantor. For this type, payment for rates is effected towards the respective local authority for services rendered. The leases are granted by the existing government on the public land, local authority for trust, and individuals with the freeholds.
For such lands, the government maximum term for the lease is 999 years for agricultural land and 99 years for urban plots. Also, it is common to get a 33 year lease in respect to the urban trust land.
In the case of freeholds, the lease period is dependent on the agreement reached between the landlord and the tenant. Once the lease expires the property automatically reverts back to the owner. The leaseholder can also apply an extension for the lease moreso if they want to re-develop the property and the lease period is about to expire in this process, or the remaining period is not enough to recoup back the investments that was initially set.
The next time you want to buy land or plots for sale in Nairobi from the land buying company like Denver's, ask these questions so that you can purchase the best property for your desired requirements. Ask the following question, Is the title deed for the property Freehold or Leasehold? Ensure this is clarified to you before proceeding to the next step of signing the agreement, or making the first deposit on land.
Tags: Absolute ownership, Conditional Freehold, Freehold title deeds, Leasehold title deeds, Absolute proprietorship, Free simple