Ownership of Land by Foreigners in Kenya

Can a foreigner own land in Kenya or Is Property Ownership in Kenya Open to Foreigners?

In Kenya, it is a common misconception that foreigners are not allowed to own property in their name. However, this is not true as the Constitution (2010), the Lands Act (6/2012), and the Land Registration Act (3/2012) allow any person, either individually, or in association with others, to acquire and own land in the country, subject to certain limitations.

Unfortunately, many foreign investors have fallen victim to scams in which they are convinced that they cannot own land in their own name in Kenya. In such cases, they enter into partnerships with locals who purchase properties on their behalf. These arrangements often turn sour, leading to legal disputes that can be avoided.

To prevent such situations, it is important to conduct proper research before purchasing property in Kenya. It is also advisable to engage qualified professionals to guide the buying process and adhere to the rules and regulations set by the land commission. By doing so, foreign investors can protect their interests and avoid unnecessary legal battles.

Restrictions on Ownership of Property in Kenya by Foreigners

The ownership of property in Kenya by foreigners is subject to certain limitations, as outlined in the Constitution and the Land Control Act (Cap 302).

According to Article 65(1) of the Constitution, non-citizens are only allowed to hold land on a leasehold tenure, with a lease term not exceeding 99 years. However, it is possible to seek a renewal of the leasehold term after the expiry of the leasehold term. Additionally, any document that confers on a foreign investor an interest in land with a lease of more than 99 years is regarded as conferring only a 99-year leasehold interest.

For property ownership purposes, a company is considered a Kenyan company only if it is wholly owned by one, or more Kenyan citizens. Hence, a company with foreign shareholders is considered a foreign company and cannot own freehold land. Furthermore, the Constitution stipulates that any freehold interest in land held by a non-Kenyan citizen shall revert to the Republic of Kenya and be held on behalf of the Kenyan people, with a peppercorn rent for a period of 99 years.

As a result, the government has been forced to recall land titles held by foreigners and replace them with leasehold titles starting from August 28, 2010. It is crucial for foreign investors to be aware of these limitations before investing in property in Kenya to avoid potential legal issues.

Restrictions on Foreign Ownership of Agricultural Land in Kenya and Risks of Using Dummy Companies and Nominees

The Land Control Act in Kenya designates transactions involving agricultural land and other types of land as “controlled transactions,” which are legally void unless approved by the land control board for the area where the land is located. Approval cannot be granted to transactions involving the sale, transfer, lease, exchange, or partition of land to individuals or companies who are not Kenyan citizens, a cooperative society whose members are Kenyan citizens, a group representative incorporated under the Land (Group Representatives) Act, or a state corporation under the State Corporation Act. As a result, foreign investors and companies owned by non-Kenyans are unable to own agricultural land in the country. However, exemptions to these restrictions can be granted by the President through a notice in the Kenya Gazette, allowing foreign investors to apply for permission to purchase agricultural land. Public companies with foreign members can also acquire agricultural land.

Some foreign investors attempt to bypass these restrictions by creating dummy companies that list Kenyan citizens as shareholders in the Companies Registry. These local shareholders then enter into a declaration of trust with the foreign investors, which declares them as legal but not beneficial owners of the company’s shares. Alternatively, nominees are used to enter into property transactions and own property on behalf of foreign investors. However, these practices are deemed unconstitutional and illegal. The Constitution stipulates that any property held in trust must be owned by Kenyan citizens, and therefore the use of dummy companies and nominees can put investments at risk.