Articles

WHAT FOREIGNERS NEED TO KNOW ABOUT PURCHASING PROPERTY IN KENYA

Introduction

Kenya’s real estate market has become an attractive destination for foreign investors, expatriates, and diaspora returnees. With infrastructure development, growing urbanization, and vibrant tourism, cities like Nairobi, Mombasa, Kisumu, and Naivasha offer increasing opportunities for long-term property investment.

However, while the potential for return is promising, foreigners face specific legal and regulatory constraints when acquiring land or buildings in Kenya. At B.I.K Advocates LLP, we provide foreign nationals and entities with full legal guidance to ensure their property transactions are secure, compliant, and transparent.

Can Foreigners Buy Property in Kenya?

Yes, foreigners can legally purchase property in Kenya. However, this right is restricted to leasehold interests only. Section 65 of the Constitution of Kenya, 2010 expressly provides that non-citizens may only hold land on leasehold terms not exceeding 99 years, and only subject to approval by the relevant authorities.

Foreigners are not allowed to own freehold land, which is land held indefinitely without renewal. Leaseholds, however, are renewable upon expiry, and most titles are granted for a 99-year term.

Foreign-controlled companies (defined as having more than 51% shareholding by non-citizens) are also subject to these same limitations.

Key Legal Framework Governing Foreign Ownership

Foreign property acquisition is governed by the following key statutes:

1. The Constitution of Kenya (2010), Article 65 – restricts non-citizen land ownership to leasehold.
2. Land Control Act (Cap 302) – requires Land Control Board (LCB) consent for land transactions involving agricultural land.
3. The Land Registration Act (2012) – outlines procedures for registering interests in land.
4. The Physical and Land Use Planning Act (2019) – guides land use, zoning, and planning restrictions.

It is critical to understand that agricultural land cannot be acquired by foreigners without express presidential exemption, which is rarely granted unless it serves national interests.

Types of Property Foreigners Can Acquire

Foreigners can invest in or purchase the following property types in Kenya:

1. Residential homes or apartments in urban areas
2. Office space and commercial buildings
3. Tourism-related facilities such as resorts, hotels, or lodges
4. Sectional property units registered under the Sectional Properties Act
5. Industrial zones, warehousing, and export processing areas

Foreigners cannot directly acquire agricultural land, trust land, or communal land. These categories are often reserved for Kenyan citizens and governed under different laws and community arrangements.

The Legal Process of Acquiring Property

1. Due Diligence:

• Confirm ownership through an official land search at the Ministry of Lands
• Verify whether the property is subject to any caveats, disputes, or encumbrances
• Ascertain land use classification (residential, commercial, agricultural)

2. Agreement for Sale:

Once terms are agreed, a lawyer prepares or reviews the sale agreement, Buyer pays a deposit (commonly 10%) to the vendor’s lawyer on stakeholder terms

3. Consents and Approvals:

4. Stamp Duty and Transfer:

1. Buyers pay stamp duty (2% in rural areas, 4% in urban areas)
2. Lawyer registers transfer at the Lands Registry and applies for the title

5. Issuance of Leasehold Title

Once registered, the buyer is issued a leasehold title (usually 99 years)

Risks to Watch Out For

• Fake or forged title deeds – always conduct an official land search
• Unapproved subdivision or change of user – zoning violations may invalidate use
• Fraudulent agents or double sales** – insist on transacting through an advocate
• Disputes with communities** over ancestral or communal land
• Lack of succession documentation** where property is under inheritance litigation

Helpful Tips for Foreign Buyers

• Work with a licensed law firm from start to finish
• Conduct a site visit and meet the vendor in person where possible
• Ensure payment is made via secure escrow or stakeholder accounts
• Avoid ‘too good to be true’ deals and buy only from verified developers or owners
• Understand local tax obligations, especially if rental income or capital gains are involved

Foreign Companies and Real Estate

Foreign companies may purchase property in Kenya, but the same restrictions apply:

• If the company is foreign-controlled, it cannot hold freehold land
• Must be registered in Kenya to acquire land
• Subject to disclosure under the Beneficial Ownership Regulations
• Investments through Special Economic Zones (SEZs) or joint ventures with local partners may offer more flexibility, depending on the structure.

How B.I.K Advocates LLP Can Help

At B.I.K Advocates LLP, we offer tailored legal services for foreigners acquiring property in Kenya. Our services include:

• Conducting due diligence and land registry searches
• Drafting and reviewing agreements for sale
• Handling consents and regulatory approvals
• Structuring joint ventures or landholding companies
• Advising on tax, compliance, and registration matters

Conclusion

Kenya’s property market is full of opportunity—but legal clarity is key. With the right guidance, foreigners can invest securely and confidently.

If you are a foreigner looking to buy property in Kenya, B.I.K Advocates LLP is ready to guide you through every legal step—from due diligence to title registration.