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Renewal Of Leases: Restrictions On Foreigners

The legal regime around restriction on land ownership by foreigners is founded in the Constitution, the Land Act and the Land Control Act. As per Article 65 (1) of the Constitution, a person who is not a Kenyan citizen may only hold land on a leasehold basis and any such lease, when granted, shall not exceed 99 years. Article 65 further provides that any document that purports to confer on a foreign investor an 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 than 99 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 ownership of property in Kenya, may only own property 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 in Kenya. It is also worth noting that a trust cannot be formed to do away with this requirement. Under article 8 (1) of 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 on behalf of its citizens 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 (a negligible amount payable as rent).

The Land Control Act touches upon transactions relating to agricultural land and other land which maybe gazetted by the Cabinet Secretary for Lands and Physical Planning which is defined as a ‘controlled transaction’. In Kenya, controlled transactions are void unless the same get the necessary approval or consent from the Land Control Board within the land control area in which the land is situated.

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 the above is that foreigners or companies owned by foreigners cannot own agricultural land in Kenya. However, the position has since changed as through a gazette notice, the president may exempt any person from any or all of the provisions of the Act. Therefore, foreign investors wishing to acquire agricultural land may first apply for exemption. Also, public companies in which foreigners are shareholders may acquire agricultural land.

Research by Clara Rincuni & Review by Elizabeth Museo

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