Last Updated May 23, 2019

Law and Practice

Contributed By MMC Africa Law

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MMC Africa Law was established in 1995 and is headquartered in Spring Valley, Nairobi, with a full-service office in the coastal city of Mombasa. The firm is made up of 12 Partners and over 30 lawyers with expertise in a wide variety of legal matters. As well as being a member of ALFA International, a global network of independent law firms, it has a close association with the leading global law firm of Orrick, Herrington & Sutcliff LLP. MMC Africa Law’s dedicated real estate team comprises three partners and 12 lawyers who pride themselves on their extensive experience handling sophisticated and complex transactions such as those relating to mixed-use developments, an emerging market in real estate. The team also offers specialised services in urban regeneration projects, construction law, REITs, hospitality and hotels, residential developments, commercial and farmland leases, land use and planning, environmental compliance, contractual agreements, conveyancing and conducting due diligence on property.

As a consequence of having been colonised by Britain, Kenya is a common law jurisdiction.

The main laws governing the real estate sector in Kenya are as follows:

  • the Constitution of Kenya, 2010 (CoK), the fifth chapter of which provides for the categories of land, the principles of land policy, landholding by non-citizens, regulation of land use and establishment of the National Land Commission (NLC);
  • the Land Act, 2012 (LA), which consolidates all the different land laws in Kenya and provides for sustainable administration and management of land and land-based resources;
  • the Land Registration Act, 2012 (LRA), which is meant to revise, consolidate and rationalise the registration of titles to land, giving effect to the principles and objects of devolved government in land registration;
  • the National Land Commission Act, 2012 (NLC), which provides for the functions, powers and internal procedures of the NLC;
  • the Land Control Act (LCA), which establishes the Land Control Board (LCB) to regulate transactions affecting agricultural land;
  • the Stamp Duty Act (SDA), which contains general provisions on the stamping of documents, the penalties, exemptions and the rates applicable;
  • the Law of Contract Act (LCA), which requires contracts relating to a disposition of an interest in land to be in writing;
  • the Landlord and Tenant (Hotels, Shops and Catering Establishments) Act (LTA), which provides for protection of controlled tenants;
  • the Sectional Properties Act (SPA), which provides for the division of buildings into units, ownership of common property of buildings and for the use and management of units and common property;
  • the Distress for Rent Act, which provides for procedures for levying distress for rent in lease transactions;
  • the National Construction Authority Act, 2011 (the 'NCA Act'), which establishes the National Construction Authority (NCA), its powers and functions;
  • the Environment and Land Court Act, 2011 (the 'ELC Act'), which establishes the Environment and Land Court (ELC), its powers and functions;
  • the Environmental Management and Co-ordination Act, 1999 (EMCA), which establishes the National Environment Management Authority (NEMA); and
  • the Physical Planning Act (Cap 286) (PPA,) which provides the procedures for the preparation and implementation of physical development plans.

The main market trends in the real estate sector in Kenya have been as follows:

  • The Government of Kenya is working towards providing affordable housing for its citizens. This has been necessitated by the housing deficit that has been brought about as a result of the mushrooming populations in urban areas due to rural-to-urban migration. In order to achieve this, the Government has proposed the establishment of a housing fund into which employees will be make mandatory monthly contributions. The affordable housing framework requires a developer to build houses priced at a maximum of KES3 million (USD30,000), with the Government guaranteeing offtake in three years.
  • There has been an emergence of master-planned communities in Kenya through the creation of alternative cities – mixed-use developments such as Tatu City, Infinity and Tilisi that have arisen as a result of development in other cities. These alternative cities are built with a focus on the principles 'live, work and play'; they include industrial, commercial, retail and residential development as well as schools, hospitals and recreational facilities.
  • Devolution, which was introduced in 2010, has also changed the real estate sector significantly. This is because unlike under the previous regime in which Kenya only had a centralised government, leading to concentrated real estate development in Nairobi, Mombasa, Kisumu and a few other large towns, real estate developers now have a choice of 47 alternatives (ie, the county government headquarters) in which to venture.
  • In order to reduce operating costs and provide a safe and healthy environment for workers, developers have been employing green building technology. This has proved to increase employee productivity. Green building entails the creation of structures that have low environmental impact throughout their life cycle, encompassing their design, construction, operation, maintenance, renovation and demolition.

The most significant deals in real estate in Kenya have been Tatu City, Tilisi Development and Konza City.

Digitisation of Land Transactions

Land transactions, from physical planning and survey to land registry transactions, are carried out manually in Kenya. The Ministry of Lands and Physical Planning appointed a taskforce in August 2018 to prepare guidelines for their digitisation. The purpose of this initiative is to ensure efficient and effective service delivery that will lead to enhanced access to information, increased customer confidence, reduced business timelines and enhanced revenue collection.

The author of this chapter (Esther Omulele) is a member of the taskforce on digitisation of land transactions, which has completed its report on the proposed implementation of the digitisation process. The recommendations of the report include amendment of various laws touching on land transactions to allow for digital processes. The success of this programme will require the co-operation of the Ministry of ICT for purposes of creating the necessary digital platform at a national level, as well as the Treasury for purposes of integrating suitable payment solutions relating to capital gains tax, stamp duty, land rent and rates and registration fees.

Land Dispute Resolution Through Alternative Dispute Resolution Mechanisms

The CoK encourages the use of alternative dispute resolution mechanisms. These are advantageous in that they are less costly and take less time. Land disputes are mainly handled by the ELC. Our proposal in this case is for an amendment in the statute establishing that the ELC provide a limit on the matters that are filed in this court. This will reduce backlog, leading to quick resolution of land cases.

MMC Afica Law

MMC Arches,
Spring Valley Crescent,
Off Peponi Rd.
Westlands

+254 020 2329898

+254 720 585 785

eomulele@wakili.com www.wakili.com
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MMC Africa Law was established in 1995 and is headquartered in Spring Valley, Nairobi, with a full-service office in the coastal city of Mombasa. The firm is made up of 12 Partners and over 30 lawyers with expertise in a wide variety of legal matters. As well as being a member of ALFA International, a global network of independent law firms, it has a close association with the leading global law firm of Orrick, Herrington & Sutcliff LLP. MMC Africa Law’s dedicated real estate team comprises three partners and 12 lawyers who pride themselves on their extensive experience handling sophisticated and complex transactions such as those relating to mixed-use developments, an emerging market in real estate. The team also offers specialised services in urban regeneration projects, construction law, REITs, hospitality and hotels, residential developments, commercial and farmland leases, land use and planning, environmental compliance, contractual agreements, conveyancing and conducting due diligence on property.

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