Introduction
Over the years, there has been an increase in the number of foreigners seeking to own land in Kenya either for investment or residence. In addition, there are foreigners who have held land in Kenya for a while without necessarily acquiring Kenyan citizenship. There were various laws and practice relating to ownership of land by foreigners. Foreigners have rights over land owned by them and there are also some restrictions imposed on a foreigner who owns or seek to own land in Kenya.
Can A Foreigner Own land in Kenya?
This is a question that many foreigners who have or had intentions and interest in investing in Kenya have to ask themselves before committing to any investment in the county. Prior to the promulgation of the new Constitution, there existed a misconception in Kenya that a foreigner cannot own land in Kenya and the law was not clear on ownership of land by foreigners and the rights they enjoy as land owners in Kenya. This led to many foreigners who were interested in owning land in Kenya to make arrangements like acquiring land through proxies or third party nominees which led to many of them losing their land or being duped. This was the case in Hartmann v Mbogo (Civil Case 222/2007) where the Plaintiff jointly registered the Property with the Defendant on the Defendant false representation that a foreigner alone cannot own land in Kenya.
Article 40 of the Constitution of Kenya 2010 grants the right of ownership of land to any person in any part of Kenya meaning that any one in Kenya whether a Kenyan citizen or a non-citizen can own land in Kenya. The said Article 40 is however subject to and is to be read with Article 65 (1) of the Constitution which sets out restrictions to the limitations as to the land tenure which a non-citizen can own. The distinction of land acquisition in Kenya for a foreigner or non-citizen and a Kenyan citizen lies in the tenure which the property can be held and some restrictions on ownership of agricultural land by foreigners.
The Parliament has passed several laws relating to ownership of land in Kenya. Land Registration Act No. 3 of 2012, Land Act no.6 of 2012 and the National Commission Act.
Therefore, the position of Land ownership by foreigners in Kenya is clear in that they can own Land and the only limitation is the tenure which they can hold land limiting them to a Leasehold of not more than Ninety-nine (99) years.
So who is a Kenyan Citizen?
For an individual to be considered as a Kenyan citizen, one has to be either born in Kenya or be registered as a citizen of Kenya. Registration can either be through marriage to a Kenyan citizen for a minimum of Seven (7) years, lawful continuous residence in Kenya for a minimum of Seven (7) years or through adoption by a Kenyan citizen.
For purposes of land ownership under Article 65 of the Constitution, a body corporate is regarded as a citizen if it is wholly owned by one or more Kenyan citizen. This essentially means that the body corporate’s shareholding has to be 100% Kenyan for the body corporate to be considered Kenyan.
Are there any Laws in Kenya Governing Land Ownership by Foreigners?
There are various that govern land acquisition and ownership of land by foreigners in Kenya and they are as follows: –
- The Constitution
The Constitution under Article 65 limits the tenure which the foreigners can hold land to only Leasehold of less than 99 years. It is imperative to note that contrary to earlier views based on wrongful interpretation of the Article 65 of the Constitution, there is no prohibition of foreigners acquiring or owning freehold land. The constitution only restricts ownership to a leasehold of 99 years.
This position was upheld by the High Court in the case of Kunde Road Residents’ Welfare Association Versus Deshun Properties Company Limited & Four Others (ELC PETITION NO. 1433 OF 2013). Justice Gacheru observed that:
“…The Constitution at Article 40 guarantees ownership of land in Kenya by any person. Granted, this provision is not absolute as it is subject to Article 65 thereof which restricts land to be held by noncitizens only as leasehold of a term of 99 years and no more. Article 65(2) of the Constitution, in my view, envisages a situation where non-citizens can enter into transactions for acquisition of interest in land that is freehold. Indeed there is no law that prohibits non-citizens from acquiring and owning freehold land, the Constitution however restricts that ownership to leasehold of a period of 99 years. It is therefore my finding that the transfer of the property in question, though the interest therein being freehold to the 1st Respondent being a non-citizen is not illegal as alleged. The bottom line is that the 1st Respondent has acquired 99 year leasehold interest…”
In the event that a Kenyan citizen sells the freehold interest to a foreigner and the freehold tenure is converted to Leasehold the property cannot be converted again to freehold tenure after the expiry of the leasehold term.
The Constitution also restricts a non-citizen from owning freehold property under a trust and provides that any property held in trust shall be regarded as being held by a citizen only if all the beneficial interest of the trust is held by people who are citizens.
After the expiry of the Leasehold term the foreigner can apply for a renewal of the Lease term or an extension of Lease. Unlike citizens, foreigners do not enjoy an automatic right of renewal or extension of a lease on expiry. Section 12(7) of the Act provides that upon expiry, termination or extinction of a lease granted to a foreigner, the land shall vest in the government.
- The Land Act
Section 12 (5) of the Land Act allows the National Land Commission to allocate land to foreign governments on a reciprocal basis in accordance with the Vienna Convention on Diplomatic Relations. This is however subject to the Constitution and any other relevant law and consultation with the National and county governments.
The Act was amended in 2016 to introduce a new section – 12A – which requires foreigners to obtain consent to purchase 1st and 2nd row properties. This was however challenged in court leading to suspending the application of these sections until the matter is fully heard. More details are under Section F below.
- Land Registration Act
The Land Registration Act in section 107 (3) reiterates the provisions of Article 65 of the Constitution that the maximum leasehold period that may be granted to a foreigner is 99 years.
- Land Control Act
The Land Control Act (the Act) restricts the ownership by non-citizens of agricultural land or land within land control areas The Act in section 9 as read with section 6 provides that any dealing in agricultural land or controlled land the purported effect of which is to sell, transfer, lease, charge, partition or exchange land with a non-citizen is void for all intents and purposes.
There are two ways in which a foreigner can own agricultural land;
- Through an application for exemption to acquire agricultural land by the President under section 24; and
- Through owning shares in a public company that owns agricultural land.
Has the New Constitution had any effects on Land ownership by Foreigners in Kenya?
As noted above, under the new constitution, a foreigner may only hold a leasehold of up-to 99 years, so then what happens to the land held by foreigners for a leasehold longer than 99 years of as a freehold?
Any foreigner who held a freehold interest in land as at August 2010 is automatically deemed to be leasehold by operation of law. There was a directive for the foreigners to surrender such titles to the Land office for conversion from freehold to leasehold however the process of converting is yet to be put in place by the National Land Commission and the Cabinet Secretary Lands.
Section 8 of the 6th schedule of the Constitution 2010 provides that on the date when the constitution came into force, all non-citizen who held Leases exceeding 99 years shall revert to the state and the state shall grant the person a 99 year Lease. Also all freeholds that were held by non citizens were on the 27th August, 2010 converted into leaseholds of not more than 99 years.
It is however not clear whether a freehold title or an unexpired Leasehold Title of more than 99 years that is jointly owned by a Kenyan citizen and a non-citizen would be converted to a Lease of 99 years or whether the tenure would remain intact.
Can Foreigners own beach plots in Kenya?
In 1970, the then President Jomo Kenyatta issued a presidential decree prohibiting the sale and purchase of 1st and 2nd rows of beach plots on the Indian Ocean and land within a zone of 25 kilometres from the inland national boundaries of Kenya without consent from the President.
This position would obtain for over 42 years until it was declared illegal by the High Court in Mohamed Balala and 11 others Vs. The Attorney General and 7 others (2012). The Court found the presidential consent to be an illegal and discriminative practice and prohibitory orders were issued against officers who set presidential consent as a precondition before transferring land located on the 1st and 2nd row beach plot to foreigners. On appeal to the Court of Appeal, the appellate court upheld the decision in their 2014 ruling stating that:
“Neither the Registered Land Act, Registration of Titles Act nor the Land Titles Act, now all repealed, nor even the current land law regime has such provisions. Nor is there any statute or legal basis for requiring such consent.”
In 2016, and in an apparent attempt to reintroduce the requirement for consent for beach plots, Parliament enacted the Land Laws (Amendment) Act, 2016 (No. 28 of 2016) which sought to bring a myriad of changes to the land laws. These amendments were assented to by the President on 31st August, 2016 and came into effect on 21st September, 2016.
One of the key changes introduced by the amendments was introduction of section 12A to the Land Act.
This new section introduced the concept of “controlled land” and “ineligible persons”. The term “controlled land” was defined to mean land which is either (i) within a zone of twenty-five kilometres from the inland national boundary of Kenya; (ii) within the first and second row from high water mark of the Indian Ocean, or (iii) any other land as may be declared controlled land under any law or statute. An “ineligible person” was defined as (i) an individual who is not a Kenyan citizen; (ii) the government of a country other than Kenya or a political subdivision of a country other than Kenya, or any agency of such government or political subdivision, or (iii) a body corporate which has non-citizens as shareholders shall be deemed to be a noncitizen.
The section prohibited transactions in controlled land to an ineligible person without the prior written approval of the Cabinet Secretary.
Later in the year, the Malindi Law Society through Petition No. 19 of 2016, Malindi Law Society vs Attorney General of Kenya and Another petitioned the High Court challenging the constitutionality of section 12A of the Land Act. They were granted interim conservatory orders staying the application of section 12A, pending full hearing and determination of the petition. We await the determination of the Petition to see the direction this will take but in the meantime the consent of the Cabinet Secretary is not required.
Does the Constitution of Kenya adequately protect the rights of foreigners on land ownership in Kenya?
The Constitution 2010 sort to heal the historical injustices that have ailed our country for a long time. It is the skeleton which the new land laws provide the necessary flesh to protect and secure the rights of Land owners in Kenya. The Law in clear as to the land ownership by foreigners and their rights are clearly spelt out and their interests secured. In my opinion this has brought about productivity in terms of utilization of Land by foreigners for development purposes which has led to economic growth in the country.
The Constitution 2010 and the new land law regime seeks to bring about a sense of equitable ownership of Land which has given a guarantee of the foreigner’s right being protected and secured.
As we celebrate the positive side which the laws have achieved we need not forget that the legal restrictions and limitations has also created room for corruption and fraud. In cases where consent is needed like acquisition of Agricultural land, official will often make promises to foreign investors with intentions of defrauding them by giving them possession of land which the law prohibits them from having access to.
As much as the conversion was of Freeholds and Leaseholds of more than 99 years were automated by the use of the operative word “shall” there is need for some legislative or policy procedure by the National Land Commission and the Ministry of Land and Physical Planning.
When it comes to the renewal and extension of the Leasehold period for a foreigner, there is uncertainty which should be addressed by providing some guidelines for which foreigners can seek extension and renewal of Leases to enable sustainability of the investments they have made on their land.
Under the Land Control Act for a foreigner to own agricultural land, they need to seek exception by the president. This requirement was passed during postcolonial era when the president had powers and control over land but with the Constitution 201o and the new land regime this function should be transferred to the National Land Commission.
It is also important to note that there is a loophole under the Land Control Act whereby a foreigner can own agricultural land by being a shareholder in a Public company. Foreigners have taken advantage of this loophole and incorporated Public companies in which they are shareholders and through these companies they gain the capacity to own agricultural land. The act should therefore be review to include that a public company that has foreign shareholding can’t own agricultural land.
There is also a need for a test against which a non-citizen corporation seeking land for investments should be measured, in order to determine the scope and breadth of leasehold interests, up to the upper limit of 99 years.
Conclusion
In conclusion a Foreigner has a right to acquire own land in Kenya but can only hold such land under a leasehold of up to 99 years and for avoidance of doubt where there is any document conferring interest in land greater than 99 years the document shall be regarded as to confer a 99-year leasehold interest and no more. Even where a foreigner holds a freehold title or acquires title to a freehold title, the interest acquired is deemed to be a 99-year leasehold. The conversion is automatic and requires no further formalities to be operational. Further, an individual foreigner or private corporate body may not own agricultural land except with the President’s consent.
