Understanding Compulsory Acquisition as a Real Estate Owner

In Kenya, compulsory acquisition is a critical tool for public development projects but poses significant challenges for the real estate industry. This newsletter delves into the effects of compulsory acquisition on property owners, market stability, and potential solutions to mitigate these impacts.

The State of Compulsory Acquisition in Kenya:

Compulsory acquisition is widely used for infrastructure projects like roads, railways, and public facilities. The government assesses the required land, compensates owners, and facilitates development. However, the process can lead to displacement and disruption for affected property owners. While necessary for national development, the process often leads to disputes and challenges for property owners.

Legislative Framework:

Compulsory acquisition in Kenya is primarily governed by the Constitution of Kenya, 2010 and the Land Act, 2012 (The Act). The Constitution under Article 40, protects the right to property and stipulates conditions for compulsory acquisition. This constitutional provision emphasizes the necessity of fair and prompt compensation. The Land Act establishes a structured and transparent process for acquiring land for public purposes. Section 107 of the Act specifies the purposes for which land may be acquired, such as infrastructure development and public utility projects, ensuring that land is only taken for initiatives that serve the public interest.

Section 110 of the Act mandates that the National Land Commission (NLC) must issue a notice of intention to acquire land. This notice must be published in the Kenya Gazette and delivered to the property owners and occupants, ensuring that all affected parties are informed. Section 112 requires the NLC to conduct an inquiry to hear objections and claims from affected property owners and interested parties, providing a platform for grievances and disputes to be addressed.

Fair and prompt compensation is a crucial aspect of compulsory acquisition, as outlined in Section 113 of the Act. This section ensures that property owners are compensated for the market value of their land, damages due to severance, and other losses resulting from the acquisition. The factors considered for assessment of compensation are: market value of the land, compensation for disturbance and expenses for relocation. Section 114 of the Act further mandates that compensation must be paid promptly and in full. If property owners are dissatisfied with the compensation, they have the right to seek a review from the Environment and Land Court.

Once compensation is settled, Section 116 of the Act allows the NLC to take possession of the land, transferring ownership to the government free from all encumbrances. To address the displacement of individuals, Section 118 requires the development of resettlement plans, ensuring that affected persons have access to adequate housing and livelihood opportunities. Property owners also have the right to appeal decisions related to compensation amounts and procedural aspects. Section 120 of the Act provides for appeals to the Environment and Land Court, ensuring that property owners can seek redress and fair treatment.

In addition to the Land Act, the National Land Commission Act, 2012, further details the roles and responsibilities of the NLC in managing land acquisitions and resolving disputes.

Advantages of Compulsory Acquisition:

1. Facilitates Development: Enables the government to undertake critical infrastructure projects, promoting urbanization and economic growth.
2. Public Benefit: Ensures land is available for public utilities and services, improving living standards and accessibility.

Challenges in the Sector:

1. Market Uncertainty: The threat of acquisition can create uncertainty in the real estate market, affecting property values and investment.
2. Compensation Disputes: Disagreements over compensation amounts can lead to lengthy legal battles and delays.
3. Displacement: Property owners may be forced to relocate, leading to social and economic disruption.

Solutions to Improve the Process:

1. Fair Valuation: Implement transparent and fair valuation processes to ensure just compensation for property owners.
2. Public Awareness: Increase public awareness about rights and procedures in compulsory acquisition to reduce disputes.
3. Legal Support: Provide legal assistance to property owners to help them navigate the acquisition process and protect their interests.

Conclusion:

Compulsory acquisition is a necessary tool for public development but must be handled fairly and transparent to protect property owners’ rights. Enhancing legal frameworks, public awareness, and fair compensation practices can mitigate its negative impacts on the real estate industry.