OMBETA OGONYO & CO.

ADVOCATES

TO

NELSON GATERI MWAURA

LEGAL OPINION

IN RESPECT TO FOREIGNERS’ OWNERSHIP OF PROPERTY IN KENYA

DRAWN BY:

OMBETA OGONYO & CO.

ADVOCATES
KAKAMEGA DISTRICT CO-OP UNION HSE, 1ST FLOOR
KENYATTA AVENUE/ MUMIAS ROAD
P.O. BOX 1398 – 50100
KAKAMEGA
Tel: 0726595157/ 0732473935
Email: ombetaogonyo@gmail.com
Can foreigners’ own property in Kenya?

Yes. Foreigners can own property in Kenya in their name. The Constitution (2010), the Lands
Act (6/2012) and the Land Registration Act (3/2012), subject to certain limitations, grant the
right to any person, either individually or in association with others, to acquire and own land in
Kenya. This is important as many foreign investors have been duped into believing that they
cannot own land in their own name in Kenya.

This article seeks to clearly elaborate on some of these issues. It seeks to inform on;

1. How non-citizens can own land in Kenya;

2. How non-citizens can hold property (freehold or leasehold); and
3. How long can non-citizens hold the Property.

Under the provision of the above-stated laws, however, only Kenyan citizens can hold land on a
freehold title while non-citizens can only possess land under a leasehold tenure, for a period of
99 years.

What then, is the difference between freehold and leasehold land?

Freehold land is the greatest interest a person can have on land as it gives the holder absolute
ownership of the land for life. This means descendants can succeed the owner for as long as the
family lineage exists. A freehold title deed generally has no restrictions as to the use or
occupation.
 
On the other hand, a Leasehold interest in land is for a specific period subject to payment of a fee
or rent to the grantor. In the case of non-citizens, leases are granted for a period of 99 years.

What happens when a 99-year lease expires?

The Land Act provides that after 99 years when a leasehold title expires, the Land Commission
shall offer to the immediate past leasehold owner thereof pre-emptive rights to be allocated the
land provided that the land is not required by the national or the county government for public
purposes.
 
Can a foreigner form a Company to hold freehold land in Kenya?
 
Many non-citizens have attempted to establish and form companies in order to hold freehold
property in Kenya. However, the Constitution is clear in its provisions that a body corporate shall
be regarded as a citizen only if it is wholly owned by one or more citizens. This essentially
means that in order for a Company to own freehold property, the Company must be wholly
owned by one or more citizens.
Can a foreigner buy agricultural land in Kenya?

Under the Land Control Act, the Land Control Board shall refuse consent to the transfer of any
agricultural land to a person who is not a citizen of Kenya. However, the Act also provides that a
non-citizen can only own agricultural land if it is an initial grant from the Government or after
obtaining a presidential exemption to acquire the agricultural land.

The only saving exemption seems to be that a public company can own agricultural land even if
some of its shareholders are foreigners. The same cannot be said for a private company in which
all of the shareholders must be Kenyan citizens in order to own agricultural land.

Can a foreigner invest for commercial purposes?

Yes, non-citizens can invest in land in Kenya for purposes of revenue-making or generating
income. However, it should be noted that the said property can only be invested for commercial
purposes and not for purposes of generating personal rental income.

Dummy companies and nominees

One of the ways in which foreign investors attempt to circumvent limitations to property
ownership is by either:

i. Forming a company whose shareholders are indicated as citizens in the Companies

Registry. The Kenyan shareholders then enter into a declaration of trust with the foreign
investors. The declaration of trust will usually state that local shareholders are the legal
but not beneficial owners of the shares in the company; or

ii. The use of nominees to enter into property transactions and own property on behalf of
foreign investors.

These approaches are, however, void and unenforceable as they go against the Constitution and
the law. The Constitution provides that any property held in trust shall be regarded as being held
by a Kenyan citizen only if all of the beneficial interests of the trust are held by Kenyan citizens.

The use of dummy companies and nominees, therefore, puts investments at risk.

Foreigners’ ownership of first-row beach plots along the Kenyan Coast.

In 2016, the Land Laws (Amendment) Act, (the “Amendment Act”) was passed and it sought to
amend the provisions of existing statutes affecting land ownership by foreigners.

Section 47 of the Amendment Act barred non-citizens from conducting any dealings in first and
second-row beachfront property and land within twenty-five kilometers (25km) from the inland
national boundary of Kenya, without the prior written approval of the Cabinet Secretary in
charge of the Ministry of Lands and Physical Planning.
However, on 29 October 2021, the Environment and Land Court in Malindi declared the
amendment to the Land Act restricting the ownership of land by non-Kenyan citizens
unconstitutional. This was after the Mombasa Law Society and the Malindi Law Society (the
“Petitioners”) filed constitutional petitions challenging the constitutionality of section 47 of the
Amendment Act, among other provisions. The Petitioners argued that section 47 was
discriminatory and denied landowners their constitutional rights to equitable access to land.

The Court in making its decision was alive of the fact that section 47 of the Amendment Act
placed a considerable limitation on the right to ownership of land by foreigners. While noting
that indeed the Constitution allows for certain limitations to the right to ownership of land, the
Court held that it was incumbent upon the State to demonstrate that the limitation was justifiable
and that the societal need for the restriction outweighed the individual’s right to enjoy the right
or freedom to deal with their properties. Ultimately the Court held that the State did not fulfill its
obligation to justify why this limitation was necessary and declared section 47 unconstitutional.

The declaration of unconstitutionality of section 47 of the Amendment Act means that non-
citizens may enter into transactions involving first and second-row beach front property and land
within 25km from the inland national boundary of Kenya without requiring the Cabinet
Secretary’s written consent.

Foreign Ownership of Businesses

Foreigners can take advantage of business opportunities in Kenya and set up or buy businesses
while living in Kenya. However, they should take note of  and adhere to the following legal
considerations:

  Work Permits

A foreigner in Kenya requires a work permit to live in Kenya and run a business. There are
various classes of work and residence permits depending on the type of investment you are
coming to run in Kenya. Further, foreign investors coming to Kenya with their families will need
to obtain the requisite resident permits (dependents’ passes) to facilitate lawful immigration
status in Kenya.

Depending on the sector you intend to invest in, listed below are some of the permits a foreigner
investor will be minded to obtain before they can initiate their business while living in Kenya:

 Class A: (for prospecting and mining)

 Class B: (Agriculture and Animal husbandry)
 Class C: (Prescribed profession)
 Class F:(Specific manufacturing)
 Class G:(Specific trade, business, or consultancy) 
  Minimum Investment Amount

Any foreigner intending to set up a business and obtain a permit to live and work in Kenya must
show that they can provide a minimum capital of at least USD 100,000. This is proved by
audited accounts provided by the foreign investor in their application to obtain a Permit.

 Requisite Licenses

It is important to note that certain sectors are regulated industries and you may need to apply for
the requisite license from the regulating authority (a statutory body under Kenyan Law) before
you can legally operate certain businesses. Examples include the oil, energy, mining,
pharmaceutical, and liquor industries, etc.

 Tax rules

Kenya has a residency-based tax system whereby a resident is taxed on their worldwide income

while a non-resident is taxed on income derived from Kenya. Therefore, take into consideration
whether Kenya has Double Taxation Agreements with your home country in order to take
advantage of foreign tax credits with regard to Kenyan tax liabilities on your business income.

Conclusion

In practice, the restrictions above do not hinder non-citizens’ ability to invest in land in Kenya.
Those non-citizens currently in ownership of freehold land or leasehold land for a term greater
than 99 years will have the tenure of their properties converted and will have new 99-year
leasehold titles issued to them in an exercise to be conducted by the National Land Commission
set to be completed in the year 2022.

After the expiry of a leasehold title, the current owner is given priority for the allocation of the
land by the land commission unless the national government or the county government requires
the land for public reasons.  

What this therefore means is that, if a foreigner purchases a piece of land on a freehold, the title
on the land is automatically assumed to be on a leasehold of 99 years.

So far as agricultural land is concerned, a foreign investor may apply for an exemption from the
President and if they lack access, then an investor may obtain ownership or other rights through
ownership of a public company.

For legal advice on matters related to the conversion of land tenures and purchasing of
agricultural land, please do not hesitate to contact us.