CALL NOW: +254 716 325 064 | PAYBILL NO: 716096 | ACCOUNT NUMBER: 716096

Real Estate Blog

Land tenure system in Kenya: Freehold versus Leasehold

land tenure system

Understanding the Land tenure system in Kenya

Due to rapid population increase, agricultural land is rapidly being converted to plots for residential, industrial or commercial use. Most people seeking land, however, end up with unsuitable ones for the projects they had in mind. Solely because they do not understand the various categories of land and the tenure system applied in Kenya. Understanding the types of land ownership available is important especially if one intends to purchase land. Kenya’s Land tenure system is the act, right or period of holding land. There are two types of land tenure system in Kenya:

1. Freehold System

It is the greatest interest a person can have on land as it gives the holder absolute ownership of the land for life. What this means is that descendants can succeed the owner for as long as the family lineage exists. A freehold title deed has no restrictions as to the use or occupation. However, there are conditional freeholds, which restrict the use of the land, for instance, for agricultural purposes or ranching only. A freehold interest is also known as fee simple or absolute proprietorship.

2. Leasehold

This is the interest in land for a particular period subject to payment of a fee or rent to the grantor. Payment of rates is made to the respective local authority for services rendered. Leases are granted by the Government for public land, the local authority for trust land and individuals with freeholds. The maximum term of government leases is 999 years for agricultural land and 99 years for urban plots. It is also common to find 33-year leases with urban trust land. For freeholds, the period of lease will be as agreed upon between the landlord and tenant. Once a lease expires, the land or property reverts to the owner. A leaseholder can also apply for a renewal or extension of the lease. More particularly if he or she wants to redevelop the property and the lease period is about to expire or the remaining time is not enough to recoup the investments

It is also common to find 33-year leases with urban trust land. For freeholds, the period of lease will be as agreed upon between the landlord and tenant. Once a lease expires, the land or property reverts to the owner. A leaseholder can also apply for a renewal or extension of the lease. More particularly if he or she wants to redevelop the property and the lease period is about to expire or the remaining time is not enough to recoup the investments

 

N.B Land Tenure System (Both freehold and leasehold land in Kenya) is subject to local authority rates which are usually a fraction of the unimproved site value. However, leasehold is further subject to Land Rent, based on the size of the land.