On April 5, 2024, the Ministry of Lands, Public Works, Housing, and Urban Development issued a notification to all land registrars in Kenya with a directive that a 4% stamp duty would now apply to land transfers within designated towns and municipalities. Well, you are probably wondering what the new stamp duty rates mean to you as a buyer and we are here to help you discern this.
Here, we’ll tell you what you need to know about the impact of the 4% new stamp duty rates on land transfers in Kenya’s municipalities, as well as other closing costs or charges you should know as you buy land.
What is Stamp Duty on land transfer?
For starters, stamp duty is a tax that’s levied by the Kenyan government on the transfer of ownership of land. The stamp duty rates applicable depend on the location of the property.
Currently, the rate is 2% of the property’s market value for land outside urban areas which includes municipalities or towns, while the new 4% stamp duty rate now applies to land transfers in areas like Kiambu, Naivasha, Gilgil, Thika, Eldoret, Juja, Githurai, Nanyuki, Murang’a and other municipalities or towns around the country.
What the Stamp Duty Hike Means to Land Investments in Kenya
Generally speaking, a change in stamp duty Kenya land rates will often indicate that the affected area is poised for significant growth and development. In fact, most of the municipalities affected by the stamp duty hike have been earmarked for significant growth and development with access to key amenities, transportation networks, and economic hubs.
So, investing in land in these areas now is a smart move to secure prime plots. This is important before prices escalate due to increased demand driven by development activities and infrastructure improvements.
The other direct impact of the revised rates will likely mean an increase in transaction costs, depending on the land selling company in Kenya you use.
This is why as a buyer you are thus better off buying land from the best real estate company Kenya like Fusion Estates, that offers an all inclusive purchase price, covering all costs, including the stamp duty costs.
You’ll have that peace of mind, knowing that there won’t be any unexpected expenses cropping up later in the land transaction process!
Stamp Duty For Land in Kenya FAQs
Who is exempted from paying stamp duty Kenya?
There are several exemptions to stamp duty for land transactions in Kenya.
Here are some of the common stamp duty exemptions in Kenya (applicable to land transactions):
- When you are transferring of land to your spouse
- Inheritance: When transferring family land to members upon the passing of a family member
- Gifts to charity: Transferring land as a gift to charitable organizations
- Business restructuring: Transfer of land from a holding company to its subsidiaries.
- Transfer of family property to a company wholly owned by the same family.
Of importance to note is that the exemptions are sought from the Collector of Stamp duty at the Ministry of Lands. The person seeking the exemption will have to provide supporting documents depending on the category they are seeking exemption on, for instance, if its a transfer between spouses, they will have to produce evidence of a valid marriage, such as a certificate of marriage.
Who pays stamp duty: the buyer or the seller?
As per the Lands Act and the Registered Lands Act, it is your responsibility as a buyer to pay for stamp duty on a land transfer in Kenya unless you get an all inclusive package from the seller.
Other Extra Charges You Should Know When Buying Land in Kenya
Other than the stamp duty fee, there are other extra costs you should be aware about as you look to buy land in Kenya:
- Legal Fees and Disbursements: These are costs associated with hiring an advocate to handle the legal aspects of the land purchase process.
- Land Board Approval Costs: Each county in Kenya has a Land Control Board that oversees land transactions within its jurisdiction and whose mandate is given by the Land Control Act . You’ll need to submit an application with the board, including relevant documents like proof of ownership, valuation report, and community consent (if applicable). There are associated fees for processing this application.
The Land board applies mostly to Properties that are freehold and provided for under the Land Control Act. In some areas the Commissioner of Lands consent is what will be issued. The consent from the Commissioner for Lands applies to properties that are within the towns and municipalities
- Title Registration and Transfer Fees: These are fees charged by government authorities for registering the transfer of land ownership from the seller to the buyer. The costs may vary depending on the value of the land and the area. They typically include registration fees, title processing fees, and other administrative charges associated with updating the land title records.
- Valuation Fees: You might also need to pay for valuation fees to cover the cost of hiring a qualified valuer or surveyor to assess the land’s worth based on factors such as location, size, accessibility, and development potential.
- Post Registration Search of Title: After the land transfer is completed and your ownership is registered with the relevant authorities, it’s advisable to conduct a post-registration search of title. This involves verifying that the land title has been properly updated to reflect your details. It will also help you confirm that there are no other issues affecting the property’s title.
- Other Due Diligence Costs: In addition to the aforementioned closing costs, you may incur various due diligence expenses to ensure that the land purchase is legally sound and free from any potential risks or liabilities. This may include verifying the seller’s identity and legal status, conducting searches with government agencies to confirm property ownership and land use restrictions, and obtaining relevant documents such as land maps and title deeds from official sources.
NB: in cases where one is seeking financing from a financial institution to pay for the purchase price. It’s important to note that there would be additional costs the buyer will incur. These costs are determined by the amount being secured and the financial institutions.
Buy Land From Fusion Estates: Get an All-Inclusive Purchase Price Covering Every Cost Until Title Deed Handover!
In a nutshell, as a buyer you should be aware of the stamp duty tax and other extra closing costs so that you can plan your finances from the start of the land buying process. You can avoid incurring extra charges by buying land from Fusion Estates where you’ll get an all inclusive purchase price that covers all the costs up to when you receive your title deed!
We are one of the best real estate companies in Kenya known for providing land buyers with transparency throughout the entire land purchase process.
Just contact us today via +254 723 97 97 97 or email at sales@fusiongroupafrica.com to buy affordable title plots in Kikuyu and Nairobi, Kenya with no hidden costs or surprise fees later!
