Do you want to sell/buy property in Kenya? this is what you need to know…
Owning property is one of the ultimate goals for most people and while the thought of buying is very exciting, it is also quite a daunting process that if not well undertaken can easily turn into a nightmare.
Whether your intention is to buy a home for your family or for commercial purposes, the process is somehow similar. This article will take you through the process of buying property in Kenya and at the end you will be able to make informed choices in your endeavour.
The first step to purchasing property is obviously to identify the house or development you are interested in while factoring in your financial capability and/or options. Once you have that in mind, you can then move to engage the services of a Real estate agent/realtor. Buying or selling property can be a tedious task and an agent comes in handy. Realtors are also able to match you with the perfect property much faster than you would take to scout for one as well as negotiate prices for you. Some real estate agents also double up as property Valuers and will therefore spare you the hustle of securing the services of one.
Viewing: your real estate agent will get in touch with the seller or the Seller’s Agent and arrange for the viewing, which a necessary step that you shouldn’t overlook. Other than just looking at the nature of the house, you need to look at things like security and the infrastructure surrounding the property you are looking to buy.
You also need to test the desirability of the property by finding out how long it has been in the market and also judging by how many other people will be viewing.
During this time, it is also prudent to find out whether the property has planning permission.
If you’re looking to invest in a property and intend to stay for several years to start a family, space could become an issue and you might find the need to build an extension. One essential thing to remember to ask is whether or not the property has any planning complications such as a listed status. They will have records of planning permits if any have been issued in the past. If they have been rejected, then this may cause you problems in the future.
One you have identified the property you would like to purchase, the next step will be to hire a Real Estate Lawyer, commonly known as a conveyancing advocate. Advocates help in reviewing any offers you make or receive and make sure that your rights are protected and your duties clearly defined. In the event that you are out of the country and still need to buy a property in Kenya, you can appoint your lawyer to do it on your behalf through a power of attorney.
Usually,the legal fee is about 2% of the purchase price for the lawyer’s role in the process.
The advocate will conduct a search on the property at the relevant Lands Registry (depending on where the Land is located). This is a very crucial action/step, as many areas are not registered. They will also do a ground report on the property with the help of a licensed surveyor for purposes of confirming that the land does actually physically exist as well as confirming the beacons (Land search/maps) for purposes of replacing any that may be missing.
In the event that you are taking up financing, you must consider valuation costs, which is 0.2% of the valuation, and a commitment fee to the bank of 1%.
At this preliminary stage, it is important to be very keen on details such as; finding out if the property actually exists (a physical visit to the Property with a surveyor/Valuer can suffice), if it lies on public property, outstanding land rents and local government rates and the market value. Obtaining the rates payable on a property is a simple task since you only need to visit the respective county government offices with a copy of the title and rates demand note will be issued while for land rent a rent demand note can be obtained from the Lands Office.
Your Advocate should among other things, help you understand and guide you through the provisions of the Agreement for Sale which forms the basis of the contract between you and the Seller, to ensure that your interests as the buyer are well covered. The Advocate will also assist in preparation and registration of all the legal documents, including the transfer. In the event that you are getting financing for all or part of the purchase price, the Advocate will also be of assistance in clarifying the terms of the mortgage and work with your financier, if necessary, to modify them and attend to the closing and review of all the papers you will be required to sign. Once both parties being the seller and the purchaser are in agreement on the terms of the Agreement for Sale, they proceed to execution at which point a deposit of between 10 % to 30% of the purchase price becomes payable. Depending on the provisions of the Agreement for Sale, the deposit can be refunded in full if the transaction aborts or the same can also be forfeited to the seller especially if the default is due to the purchaser’s sole fault.
Close the sale: Most sale transactions provide for a completion period of 90 days from the date of execution of the Agreement for Sale. However, delays may be experienced at the Lands registries leading to an extension of the completion period. . The seller should avail certain documents to your advocates in exchange of payment of the balance of the purchase price. These include among others,
- The original title deed
- Certificate of title
- Certificate of Lease/Sub-Lease,
- Consent to transfer the property,
- Rates clearance certificate and payment receipts thereof,
- Rent clearance certificate and payment receipts,
- Duly signed but undated transfer,
- Copies of their PIN and ID,
- Certificate of incorporation if seller is a company and the PIN thereof,
- Spousal consent/negation of spousal consent if the seller is an individual etc.
For you as the purchaser, you will be required to meet the stamp duty charges which range between 2% to 4% of the value endorsed by a government Valuer on the transfer document. The percentage is dependent on whether the property is within a municipality or not.
Transfer of ownership: The process of transferring title to the purchaser is undertaken through registration at the relevant Lands Registry. Your Advocate will present the requisite documents at the registry and book them for registration. The process takes at most a week if all documents are in order. The process of registration especially where all documents are okay is simple and you can choose to do it by yourself without involving an advocate.
Thereafter, once the title is registered in your name, it is important to do a post registration search to verify that the property was indeed transferred to your name or that of your nominee
Copyright: Pearlbridge Consult