The cost of buying and selling property in Kenya is set to shoot upwards if Parliament passes amendments to three Acts as suggested by the Ministry of Lands.
Lands CS Alice Wahome has proposed amendments to three Acts – Land Adjudication, Land Registration and Community Land – which will raise some of the costs related to property transfers by more than 1,000 per cent.
Public participation on the planned increments is set to start on Tuesday, as Lands ministry officials meet with the National Treasury, National Land Commission and Council of Governors in Nairobi.
The Law Society of Kenya, which is slated for a November 17 engagement with the Lands ministry, has already opposed the move.
LSK President Eric Theuri said in an interview that the Lands ministry should clean up its house and ensure good service before increasing the cost of property dealings.
Other stakeholders the Lands ministry intends to engage include the Institute of Surveyors of Kenya, Kenya Institute of Planners, Valuers Registration Board, Kenya Property Development Association, Kenya Bankers Association, Kenya Land Alliance, committees in the National Assembly and Senate, and the general public.
If the National Assembly passes the proposed amendments, filing a case at the Land Adjudication Committee – one of the first ownership dispute resolution institutions – will be charged at Sh2,000, up from Sh500.
Appealing decisions of the Land Adjudication Committee to the Arbitration Board will cost Sh3,000, up from Sh300.
The biggest increment will affect appeals of the Arbitration Board to the Lands CS. The cost will shoot up to Sh7,500 from the current Sh600.
The proposed laws also introduce a Sh50,000 fee for incorporation of a trust which can hold land.
Land ownership searches, one of the most crucial steps in property transfers will quadruple to Sh2,000 from the current Sh500.
The proposal to increase land search fees comes as hundreds of transactions are stuck owing to disruptions caused by the migration of services to the eCitizen platform.
Several individuals have been unable to get the search results after paying for the service, an issue the Ministry has blamed on the integration of the ArdhiSasa and eCitizen platforms.
Daniel Njoroge, who paid for a land search twice, is yet to get the results as the integrated system still lists his service request as unpaid.
“I went to a cybercafé in October and paid Sh550. My account still indicated that it was unpaid, so I was advised to go to the Ministry of Lands offices and show my Mpesa message for further assistance. I lined up and gave my receipt and showed the Mpesa message but the officers insisted that it was unpaid. After a lot of back and forth, I decided to just pay again. I still haven’t gotten the search result,” Mr Njoroge said.
And advocate with conveyancing experience who requested not to be named out of fear of victimization said that he also paid for a search in October, but is yet to get the results as the eCitizen portal indicates that he did not remit money.
The advocate added that in a second transaction, he reached out to the Ministry of Lands customer service desk and got assistance.
“We have had forums with the Ministry where we ventilate issues and they have said that the integration is what they are now trying to resolve,” he said.
Lands CS Alice Wahome, who has tabled the fee increment proposals at the National Assembly, and PS Nixon Korir neither answered our calls nor responded to text messages questioning the impact of the planned hikes.
Interestingly, the Ministry of Lands website still states that land searches are free of charge.
LSK President Eric Theuri said that the Lands ministry should have first focused on providing complete land records in good time before pondering service fee increments.
“What would necessitate these additional costs? Cost of living has gone up and taxation has gone up. Services at the Ministry of Lands is still below par in terms of efficiency and accuracy. The first thing they (Ministry) should have done is to put their house in order so that when they increase costs, one is able to see the service they are paying for. They should first make sure that records are complete and accurate,” Mr Theuri said.
He added that the increased costs are likely to discourage deals in the property market, at a time that the government is trying to attract investors. The LSK President said that investors should brace for impact in the event that the proposed increments are passed by Parliament.
“We (LSK) will be opposed to these changes in the first instance. It is an extra cost of doing business because you have to keep calling people, buying tea for people for you to get service. The property and legal industries will be hard hit. Naturally this cost will be pushed to the consumer. At a time the government should be lowering the cost of doing business. A thing like trusts, at a time the country is encouraging formation of trusts to help manage succession, will be affected,” Mr Theuri added.
In a regulatory impact assessment published in October, the Lands ministry states that the fee increments are to cater for gaps that do not provide fees for several services offered.
The ministry also cites inequality in payment of land rates and the need to collect more revenue to make service delivery sustainable.
The paper states that some freehold property in affluent neighbourhoods like Karen, Runda and Kitisuru are not liable for land rent, while “leaseholders in less prime areas like Kayole, Umoja and Dandora are charged land rent.
