State reveals plan to increase land fees by up to 100 times

Home and land buyers are braced for a new hit after the Lands ministry proposed to increase a number of service fees under a World Bank-backed revenue expansion plan.

This will see some fees levied on land registration rise by up to 100 times, impacting the cost of home and land ownership, according to players in the real estate sector.

For instance, the cost of official land search will double to Sh2,000 in a move which will see the ministry collecting billions of shillings in additional revenues from the essential service.

Read: Land rates review to tap extra Sh8 billion

Fees on registration of documents, including deeds of indemnity, agreements, contracts and trust deeds will jump from Sh500 to Sh1,500 while applying for a title after subdivision will rise to Sh2,500 from Sh500; replacing a title will go up 10 times to cost Sh5000.

But it is applicants for incorporation of a trust that will take the biggest hit as the review will cause a 100-fold jump to Sh50,000 from Sh500.

“These charges are paid by homeowners who usually cover the cost of registration, transfers and so on. The immediate effect is that home and land buyers will feel this pain and will transfer it to tenants,” says property development consultant Geoffrey Odongo.

“This is also going to affect the order in which people access these services, where some may not be willing to pay the higher prices. In the long-run, home ownership will become expensive and hectic.”

Persons seeking land registry services outside the registration centres will part with Sh5,000 and also pay for transport costs for the officers, up from a previous flat rate of Sh2,500.

The review of charges represents part of the Land Laws (Amendment) Bill, 2023 which is at the public participation stage. This comes at a time the government is seeking to mobilise additional resources to fund the Sh3.93 trillion budget after it was recently increased by Sh187.3 billion to pay for extra debt servicing cost due to the weakening shilling.

According to the Ministry of Lands, the revision of the service charges is set to harmonise some of the fees especially those it considers unreasonably low or unaligned to market rates.

Additionally, the review is expected to promote value for money for services rendered while helping the ministry to invest in efficiency and technology.

Players in the real estate sector, however, are opposing the review, arguing the ministry has failed to provide a fair justification, particularly for fees levied on essential services such as land searches.

“The intention of this fee increase is ill-informed. While it may lead to increased revenues for the government, it may hinder access to essential services, which should be manageable for the public. Many may look at avoiding these searches and you will have land transactions happening without due diligence,” Augustine Munialo, a land surveyor and member of the Institution of Surveyors of Kenya told the Business Daily on Tuesday.

Instead, the review has the backing of the World Bank Group and forms part of the multilateral lender’s terms for its recent Sh151.1 billion ($1 billion) financing in May this year.

The set of reforms underpinning the disbursement by the Washington-based development lender included the review of Kenya’s land laws to expand the revenue collection base.

The financing from the World Bank was to provide low-cost budget financing along with support to key policy and institutional reforms for near-term objectives of fiscal consolidation and the long-term goal of green and inclusive financing.

“It is necessary to prioritise policy options to reduce fiscal deficit, respond to the rising cost of living and climate change shocks. Many domestic resource mobilisation efforts have concentrated on boosting tax revenue and improving the administrative efficiency of tax institutions; little systematic attention has gone to non-tax revenue collection,” the Lands Ministry stated in its impact statement accompanying the proposals.

The changes are expected to impact a sector whose contribution to the economy or GDP was tabulated at 8.6 percent in 2022, ranking it ahead of sectors such as ICT, manufacturing, finance and insurance.

According to data from the Kenya National Bureau of Statistics, about 4,300 persons were gainfully employed by the sector directly as at the end of last year.

Read: Nairobi landowners set to pay double rates January

The sector is also among the top recipients of private sector credit with commercial bank loan advances to building, construction and real estate totalling to Sh561.9 billion in 2022.

The looming changes come amid the ongoing land digitization under the Ardhisasa platform.

In August, the then Lands Cabinet Secretary Zachariah Njeru noted progress has been made in the transition even as the ministry works with stakeholders to tackle issues and improve the Ardhisasa processes.

“In the next few months, we will be done with Nairobi and it will help a big deal in that the land transactions will be faster and the government shall generate more revenues,” he noted.

The ministry’s services transverse land listing services, including registration of documents and issuance of land title searches, land administration, valuation and survey services.

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