Reining in land cartels: MPs approve a Bill to regulate land-buying firms

Plot for sale

MPs have approved the publication of a Bill that will see the State net millions of shillings annually from land-buying or selling firms.

Photo credit: Shutterstock

Lawmakers have approved the publication of a Bill that will see the State net millions of shillings annually from land-buying or selling companies in a bid to protect investors from fraud.

The National Assembly’s Budget and Appropriations Committee (BAC) says the Land (Amendment) Bill should be fast-tracked to regulate the activities of more than 105 land dealing entities to protect the interest of persons buying land from such companies.

The Bill seeks to amend the Land Act, 2012 to provide for registration, licensing, and regulation of over 105 land dealing entities in the country to protect the interest of persons buying land from such companies.

If the Bill is passed, land buying companies will be compelled to deposit Sh500 million as licence fees before they are cleared for registration.

“The Bill aims to ensure that all entities dealing in land are regulated and set a minimum fee for registration of land dealing entities and impose penalties for non-compliance,” Mr Joseph Gitari, who sponsored the Bill, told BAC.

“The Bill provides for payment of a registration fee by each land dealing company which will be prescribed by the Cabinet Secretary responsible for Land and renewed every year.”

Currently, there is no law that regulates the activities of land buying companies that have seen investors lose billions of shillings to shadowy entities.

Several investors have been duped by land buying companies and unscrupulous professionals like lawyers, land surveyors and land valuers into buying non-existent parcels of land due to a lack of sufficient laws to regulate land buying entities.

“We need a law that regulates these land buying companies who use celebrities in the media and in particular vernacular stations to advertise non-existent land,” Mr Gitari told BAC.

“There is no legislation or policy that regulates the operations of the land dealing companies. This may have contributed to the rampant cases of Kenyans being conned money by fraudulent land-buying and selling companies.”

The Kirinyaga Central Constituency MP said the situation is further complicated by the fact that some land dealing entities operate as briefcase companies in the absence of the necessary legislation.

He told the committee chaired by Kiharu MP Ndindi Nyoro that most of the affected Kenyans have raised complaints with the Directorate of Criminal Investigations (DCI) but they are yet to get justice due to the lack of proper regulation mechanisms.

Mr Gitari, a land surveyor by profession, appeared before the BAC to defend his proposed Bill during the pre-publication scrutiny.

“The land dealing entities attempted to address the proliferation of fraudulent land-buying and selling companies by forming the Real Estate Stakeholders Association,” Mr Gitari said.

“However, the association still has a limited impact in dealing with the effects of unscrupulous companies since it is a voluntary membership association and so cannot regulate non-member companies.”

He said the establishment of a registration and regulation mechanism for land-dealing entities will go a long way in providing policies that will protect Kenyans from exploitation by fraudulent land-buying and selling companies.

The Parliamentary Budget Office (PBO) estimates that the annual registration fee for land dealing entities will be Sh100,000.

It said the implementation of the Bill will cost the national governments approximately Sh9.5 million in the first year, Sh9.4 million in the second year and Sh9.25 million in the third year.

The Bill seeks to protect the interests of persons who purchase property from a land-buying company.

The proposed law seeks to establish an agency that would regulate the proliferation and activities of all land-buying companies in Kenya.

The Bill empowers the regulator to impose penalties of up to Sh5 million for non-compliance by the land-buying companies.

The proposed Bill comes in the wake of several petitions to Parliament by Kenyans who have complained of being swindled by fraudsters posing as land investment companies.

The House last year handled a petition by a section of Kenyans who allege that investment firm Cytonn Investments Management PLC misappropriated investors’ cash in one of its projects.

Several Kenyans have lost their money through unregulated investment companies that operate real estate businesses that sell the property as “off–plan”.

Cases of rampant fraud perpetuated by real estate firms last year prompted the DCI to launch investigations into various companies that Kenyans complained about.

The DCI appointed a 26-member special team of investigators with backgrounds in land matters to the Land Fraud Investigations Unit.

The 26 detectives with professional backgrounds in land survey, land economics, land physical planning and administration, among other relevant fields have been deployed to the unit.