Ownership of Properties to Infinity: New Regulations on Extension of Leases in Kenya
By a Gazette Notice No. 5734 the Cabinet Secretary for Lands and Physical Planning issued guidelines for extension and renewal of leases (the “Guidelines”).
Five months earlier, Gazette Notice No. 1812 of 27th February 2017 had appointed a ten- member task force to investigate the processing, renewal and extension of leases in Kenya since 2010.
The foregoing actions target the complaints on the process of extension and renewal of leases as well as delays and loss of land through irregular allocations of expired leases. The legislature therefore has seen the need to come up with clear policy guidelines on extension and renewal of leases because the issue has far reaching implications on so many a local and foreign investor.
Lease Renewal under the Land Amendment Act 2016: Loopholes sealed
Under Section 13 of the Land Act as amended by the Land Amendment Act, 2016, a Kenyan citizen holding a lease from the National or County Government over land enjoys pre-emptive rights.
This ensures that the owner of the leasehold interest gets the first right to allocation of the land in question provided that the land is not required by the National or County Government for public purposes.
It is pertinent to note that pre-emptive rights only apply to Kenyan citizens. However, this does not preclude non-citizens from applying for extension or renewal of leases held by the same provided that one is in compliance with requirements under the Guidelines.
The policy, legal and institutional framework on processing, extension and renewal of leases;
Prior to the Guidelines, the process for applying for extension and renewal of leases was initiated by the registered owner. The present guidelines however seek to streamline the process by introducing and amending procedures as follows: –
• The National Land Commission (“the Commission”) Presumptive rights: Notice on expiry
The Commission will now trigger renewal on their own motion by writing to registered owners. The guidelines require the Commission to notify the registered owner by registered mail of the imminent expiry of the lease, five years prior. The notice should inform the registered owner of his/her pre-emptive rights of extension of the lease
• Advertisement and verification.
The Guidelines now require the Commission to advertise the notice of expiry of lease in two newspapers should the registered owner fail to respond to the initial notice; this is a slight departure from Section 13 of the Land Act as amended which provides for advertisement of the notice in one newspaper only.
The Commission shall undertake a physical verification of the land with a view to establish the status of the land; and secondly, to advise the registered owner on the need to apply for extension before the expiration of the term and the consequences of not doing so which include forfeiture of the preemptive right over the land and the automatic reversion the land in question to the National or County Government.
• The Application
Application for extension or renewal is made by the registered owner or appointed administrator before expiry of the Lease.
Where the term of the lease has expired without prior notice to the registered owner, the same will have to apply for renewal of the lease.
The application for extension or renewal shall be made to the Commission either by delivery of the same to their offices or in case of renewal, through the Commissions email address.
The Commission shall within seven days from receipt of the application, forward the same to the Cabinet Secretary for lands if the land is vested in the National Government or the County Executive Committee Members for lands if the land is vested in the County Government.
In order to obtain approval for extension, Kenyan citizens are required to produce land rent and rates clearance certificates, information on prospective encumbrances on the land, proof of compliance with the terms of the lease and in the case of a company, search results from the Company Registry.
Large scale investors must also satisfy the Commission of the economic benefit and the national development impact of the extension or renewal sought. However, the Guidelines do not define who constitutes a large-scale investor.
• The Process
The application process has been systemized with regard to extension of leases. The Application once receive by the Commission Officer, will be entered into a serialized register. In order to be entered in the register, the Guidelines require the application
– a Copy of the ID/Passport;
– an official search obtained one month prior,
– Passport size photograph,
– Certificate of incorporation in case of a Company; and
– Letters of administration and confirmation of grant where applicable.
The accompanying documents required for renewal are similar to those listed above save for the additional requirement for the original lease.
The National and County Government shall consult with the relevant County Executive Committee Member, County Government Surveyor, Physical Planner and the Land Administration Officer of the Commission prior to approving the application for extension.
This also applies in the renewal of lease in which case the consultations should not be mere representations by the experts but also recommendations and any objections by them should be supported by reasons.
Once approval of extension or renewal of the lease is granted, there shall be revaluation to determine the payable land rent and other requisite fees, re-survey and geo-referencing and surrender the existing title. In the case of renewal, there is an additional requirement for a new letter of allotment for the parcel before the new leases is issued.
• Notification of rejection of the application
The Government is to notify the registered owner of its intention not to extend the lease three years before the lease expires and copy to the Commission.
Notice of rejection of an application is to be supported by reasons of either compulsory acquisition or non- compliance and issued within ninety days from the date of the application. At this point, all developments on the land are prohibited, previous developments are itemized and the registered owner is entitled to compensation on account of previous developments if the land is required for public purpose.
Appeals from the decision of the National or County Government lie in the Appeals Committee which is established by the Commission. The Appeals shall be held in the respective Counties in the Office of the Executive Committee member in charge of Land in that County.
The points of departure
The current Guidelines are not free from the shortfalls accompanying their provisions and implementation: –
• The preceding conditions
The foregoing guidelines have come at a time when litigation shaded the recent Land Amendment Act of 2016 where some sections of the Act were suspended by an order of the Environmental and Land Court (ELC) in Malindi pending the hearing of Petition Number 19 of 2016. One of the amendments that was suspended by the orders pertains to Section 13 of the Land Act from which the Regulations emanate. Despite the suspension of its application, the provisions in the Section 13 have been reiterated in the new Guidelines.
• Shortfall in Scope of Application
The guidelines have failed to address the issuance of leases for properties undergoing subdivision, amalgamation and change of user. Application for the said procedures is similar to the one for extension of lease. It was therefore expected that the Guidelines that seeks to streamline the law on renewal and extension of leases would make provisions for subdivision, amalgamations and change of user as well. The inclusion of these procedures is also more critical in light of the suspension of issuance of titles for subdivisions.
The new procedures and process for obtaining extension and renewal of leases is laudable for ensuring transparency. The Guidelines have attempted to provide for specific timelines for processing applications to ensure applicants do not suffer from unnecessary delays. Further, they have put in place steps to be taken by the Commission in alerting the land owners to ensure they do not unjustifiably lose their land through government re-allocation which is a positive step towards ensuring the protection of the right to property enshrined in our Constitution.
Article by: June Njoroge Ngwele Assisted by Pauline Kenyatta