Fees, Costs, and Taxes Payable When Buying Land or Houses in Kenya (Conveyancing)

Buyer’s (Purchaser) Costs

1. Purchase Price
   • Unless advised otherwise by your qualified advocate, let a qualified advocate hold all funds as a stakeholder, not an agent, or jointly by both parties, or by a third party in an escrow account. The purchase price is ideally paid as follows:
     • Deposit: 10% (or higher) of the purchase price on or before execution of the sale/lease agreement.
     • Balance: Remaining purchase price on completion (exchange of documents, transfer of original title, etc.).
     • If it is a gift, state clearly that it is a gift. Never pay in hard cash! Check our Vol 2, 2023.
2. Professional Fees
   • Qualified Advocate: Minimum legal fees are regulated by the Advocates Remuneration Order (ARO) and based on the value of the subject matter. Avoid agreements for KES 2,000.
   • Qualified Valuer: To value the property.
   • Qualified Surveyor: To obtain maps/mutation at the Ministry (Maps cost about USD 4/KES 400) and resurvey the property.
3. Nominal Duty to Stamp Agreement
   • The sale/lease agreement must be stamped to be used in a court of law in case of fraud.
   • Cost: Usually USD 20-50/KES 200-500 (expressed in denominations of KES 20, referred to as pounds).
   • The agreement will be stamped with a red dye stamp (in Kenyan pounds).
   • Must be stamped within 30 days, or penalties will accrue.
4. Stamp Duty
   • 4% for properties within cities and municipalities.
   • 2% of the value for properties outside municipalities/cities.
   • Your advocate will advise on properties exempt from stamp duty.
5. Bank Fees & Miscellaneous Costs
   • If taking a loan, the bank will charge the property. Charges/mortgages attract 0.1% of the amount secured.
   • Bank miscellaneous costs (RTGS/excise tax).

Seller’s (Vendor) Costs

1. Land Rent
   • Payable to the government (if leasehold).
2. Land Rates
   • Payable to the county government.
   • Includes all penalties for late payments.
   • Seller to provide buyer with all clearance certificates and accompanying receipts/bank cheques.
3. Utility Bills
   • All pending water and electricity bills.
   • All the above costs will be apportioned between buyer and seller. Your advocate will advise on this.
4. Commission
   • Payable to duly licensed estate agents/brokers.
5. Partitioning or Subdivision of Land/Building Plans
   • Costs of engaging a surveyor, physical planner, qualified engineer/architect/quantity surveyor.
6. Consents/Approvals
   • All costs necessary for obtaining consents referred to in our Vol 2 (Commissioner of Lands, Land Control Board, Change of User, County Council Building Permits, etc.).
7. Probate/Succession Costs
   • In case of succession matters, all probate fees to obtain proper title.
8. Capital Gains Tax (CGT)
   • Check our Vol 1, 2023.
   • The rate of tax is 15% of the net gain.
   • Your advocate will advise on how to calculate tax and properties exempt.
9. Bank Loan Discharge Fees
   • If the owner had taken a loan against the property, it must be discharged with consent by the bank. Discharges/reconveyances cost 0.05% of the amount secured.
   • Bank miscellaneous costs/excise tax.
10. VAT (16%) on Sale of Commercial Buildings
    • On January 17, 2019, KRA was granted a stay of execution on the High Court judgment (civil suit 541 of 2015) until the presumed appeal is heard. For now, VAT on the sale of commercial buildings remains payable.

Buying a House/Apartment + Costs

• Note that for houses and apartments, the first agreement is called an offer letter, and the sale agreement is known as an agreement of lease. The purchase price is referred to as lease premium.
• After the passage of the Sectional Properties Act No. 21 of 2020, buyers/owners of apartments will receive a title deed rather than a certificate of lease. Buyers/owners will also have one share in a corporation to manage the common areas.

Seller’s Lawyer Legal Fees

• 1% of the purchase price.
• Can be renegotiated by your qualified advocate.

Other Costs

• Disbursement for Water Infrastructure Costs
• Electricity Infrastructure Costs: Normally referred to as electricity/power meter & deposit & connection charges.
• Provisional Service Charge and/or Service Charge: For the first 3 to 5 months, expressed as a percentage of the lease premium.
• Initial Provisional Infrastructure Levy Deposit: May not be charged.
• Cost of Transfer of Allotment and Setting Up of Management Corporation
• VAT on Fees and Disbursements: VAT is payable on legal fees and disbursements at a rate of 16%.
• Registration of Documents and Pre/Post Search Costs: Green card search and normal search before and after obtaining title, and registration of transfer documents to obtain new title/sectional title.

For more details, visit WKA Advocates.