Tips For Leasing Land In Kenya

Land leasing in Kenya is not a new phenomenon, but it has gained more popularity in the past two decades. This is because of the increasing demand for space by the young and educated Kenyan youth who want to start businesses or engage in agribusiness. People and businesses lease land for various reasons, but they usually have a commercial motive or benefit that ensures the viability and profitability of their chosen enterprise. In this post, we will discuss the best tips for leasing land in Kenya.

When leasing a piece of land, ask yourself the following questions:

• How do you plan to use the land that you want to lease?
• What are the advantages and disadvantages of leasing land for commercial purposes?
• What are the steps involved in registering a lease agreement in Kenya?
• What are some of the factors that affect the price of leasing land?
• How can you protect your rights and interests as a lessee?

Why is land leasing in Kenya on the rise

Land leasing is becoming more popular as the supply of agricultural land near the urban centres in the country decreases and the cost of buying commercial land with good access to roads and public transport increases.

In urban areas, some of the most common businesses that lease land are furniture dealers, timber yards, fuel stations, garages, car washes, churches, roadside car dealers and many more. Some also lease land to set up shipping container malls or shops, which are semi-permanent structures that can be easily moved when the lease expires or when necessary. In rural areas, land leasing for agricultural purposes is more common. The lessees use the land for agribusiness activities such as greenhouse farming, wheat farming, flower farming, herb farming and so on. In some rare cases, some people lease land for animal husbandry.

Tips For Leasing Land In Kenya

Determine what venture you want to invest in

The question of what you want to do with the land is very important because it helps you determine what qualities and location you need in the land you want to lease. Different commercial activities need different land characteristics and attributes. For example, setting up a car yard business requires different land features than a wheat farming business. For the former, you only need a small piece of land like a quarter of an acre along a major highway and close to or within a major town, while a wheat farm business needs a large tract of land in remote areas.

Search for the Property

The second step is to find potential lessors who are willing to lease you land that is suitable for your intended purposes. To help you search for the most appropriate land, you need to ask yourself what you are planning to do on the land and when you are planning to do it. Once you find potential lands, you will inquire about the leasing price to see if it fits your budget and also the size of the land to see if it is sufficient for the type of venture you want to start.

Undertake Due Diligence

Undertaking due diligence involves the process of verifying whether the person leasing you the land has the authority to do so. You need to know if they legally own the land or have the right to lease it to you and if there are any disputes or issues related to the land. Due diligence should not be just a simple formal search exercise.

A more thorough search that involves asking probing questions about the validity of ownership and checking with the local administration offices to confirm the status of the land is recommended. This can reveal more information about the land and help you discover any hidden facts that were not disclosed initially and that differ from the reality on the ground. Not everyone is honest and some owners may omit some important information that you need to know.

This process helps you ascertain the following:

Have a Written Agreement

A written agreement is important because it ensures that both parties strictly adhere to what was discussed and agreed upon when entering into the agreement. While some oral agreements can be recognized by law in case of a dispute, there are some things that can only be clarified and followed up if a written agreement is in place.

A written lease agreement also protects you as the lessee from the owner who might want to frustrate you or do anything that is outside the agreement. It is also ideal for leases that exceed two years because oral agreements are only legally valid for two years and non-renewable. Beyond that, it has to be a written agreement. A written agreement also helps to clearly indicate the terms, price, duration, government requirements, etc. It helps avoid unnecessary disputes because the terms and conditions are clearly laid out.

Register Your Lease Agreement

Any lease that has a minimum of a two-year renewable lease agreement should be registered under the relevant land registry. The reason for registering leases is for the protection of both the lessee and lessor’s rights, with the implied rights, duties and obligations of both parties taking precedence. Registering the lease agreement is helpful if you want to exercise the option of renewing the lease at the end of the lease term. It is also helpful if you want to exercise the first right of purchase in the event that the owner wants to sell the land at the end of the lease period.

You should get professional assistance in coming up with the terms and conditions to help you if there is a need to settle any dispute with the lessor. For example, in the event of the death of the landowner or their bankruptcy, a registered lease may serve the purpose of recognizing and protecting your rights when a trustee to the bankrupt person or administrators to the estate of the deceased person are appointed.

Additional Tip: Create an Exit Plan

In some cases, it is important to have an exit plan, especially for commercial reasons. For example, one of the implied conditions on the expiry of a lease is that you will hand over possession of the land in the condition in which you received it. However, sometimes this might involve extra costs to undo any improvements you made on the land during your period of occupation. Are there any important improvements that you made on the property that the owner might want to keep and how will they compensate you for that?

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