Viewpoint: A Look at The New Land Conversion and Compensation Rules

Posted on May 31st, 2019

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The Constitution of Kenya 2010 (the Constitution), recognises the need to regulate the manner in which land may be converted from one regime to another. In this regard, Article 68 (c) (ii) of the Constitution provides that Parliament may enact legislation to regulate the manner in which land may be converted from one category to another. This stems from the need to govern the said process, noting the irreversibility of the exercise, once conducted.

Likewise, compensation for compulsory acquisition of land is a very pertinent issue, especially in this dispensation in which the government has sought to stimulate economic growth by, amongst other things, launching mega infrastructural projects such as the construction of the standard gauge railway. Here, Article 40 (3) of the Constitution protects the citizenry from deprivation of property unless the deprivation is for a public purpose or in the public interest and in such a case, the Constitution requires that the affected proprietor is promptly compensated in full and his or her right to seek legal redress is unfettered.

The Government has therefore taken cognisance of the need to address these vital issues by promulgating the following sets of regulations.

The Land (Conversion of Land) Rules, 2017
In exercise of the powers conferred under section 9 (5) of the Land Act, 2012 (the Act), the National Land Commission (the Commission) gazetted the Land (Conversion of Land) Rules, 2017 (the Land Conversion Rules) vide Legal Notice No. 282 of 2017. The Land Conversion Rules focus on the procedural aspects of the conversion of land from public land to either private or community land and seek to ensure the process is clear, efficient and conducted procedurally.

The National or County Government may on its own motion or upon request, identify land and notify the Commission of its intention to convert land under section 9 of the Act. The procedure is meant to be transparent.

Conversion of Public Land to Private Land
Upon receipt of the notification, the Commission should satisfy itself that:

  • The land is, at the time of the intended conversion, public land
  • The purpose of its intended use is compatible with land use planning for the respective area
  • The land is not part of an ecologically sensitive area
  • The conversion complies with provisions of the Act or any other law
  • The land is not controlled land i.e. land within a zone of twentyfive kilometres from Kenya’s inland boundary, within the first and second row from the high-water mark of the Indian Ocean and any other land declared controlled land by law

Where the Commission is satisfied that the land meets the set out criteria and the matter amounts to a substantial transaction, the Commission will then refer the matter to the National Assembly or County Assembly for approval. Upon approval, the land is allocated by the Commission and its particulars entered in the Land Register.

Where the proposed conversion does not amount to a substantial transaction as defined in the Act, the Commission is required to invite the public for consultation by publishing a notice in at least two (2) dailies of nationwide circulation, affixing the notice in prominent places in a County or Sub-County including the headquarters, announcing the notice in official and vernacular stations of nationwide coverage and announcing in public meetings and places of worship. The notice must contain details of the land, proposed mode of conversion, specify the date, venue and time for the consultations and allow for representations within fifteen (15) days.

Where the Commission approves the intended conversion of land after scrutiny of the public representation, it will then allocate the land and enter the particulars in the Land Register.

Conversion of Public Land to Community Land
Upon receipt of an application for conversion of public land to community land, the Commission is required to satisfy itself that the land is public land and it will be used for the benefit of the community, as provided for under Article 63 of the Constitution.

The Commission is also required to invite comments or objections on the intended conversion of public land to community land by placing a thirty (30) day notice in the same form and mediums, as the notice for conversion from public to private land.

Where there are objections, the Commission is required to notify the National or County Government of the same for determination. In case there are no objections, the Commission will proceed to publish a notice in the Kenya Gazette on the conversion of the public land to community land. The conversion is then entered in the Land Register.

The Land (Assessment of Just Compensation) Rules, 2017
The Land (Assessment of Just Compensation) Rules, 2017 (the Land Compensation Rules) were developed by the Commission in exercise of the powers conferred under section 111 (2) of the Act, and gazetted vide Legal Notice No. 283 of 2017. The Land Compensation Rules focus on the assessment of compensation payable to persons who possess an interest in land, at the time which the Commission takes possession of such land.

The Land Compensation Rules provide that in assessing the appropriate compensation for compulsory acquisition of land, the Commission will consider the following factors:

  • The market value of the land
  • The damage sustained or likely to be sustained by persons interested at the time the Commission takes possession of the land
  • Reasonable expenses incidental to the relocation of any of the persons interested
  • Damage genuinely resulting from the diminution of the land between the date of the publication in the gazette of the notice
    of intention to acquire land and the date the commission takes possession of the land

With regard to market value of the land, the Commission is required to consider the stipulated user of the land and whether there has been any increase in the value of the land, either after publication of the notice of intention to acquire the land; or by reason of use of the land in an illegal manner or a manner detrimental to the user. Conversely, the Commission does not consider the following matters when assessing compensation:

  • The degree of the urgency which has led to the acquisition
  • Any disinclination of the person interested to part with the land
  • Damage sustained by the person interested which, if caused by a private person would not be a good cause of action
  • An increase in the actual value of the land as at the date of the publication in the gazette, of the notice of intention to acquire likely to accrue from the use to which land will be put when acquired
  • An outlay on additions or improvement to the land, incurred after the date of publication in the Gazette of the notice of intention to acquire land, unless the additions or improvements were necessary for the maintenance of any building in proper state of repair

The Commission will determine an award based on the market value of land which is taken as the value of the land at the date of publication in the Gazette of the notice of the intention to acquire the land. It should be noted that additional compensation is payable for disturbance over and above the compensation amount. Additional compensation is calculated at fifteen per cent (15%) of the market value of such land.

Conclusion
The efforts of the Commission to address the challenges affecting the land sector should be commended. It however remains to be seen to what extent the Rules will be implemented in order to determine their impact in addressing these challenges.

Still, strict implementation of the Rules is not enough. Corruption should also be tackled as it is a serious impediment in the Government’s efforts to address land issues. An example is the assessment and compensation of the compulsory acquisition exercise for one of the current flagship projects in the transport sector, which has been marred by allegations of corruption. This has resulted in the arraignment of senior officials in the Commission to answer to graft charges. We hope these efforts at curbing corruption will be sustained so that the contentious issues in the land sector will be addressed where possible, substantively
and with finality.

 

Conveyancing & Real Estate

Posted on June 12th, 2018

Our Conveyancing & Real Estate practice group has rich experience in providing strategic and practical advice to local and international clients on acquisition and disposal of land, conveyancing, commercial & residential development, leases, licenses, project financing, structuring of complex projects and joint ventures.

Chambers Global Guide, one of the most prestigious global legal directories, in its 2021 rankings, noted the practice area as a notable practice group that continues to enhance its reputation and market share in Kenya's real estate space. Similarly, the Legal 500 EMEA 2021 recognised the firm’s Real Estate & Construction team for their outstanding contribution to the practice area.

Experience

Recently, we have been involved in:

  • Acted for a leading Kenyan investments and real estate company in the sale of 10 high- end villas worth USD 100 million in a gated community in Karen. We advised the parties on the joint venture arrangement and facilitated the negotiation of the joint venture agreement and the transfer of the land to the joint venture reference.
  • Acted for a leading Kenyan investments and real estate company in the acquisition of a 10-acre piece of land in Ridgeways, Kiambu worth USD 92.5 Million. We advised on all aspects of the acquisition, conducting legal due diligence and negotiating the sale and purchase agreement.
  • Acting for a leading Kenyan real estate and investments firm in the acquisition of a property worth USD 13 million.
  • Advisor to a Pan-African financial institution with offices in several African countries, in the acquisition of a property in Nairobi worth USD 12 million.
  • Acting a leading Turkish construction company in partnership with a German investment firm in a joint venture project with landowners for the development of a multi-million dollar mixed-use project in Nairobi.
  • Acting for a leading Kenyan investments and real estate company in the purchase of a 5-acre property in Ruaka worth USD 2 million for the construction of a comprehensive mixed-use development consisting of 408 units.  We are also acting on the sale of 100 three bedroom units in the project.

Recent Insights

An Overview of the Proposed Environmental Management and Co-ordination (Extended Producer Responsibility) Regulations, 2021

Conversion of Long-Term Leases to Sectional Units

Further Update on the Launch of the National Land Information Management System

Imminent Roll Out of The National Land Information Management System (NLIMS)

Gazettement of Additional Parcels of Land for Conversion from Old Land Registration Numbers to New Parcel Number

The Stamp Duty (Valuation of Immovable Property) Regulations, 2020

Conversion of old Land Reference Numbers to new Parcel Numbers

Viewpoint: A Look at The New Land Conversion and Compensation Rules

Unresolved: An Assessment of the National Land Commission


Related Services

Banking & Finance, Corporate & Commercial and Dispute Resolution


For more information about our Conveyancing & Real Estate practice, please contact Pamella Ager (Managing Partner).  Alternatively click here to download our Conveyancing & Real Estate profile.

Key Contacts
Pamella Ager
Managing Partner

 

 

E: pamella@oraro.co.ke

James Kituku

Posted on April 11th, 2018

James Kituku

Partner

 

T: +254 709 250 000/709 250 712

E: james@oraro.co.ke

 

 

James is a Partner at Oraro & Company Advocates in the commercial, conveyancing & real estate practice areas. With over 8 years of experience, James has advised local and international clients from the financial services and construction sectors. 

James is well regarded for his conveyancing and banking expertise. He has advised on corporate lending transactions, drafting lending and security documentation, drafting of leases for both commercial & residential and transferring of land.

James recently advised a leading telecommunications company in a corporate lending transaction worth USD 10 million.

James holds a Bachelor of Laws (LLB) from the University of Nairobi and a post-graduate diploma in Law from the Kenya School of Law.

“James is well regarded for his conveyancing & real estate expertise.”
Experience
  • Part of the team that undertook a comprehensive securities audit on behalf of a Pan African Bank which aimed to review the bank's loan portfolio to mitigate the risk of the bank.
  • Part of a team advising a real estate developer in a housing development project within Nairobi, worth USD 40 million.
  • Part of the team that advised a corporate lending worth USD 10 million to a leading telecommunications company in Kenya.
  • Part of the team advising a major international NGO with offices globally in the acquisition of a property for USD 15 million.
  • Part of a team that advised a leading trailer manufacturer in greater Africa in a corporate lending and securities transaction with a cumulative value of USD 14 million.
  • Part of the team advising a Pan-African financial institution with offices in several African countries, in the acquisition of a property.

About Us

Oraro & Company Advocates is a full-service market-leading African law firm established in 1977 with a strong focus on dispute resolution and corporate & commercial law. With a dedicated team of 10 partners, 4 senior associates, 10 associates, 1 lawyer and 36 support staff, the Firm has been consistently ranked by leading legal directories such as Chambers Global, IFLR 1000 and Legal 500 as a top-tier firm in Kenya.

Oraro & Company Advocates is an affiliate member of AB & David Africa.

Contact Us

Oraro & Company Advocates
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P. O. Box 51236 - 00200, Nairobi, Kenya.
T: +254 709 250 000
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