BRIEF OVERVIEW OF THE SALE PROCESS WHEN BUYING A PROPERTY IN KENYA
The main process when buying a property in Kenya is as follows with a few variations depending on whether you are buying a Freehold, Leasehold and/or shares in a company. However, the basic rules are:
1. After finding your dream property and having agreed on a price with the seller, engage a reputable, trustworthy lawyer
2. The sellers lawyer will create a draft sale agreement and send to the buyers lawyer for their input (which you can also read and comment on).
3. Once the sale agreement is finalized, the buyer signs and puts down a 10% deposit and the seller signs. If you are overseas, the signing of the agreement must be done in front of a notary. The sellers lawyer, who will be holding the monies, will write a letter of undertaking to release the monies to the seller once the transfer is complete or within a certain number of days from the transfer, whichever the sooner.
4. The buyers lawyer conducts due diligence on the property
5. The balance of the monies should be paid to the sellers lawyer within 90 days of signing the sale agreement and all the documentation is received such as the rates clearance certificate, transfer documents, original title deeds.
6. The seller then has to pay the Capital Gains Tax (CGT) which is currently 5% on the profit (unless it has been your primary residence for the last 3 or more years) after which the buyer pays the stamp duty (2% outside of municipalities or 4% within or 1% upon transfer of shares of a company). Please bear in mind that Diani, as of January 2020, is currently on 2% however it will be soon changing into a municipality which means the stamp duty will increase to 4%.
7. The transfer documents are then sent to the respective government agencies for the transfer. Once the buyer’s lawyer receives the new title deed, the sellers lawyer will release the monies to the seller.
Documents needed from Seller: Title Deed; ID; copy of PIN; Rates Clearance Certificate; Address and contacts; Rent receipt if leasehold property. Other documents will be organized by your lawyer
Documents needed from Buyer: Passport/ID; copy of PIN; Address and contacts. (If you are a foreigner and do not have a PIN then you can apply for one after the sale agreement is signed).