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Regulations on renewal and extension of land leases

30 June 2017
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On 15 June 2017, the Ministry of Lands lifted the ban on the renewal of land leases. The Cabinet Secretary at the Ministry of Lands had been directed by the Cabinet on 22 December 2016 to stop any renewal of leases pending the formulation of regulations in conjunction with the National Land Commission (the Commission). The Ministry of Lands issued guidelines to govern the process of renewing and extending leases by Gazette notice No. 5734, as shown below.

Notice to registered owners of leasehold land

The Commission will notify the lessees of the impending expiry of their leases at least five years prior to the expiration of the lease by registered mail.

The Commission shall publish the notification in two newspapers of countrywide circulation if the lessee does not respond to the notification within one year.

The Commission may undertake a physical verification of the land if the lessee fails to respond to the notifications above, with the aim of advising the lessee on the need to apply for extension and the consequences of not applying for extension before expiry of the term.

If the term of the lease had expired without prior notice to the lessee, the Commission will require the lessee or appointed administrator to apply for renewal of the lease and the same shall be received at the office of the Commission.

Process of lease extension

The application for renewal of lease shall be done by the lessees or appointed administrator and the same shall be received at the office of the Commission situated within the respective land registration unit for approval.

The application shall include a copy of the ID/Passport of the owner, letters of administration and confirmation of grant (if applicable), current official search (less than one month old), passport size photograph of owner or administrator and certificate of incorporation (if applicable).

Factors to be considered by the National and County Government when processing application for extension of lease

For citizens, the National or County government (the Government) may require:

  • in the case of a company, the names of the directors, their citizenship status and an official search from the companies registry showing the shares of each director;
  • land rates and land rent clearance certificates from the relevant authority;
  • information on whether the lease to be extended will be subject to any of the existing encumbrances;
  • compliance by the lessee with the terms of the lease to be extended; and
  • special conditions of the existing lease.

For large scale investments, the Government shall ensure that the extension is beneficial to the economy of the country and the investment is in accordance with the national development goals.

Notification of rejection of application to extend a lease

The Government will give lessees at least  three years notice where they do not intend to extend a lease. This can only be done where the Government intends to acquire the land for public purposes or the Government has proof that the lessee has not been complying with the conditions of terms of the existing lease.

Appeal

An aggrieved lessee, whose application for extension of lease has been declined by the government, may refer the matter to an independent appeals committee established by the Commission and whose mandate shall be to hear appeals arising from the Government’s decision not to extend a lease or the Commission’s decision not to renew an expired lease.

The appeals committee members shall consist of:

  • the Chairman National Land Commission;
  • the County Executive member in charge of Lands;
  • the County Commissioner;
  • a representative of Kenya Institution of planners (KIP);
  • a representative of Institution of Surveyors of Kenya(ISK);
  • a representative of the Law Society of Kenya ( LSK);
  • a representative of the Kenya Bankers Association;
  • a representative of the Kenya Private Sector Alliance (KEPSA); and
  • a member of the Land Control Board within the registration unit.

The appeals shall be held at the respective counties.

Our Observations

On the whole the guidelines are a good start in regulating the process of renewal and extension of leases.  This is an area that was previously not regulated which created uncertainty and disputes.  It is also a positive development that applications for extension of leases shall be received at the office of the Commission within the respective land registration unit as opposed to the previous position where applications were largely made in Nairobi and Mombasa.

It remains to be seen whether the Commission’s offices in these land registration units will have the capacity together with the mechanism in place to receive and process these applications. From our past experience with the lands registry, it usually takes a bit of time for the implementation of new regulations. 

We are also skeptical about the effectiveness of notifying lessees by registered mail about the expiry of their leases.  Leases coming up for expiry will have been granted 50 or more years prior to the expiry.  It is therefore unlikely that the Commission will have the current details of the current lessees that need to be notified regarding the expiry of their leases. The land is likely to have changed hands several times prior to the expiry of the lease.  We are of the opinion that the notices should also be published on the Commission’s website.

The Commission’s requirement that an application for renewal of a lease should be accompanied with a current official search is unnecessary noting that the Commission has access to the files relating to these properties which the applicant does not. The regulations also do not deal with what happens if the lessees cannot obtain a current search due to missing/misplaced files at the lands registry which is a common occurrence.  This is an area that is likely to frustrate applicants.

The guidelines apply to Kenyan citizens.  Their application to non-citizens is not clear since the guidelines only provide that they may apply to non-citizens.  It is important to have clear guidelines in respect of non-citizens as the greater discretion given to the Commission on this matter together with the lack of clarity is likely to be abused and will almost certainly reduce the attractiveness of land in Kenya as an investment to non-citizens.  Lenders may also need to consider the citizenship of a person when making a decision to take their land as collateral.

The guidelines have also made reference to large-scale investments whose review criteria is different from that of non-large-scale investments.  The term large-scale investments is not defined. This again creates unnecessary uncertainty in the process of renewal.  

The guidelines also seem to punish lessees whose terms have expired without prior notice of the Commission, since the conditions applicable to them are more onerous than those who apply before the term expires. The application for extension of term by persons whose leases have expired is required to be accompanied with the original lease.  This is an unreasonable requirement since an applicant for renewal is unlikely to have the original lease that was issued 50 or 99 years earlier.

In addition, from a reading of the guidelines, it would appear that negative comments (for whatever reason) from the offices consulted by the Commission could lead to a decline of an application for extension in cases where the applicant’s term has expired without prior notice.  This is not the case for applicants for a renewal who do so prior to the expiry.  For these applicants, the application can only be denied for the following reasons; (a) the Government needs the land for public purpose; and/or (b) it is proved that the lessee has not complied with terms and conditions of the existing lease.