KENYA Trends and Developments Contributed by: Abdullahi Garane, Grace Mando, Elaine Murgor and Derrick Asalah, Garane & Somane Advocates
Off-Plan Property Transactions and Consumer Protection in Kenya Introduction Over the last decade, there has been a marked surge in real estate development across Nairobi and Kenya at large. The prospect of home ownership has become engrained as a matter of significant public discourse. This surge has been the result of co-ordinated efforts to respond to rapid urbanisation by expanding the housing supply. This transformation already manifests in the city landscape. If one takes a walk through Westlands, Kilimani, Lavington or the expanding suburbs in the outskirts of Nairobi, the scenery is the same: towering cranes and colourful billboards promising “The Future of Living”. For many, these billboards represent the ultimate Kenyan dream: owning a modern apartment at a massive discount before the first brick is even laid. This is the world of off-plan investing. The appeal of the off-plan model lies in its positioning as both a home-ownership pathway and an invest - ment opportunity. Buyers are typically able to secure units at prices often up to 20% below prevailing mar - ket rates, with flexible, phased payment structures that make entry more accessible. More importantly, developers frequently market these projects on the promise of capital appreciation, suggesting that by the time construction is complete, the property’s value will have risen beyond its initial purchase price. This cre - ates a perceived early-mover advantage, where those who commit before construction stand to benefit from both discounted entry and anticipated market gains. The implementation of off plan-type sales effectively deals with another issue specific to the Kenyan mar - ket: the demand for housing being correlated with the price of ready-made units. The biggest target mar - ket for these houses, the middle income earners, are not able to afford ready-made units, unless they have some form of financing from banks or other financing institutions. When looking at affordability in terms of pricing, the income level of the average Kenyan is a strong signifier of the uptake of off-plan investing. A payment model that allows for payment of a small deposit, then phased payments afterwards, is sure to have widespread appeal.
At the same time, this model is not without risk. Pur - chasing off-plan means committing funds towards a product that exists largely conceptually, only being anchored in architectural renderings and contrac - tual assurances. In addition, most developers utilise the money paid by prospective buyers to effectively finance the development itself. The Current Legal Landscape: What Protects Buyers Today? The Sectional Properties Act, 2020 – a transformative framework The most important legal development for buyers of apartments and other multi-unit developments is the Sectional Properties Act, 2020, read together with the Sectional Properties Regulations, 2021. These instruments represent a fundamental shift from the old regime under the repealed Sectional Properties Act, 1987 and the sublease system that previously dominated the market. Under the old system, developers retained significant long-term control through the head titles and man - agement companies they controlled, plans were often inconsistent and lacked proper geo-referencing, dis - closure to buyers was weak and there were no stand - ardised governance rules for common property. The 2020 Act and 2021 Regulations have corrected these deficiencies in several critical ways. • Section 4 of the Act, read with Rules 2, 8 and 9 of the Regulations, now requires every sectional plan to be properly prepared and geo-referenced, and to contain clear particulars identifying the units and common property. This replaces the previ - ous inconsistent and often unreliable architectural plans, which created uncertainty over boundaries and ownership. • Section 5 further strengthens the requirements for the content and form of sectional plans, ensuring greater clarity and legal certainty for buyers. Each buyer receives an individual certificate of lease (the title) supported by a geo-referenced sectional plan. This provides precise, survey-accurate boundaries for every unit, reducing boundary disputes and making the property easier to sell or mortgage in the future. The geo-referencing requirement brings
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