KENYA Trends and Developments Contributed by: Lorna Mainnah, Joseph Omwenga, June Lomaria and Herbert Karanja, Dentons Hamilton Harrison & Mathews
for leasehold properties. This will not apply to freehold properties. • Land valuation for land rent payable – the Bills introduce a requirement that land be valued every ten years until the expiration of the term for purposes of determining the land rent payable for the subsequent period. The land rent payable will be charged at a per - centage of the unimproved value of the land assessed. • Full payment of land rent prior to registration of a charge – the Bills introduce a provision that the Registrar will not register a charge unless land rent is not owing, or the land is freehold. • Decentralisation of registry of documents, providing for the decentralisation of land registries for the registration of documents across the country as opposed to when such services were only available in Nairobi and Mombasa. • Land Control Board consents to foreigners, enabling consent to foreigners to carry out controlled transactions to be granted. As an example, controlled transactions are those involving agricultural land. Main Market Trends and Developments in the Real Estate Sector This section will cover new emerging trends in the real estate sector, the economic outlook and its impact on the real estate industry. Finance trends and access to credit Access to credit – and particularly the interest rates at which it can be accessed – by real estate developers and purchasers is a key factor in the growth of the real estate sector. The Monetary Policy Committee (MPC) of the Central Bank of Kenya (CBK) is responsible for setting the coun - try’s monetary policy, including its base lending rates.
In periods of accommodative monetary policies, including lower base lending rates, we expect an increase in real estate property sales, along with a rise in investments. Similarly, in times of monetary policy contraction, the desire to pur - chase real estate property decreases, leading to a corresponding decline in investment activity. The base lending rates are considered the main avenue by which monetary policy affects economic activity. In February 2024, the MPC revised the base lending rate upwards from 12.5% to 13.00% to curb inflation and support the Kenyan shilling. This was the highest rate in over ten years. Increased base lending rates lead to banks exer - cising risk-based loan pricing, where it offers borrowers higher interest rates. This locks out potential investors from accessing credit for financing real estate development or purchas - ing property. However, with the increasing stability and strengthening of the Kenyan shilling, as well as weaker inflation, the CBK is expected to ease monetary policy in the last quarter of 2024, and this could result in a reduction in base lending rates. The Nairobi County’s high-rise development proposal The Nairobi City County Government (the “Coun - ty”) has, with Sessional Paper No 1 of 2023 on Nairobi City County Development Control Policy, proposed to amend the zoning regulations to alter the maximum allowable building heights in different sections of the city. This includes raising the height limit from four floors to fifteen floors in residential zones such as Kilimani and Kileleshwa and potentially permitting structures
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