A SIMPLIFIED PROPERTY GLOSSARY FOR 2024.Jan 26, 2024 Land
It’s 2024, so let’s get familiar with terms often used in land transactions, shall we? Also, let’s make this the year we finally shika hako kaploti if we haven’t already. As usual, Pro Property Solutions is the undisputed plug for the hottest properties in Kikuyu and its environs – like these fast-moving plots in Lusigetti – and this beautiful piece of Ngong’.
This is the difference between a property’s purchase and selling prices. Thanks to its finite nature, land appreciates every few years when valuation is done right, so investors can continually count on it for capital preservation.
Capital Gains Tax
This is a 15% final tax charged to the seller on the net sale price upon the property transfer. It is calculated after deductible expenses such as legal fees, stamp duty, land rent and rates.
In reference to succession, this is the property and possession of a deceased person.
Freehold Land Tenure
This land tenure gives the owner the right to use the property as they wish within its zoning limits. They own the land to perpetuity and will never be required to pay land rent for as long as they hold ownership. In Kenya, freehold titles are reserved for Kenyan citizens.
It involves buying a piece of land and parking your money while waiting for the value to appreciate to sell. It also happens when one buys one vast piece of land and subdivides it into smaller plots for sale.
Land Rent and Rates
Land rates are imposed on freehold and leasehold tenures by the county authority to cater to social amenities in the areas where said land is located.
Land rent is a fee charged on leasehold property at a rate predetermined by the lessor, in most cases, the government. Kenyans pay land rent to the Ministry of Land and Physical Planning. Both fees are charged annually, and failure to pay could result in penalties.
It refers to the categorization of property into various segments for various purposes. Land zones in Kenya include residential, commercial, industrial, agricultural, conservation, and mixed-up zones.
Leasehold Land Tenure
The lessor, in the Kenyan case, the government, grants the lessee – investor and current land occupier – the right to use the land for a stipulated period, typically 99 years. The lessee pays annual rent for this occupation and can renew the lease upon expiry.
This is property bought before any construction begins or has started but is incomplete. Developers will usually use the pre-construction layouts to sell their vision to investors who can tweak them to suit their needs.
This document sets out the terms of sale, from the names of the parties to the contract to the price and payment mode.
They are undeveloped properties ready for occupation and development as the new owner deems fit. They have ready titles and amenities already figured out for the expected type of development.
Stamp Duty on Land
Stamp duty is charged on various instruments, including land during transfers – with a few exemptions. Land within municipalities is charged 4% of the purchase price after valuation and 2% when located away from municipalities. Land sold to charitable organizations, transfers between spouses, transfers between a holding and subsidiary, and transfers between family members are exempt from stamp duty.
It is the distribution of a deceased person’s estate as per their will or the operation of the law.
Testate and Intestate Succession
Testate succession happens when the deceased leaves a valid will, with clear stipulations of how their estate will be distributed. Intestate succession occurs when the deceased does not leave behind a valid will, so the probate court determines how they will be succeeded.