PROHIBITED LAND CATEGORIES FOR FOREIGNERS IN KENYA

(Property Law: series 5)

As established by Article 65(1) of the Constitution and reiterated in Section 107(3) of the Land Registration Act, non-citizens are strictly limited to holding land on a leasehold basis for a maximum period of 99 years. This fundamental limitation means that perpetual ownership, as enjoyed by citizens through freehold titles, is not available to non-citizens. While broad ownership is permitted under leasehold, specific categories of land have stricter limitations for non-citizens.

1. Agricultural Land

The Land Control Act (Cap 302) strictly prohibits direct ownership of agricultural land by non-citizens. Any transaction involving agricultural land with a non-citizen, such as sale, transfer, lease, or charge, is void unless specific consent is obtained from the Land Control Board. This restriction aims to protect Kenya’s agricultural sector and ensure land availability for local use. Despite the general prohibition, limited exceptions exist for agricultural land ownership:

1. A non-citizen may apply for an exemption from the President under Section 24 of the Land Control Act. These exemptions are discretionary and, if approved, are published in the Kenya Gazette.  
2. Indirect ownership is possible through holding shares in a public company that owns agricultural land. This is often utilized by foreign investors to participate in large-scale agricultural projects.  

Even with the prohibition on direct ownership, non-citizens can lease agricultural land for large-scale agricultural investment, such as horticulture and floriculture, provided they follow specific legal guidelines and obtain approval from the National Land Commission.  

• Beachfront and Border Land (Controlled Land)

Section 12A of the Land Act (introduced by Section 47 of the Land Laws (Amendment) Act, 2016) required Cabinet Secretary approval for transactions involving land within 25 kilometers of the inland national boundary or within the first and second row from the high-water mark of the Indian Ocean. This provision aimed to control land in strategically sensitive areas.  

• Land Ownership Limits

Outside Special Economic Zones (SEZs), foreigners are generally limited to owning no more than 100 acres. This restriction is intended to prevent excessive land speculation and ensure that sufficient land remains available for local use and development. This approach to prohibited and restricted land categories reflects a complex balancing act between protecting national resources and attracting foreign investment for economic development. While Kenya is protective of its agricultural land and historically sensitive areas, it also seeks to facilitate structured foreign capital inflow into key sectors.

• Indirect Ownership and Investment Opportunities

Beyond direct leasehold, non-citizens can explore various avenues for land-related investments in Kenya such as

1. Corporate Ownership

A common method for non-citizens to hold land is through a body corporate. However, under Article 65(3)(a) of the Constitution, a body corporate is regarded as a citizen only if it is wholly owned by one or more citizens. If a company has non-citizen shareholders, it is generally deemed a non-citizen for land ownership purposes and is thus restricted to leasehold tenure not exceeding 99 years. This means a private company with foreign shareholders cannot hold freehold interest in land. This structure is particularly relevant for agricultural land, where foreigners can indirectly own such land by holding shares in a company that owns it.  

1. Trusts

The Constitution prohibits non-citizens from holding freehold property under a trust. Property held in trust is regarded as being held by a citizen only if all the beneficial interests of the trust are held by persons who are citizens.  

1. Special Economic Zones (SEZs)

Kenya’s government has established Special Economic Zones to attract foreign investment in sectors such as manufacturing, technology, and logistics. Foreigners can lease land within these SEZs, often for up to 99 years, and benefit from various incentives like tax breaks and access to infrastructure. Recent amendments to the Special Economic Zones Act under the Business Laws (Amendment) Act, 2024, clarify the powers of the Cabinet Secretary in declaring SEZs and expand the categories of persons to whom SEZ land or buildings may be leased, sub-leased, or sold by SEZ developers to include SEZ business service permit holders and residents.  

SEZs represent a strategic tool for targeted foreign investment. By offering a more streamlined regulatory environment and specific incentives, the government aims to channel foreign capital into priority sectors that contribute to industrialization, job creation, and economic diversification. This approach allows Kenya to attract significant foreign direct investment while maintaining broad control over its land resources outside these designated zones.

At A.O.WANGA ADVOCATES we are happy to assist you with all matters relating to property purchase and ownership.

For more information or assistance in land ownership in Kenya, contact us on info@aowangadvocates.com or +254794600191

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