March 20, 2019 In Real Estate Law

Legal hurdles hindering provision of housing

The Constitution is proving to be a double-edged sword with regard to real estate development. As Kenyans become more aware of their rights, litigation has become the order of the day whenever the Government and other industry players intend to put up residential homes.

Housing Minister Soita Shitanda has on several forums decried the amount of time spent in litigation brought about by, among other things, grabbers of public land who also “use their rights” under the Constitution to fight the Government in court. He says unnamed persons have been responsible for grabbing government land earmarked for housing schemes.

“Prime properties in the ministry’s inventory somehow turn out to be already grabbed land by connected individuals. Therefore, much of the time that would otherwise be used to develop the property is used fighting the grabbers in court,” Shitanda said while commissioning the Sh816 million National Housing Commission housing project in Kileleshwa.

A classic example is the Housing ministry’s prime property in Mlolongo, which should measure at least 250 acres, but according to current documents in the ministry, only 50 acres are remaining. This forces the ministry to spend time and resources in legal processes instead of providing affordable housing to Kenyans.

The country faces a huge housing deficit where only 35,000 units are allegedly constructed against an annual requirement of 150,000.

While some of the legal obstacles can be foreseen and overcome, some surface as soon as an earmarked project commences. To prevent such conflicts, developers intending to put up houses should do thorough checks before commencing any transactions.

Dubious means

Daniel Rono, Maestro Properties Managing Director, urges developers to step up their inspection prior to committing cash to any project, as there may be some unseen legal issues that may not be unearthed through a normal search at the Ministry of Lands.

“It is not enough to just do a search at the Ministry of Lands before starting land transactions. One should go further and ascertain what that parcel of land was previously earmarked for. A search will only tell you who the current owner is. He may have obtained the land through dubious means,” says Rono.

Three years ago, Rono suffered heavy financial losses for obtaining a piece of land that, unknown to him, harboured squatters.

“I had paid 50 per cent of the required Sh22 million only to find that the land we had purchased had squatters. The seller had physically shown me an adjacent piece of land only for the surveyor to pinpoint the beacons for the proper piece that had squatters,” laments Rono.

Rono says it is important to involve the Planning Department at the Ministry of Lands, the City Council and the Survey of Kenya where one can get a detailed map of the area.

In other instances, it pays to check with the City Council since zoning regulations do not allow certain developments in some areas. For example, one cannot put up apartments or a building that is more than two floors in some parts of the city.

“It would be a loss if one borrowed money intending to put up apartments only to learn later that such a venture would not materialise,” warns Rono. However, some government departments have been responsible for the increasing litigation in the real property sector.

For example, developers have queried the rationale behind a developer paying land rates in Mavoko, Machakos County while obtaining a title deed in Nairobi County.

Many have also questioned the slow pace of registering property at the Ministry of Lands. It takes almost six months for a buyer to register a home, which greatly affects the developer’s profits yet the owner cannot occupy the house.

Land adjudication

Nevertheless, majority of Kenyans who get raw deals in land transactions are those who bypass legal representation, feeling that such a process is cumbersome.

According to Mumbi Mionki-Swao, a partner in Mumbi Mionki & Company Advocates, anyone wishing to undertake land transactions should get the services of a lawyer to avoid legal problems later.

“Transacting through an advocate will reveal if a piece of land has encumbrances such as a bank charge. Such land cannot be transferred before the bank gives a written consent,” she says.

She says the services of a lawyer are needed since currently, there are several Acts of Parliament that affect land adjudication, creating a host of complex issues that the ordinary person may not be aware of.

Mionki-Swao says the one per cent fee that a lawyer asks for is a small price compared to the costly consequences of a fraudulent deal.

Parliament is currently debating the Land Bill, Land Registration Bill and the National Land Commission Bill that are expected to overhaul land administration.

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