CONFUSED BETWEEN FREEHELD & LEASEHELD LAND? HERE’S WHAT YOU NEED TO KNOW BEFORE BUYING PROPERTY

People often express an interest in land, be it for residential, industrial or commercial use.

A large percentage of people seeking land however, end up with unsuitable purchases for the projects they had in mind due to their misunderstanding of the various categories of land and the tenure system applied in Kenya. It’s imperative to understand the types of land ownership available especially if one intends to purchase land. Essentially, property in Kenya can be acquired on either freehold or leasehold basis.

Freehold Property

Known as ‘fee simple’ or ‘absolute proprietorship’, this is the greatest interest one can acquire on land as it gives the holder absolute ownership of the land for life. If you purchase a freehold property, the title will give the owner proprietorship over the home, land it’s built on and, ultimately awards the owner the right to live there for as long as he/she pleases. Additionally, this means that an estate may be inherited by descendants succeeding the owner for as long as the family lineage exists.

A freehold lease generally has no restrictions to the type of use or occupancy. This means that you can make modifications to the property, within restrictions of the law. However, there are conditional freeholds that restrict the use of the land for example ranching or agriculture only.

Leasehold Property

Unlike freehold properties, leasehold land is granted for a fixed term and is subject to payment of a fee or rent to the grantor. Leases are granted by the Government for public land, local authority for trust land and individuals with freeholds. The maximum terms of government leases are 999 years for agricultural land and 99 years for urban plots, respectively, or a period otherwise stated in the title document.

When purchasing such properties, it is important to consider the term of the lease and the various conditions under which a proprietor holds it. On expiry of a leasehold term, the property reverts to the grantor. Proprietors of leasehold titles should ensure that they adhere to the conditions under which the land is held and apply for renewal or extension of the lease if he/she wants to re-develop the property and the remaining lease period is not adequate to recoup the investments.

If you buy a leasehold property you are actually buying the rights to live on the property for a set period of time. You won’t actually own the property, or the grounds it is situated on.

It is important that anybody considering purchasing land is aware of the type of land tenure they are about to acquire and the conditions under which the land is held. Some financiers will not accept titles for land with a leasehold term below a certain number of years as security. The issue of the various tenures held in land can be ascertained by engaging qualified professionals in land acquisition such as Zada Consult.

To get more information on land acquisition or transaction contact us on +254 717 099 911 or email us on info@zadaconsult.com

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