Ban on land deals stifling property sector

By MKALA MWAGHESHA

Many investors have been betting big on the county governments, which came into force after the March 4, 2013 General Election. With the hope of having things like transactions and documentations localised, many investors welcomed the idea with open arms.

Many months later, however, it is emerging that county governments are in fact, delaying the growth of the real estate industry.

Between March 2013 and January this year, at least five counties have suspended land transactions in their jurisdictions. The suspensions do not augur well, coming at a time when counties are coming up with policies to plan and develop their areas, with real estate expected to play an important role.

Immediately after the General Election, Lamu Governor Issa Timamy fired the first salvo by ordering provincial administrators to stop illegal land allocations. Accusing the administrators of being behind shoddy land deals in a county that is on the verge of experiencing a massive growth through the multi-billion port project, Timamy warned them of prosecution.

In January, Home and Away got a circular sent to Kajiado County titled, “Suspension of Land Transaction in Kajiado County”, from the Department of Lands. Signed by Fred Swalah, DLMC secretary, the circular says the move was aimed at stopping land transactions in the county until further notice. It came into force on January 15 after consultations with the governor.

According to George Gacheru of Soil Merchants, there is a political angle to the suspension, with investors jittery about how the process has been carried out.

“You cannot just come out and send a circular ordering people not to sell their private properties,” says Gacheru. “The governor showed that he clearly does not understand the law because he is meddling in affairs of the central government by taking the roles of the land registrar, the county commissioner, the National Land Commission and the Ministry of Lands.”

The tense relationship between investors and the county government has led to court cases with the investors challenging the suspension.

“A circular is not a policy and our biggest problem is that there is no due process that has been followed,” says Gacheru.

According to him, a number of investors have had banks approve loans and deals brokered over the subdivided plots, with the suspension leading to stagnation of projects worth billions of shillings.

“The suspension has detrimental effects since land transactions constitute a large chunk of the county’s revenue. There is a feeling that there is a plan to reduce the number of non-locals who will become residents there,” Gacheru says.

Others hold a different view, however. “In the short-run, the bans are causing hiccups,” says Alex Muema, Director of Ndatani Enterprises Company Limited. “In the long-run, the bans are good as they will finally lead to better service delivery.”

“I cannot authoritatively speak on corruption, but there are people who pose as brokers or sellers making legitimate dealers lose credibility,” says Francis Mwangi of Horicon Engineering Solutions.

Fraud claims

In August last year, the Kajiado County Assembly passed a motion to suspend all land transactions after the Ethics and Anti-Corruption Commission rated the county as leading in fraudulent land transactions. The move came in order to control chaos and corruption in the county, which has been a real estate hotspot in the recent past.

“It was right for Kajiado (county) to come up with the proposals. There is a need to carry out the survey process and zone the county for development purposes,” says Muema of Ndatani, a land buying and selling company.

The motion came about over concerns on duplicity of title documents, corruption and irregular dealings. 

The motion recommended, among other things, enforcement of administrative directives, suspending all transactions and dealings in land while investigating all cases of irregular or double or more allocations of all parcels of land affected with a view to rectifying the situation and bringing those implicated to book.

“The biggest problem with Kajiado is that there is no zoning and the land parcels do not have the value they require. With better demarcation of public land, residential land and commercial land, true value of the properties will be achieved,” explained Muema, whose company also deals with land in Kajiado.

“As much as there is a ban, you can get your land certificates approved. Business is as usual,” says Muema.

With Kajiado laying blame on government officials for corruption, Kisumu County suspended six officials over the loss of more than Sh1.2 billion. Governor Jack Ranguma, acted after an audit report by the Transition Authority found the officers to have allegedly taken advantage of the transition period and attempted to sell more than 500 houses and council estates valued at more than Sh1.1 billion. 

Elgeyo Marakwet Governor Alex Tolgos, also stopped all land transactions in the county until the county land commission is put in place. According to him, the reckless selling of land by residents was not helping the county’s economy as it relies heavily on agriculture.

“Some people are selling land on flimsy grounds. A simple cold makes one sell land ostensibly to raise funds for medical bills,” said the governor, who also blamed chiefs for signing contracts allowing for the sale of land.

“While the law allows chiefs to arbitrate on land issues, they should not sign sale agreements as they are not lawyers and therefore, cannot give proper legal advice,” the governor said.

Kiambu case

Another county making policies to protect agricultural land was Kiambu. The county suspended change of user approvals in an attempt to safeguard coffee farming.

With private developers turning thousands of acres of coffee and tea plantations into upmarket gated community housing projects, Governor William Kabogo issued a circular to land offices to stop change of user.

In the circular, the suspension was to be followed by zoning and marking of agricultural and commercial land. This means landowners will no longer be at liberty to change their tea and coffee estates into real estate as has been happening.

“Kiambu had a valid reason, considering the fertility of the land, even though the land is prime for other commercial purposes,” says Mwangi. “The land was being divided into smaller plots and leased or sold due to speculation on real estate boom.”

Mwangi is categorical that the effects of the ban are being felt, with some structural work having stopped. “We have been affected a lot. It is a cause of concern if more counties would implement bans and suspensions,” he says.

Muema explains that in the case of Kajiado, developers are lobbying the county government to let transactions continue.

Another county, Kirinyaga, formed a committee of ten people to investigate land deals. The committee, formed by Kirinyaga Governor Joseph Ndathi, was tasked with establishing why land deals have led to lack of space for the expansion of towns.

Allegedly, some residents whose land was taken over by local authorities colluded with the officers and continue to hold the title deeds.

A number of organisations have consistently challenged the bans, with the Law Society of Kenya (LSK) having written a letter in September last year, to the National Land Commission (NLC), asking the body to rescind the bans.

LSK CEO Apollo Mboya wrote the letter, dated September 12, 2013, which was copied to Kajiado Governor Richard Parsitan, LSK Chairman Eric Mutua and LSK Environment, Natural Resources & Conveyancing Committee Convener Mbage Ng’ang’a. “The position of LSK is that the County Government of Kajiado has no constitutional mandate to issue this type of notice,” Mboya said in another forum.

According to LSK, such notices can only be issued by the NLC with valid reasons given. The LSK felt such bans would set a bad precedent by crippling property transactions countrywide. 

According to the Land Development and Governance Institute Chairman, Ibrahim Mwathane, it is time Kenyans took interest in how counties administer land.

“Professionals and investors have complained — they hadn’t seen this coming. Other counties may come up with caveats to land transactions within their jurisdictions too,” he wrote recently.

“The uncontrolled developments, change of user and land subdivisions, have totally undermined land-use planning. The main road corridors in these counties now look like commercial zones and the growth of urban centres in the two counties has run out of control. This needs to be managed. The Constitution gave counties the powers over planning and development. Land survey and mapping are county functions too,” he notes.

Mwathane says that much as registration was still the role of the central government, some functions are more localised and for counties to carry them out, was not out of order.