Why rural land may not be a prudent buy

Real Estate

By Harold Ayodo

Some investors in real estate spend fortunes to acquire property that is not registered with the Ministry of Lands. The home or parcel of land may be well below the ever-soaring market rate, but cheap may turn out to be expensive with time.

It is for similar reasons that many of the middle class prefer to purchase chunks of land from rural owners, who they deem’ illiterate’.

Generally, majority of landowners in rural areas inherited from their forefathers, but lack title deeds as the property has not been adjudicated and registered by Government.

Legally, spending slightly more to purchase registered property that has a valid title deed has more advantages than disadvantages.

For instance, property owners have security of tenure and a right to indemnity from the Government, which registered the land.

Furthermore, commercial banks and other financial institutions prefer extending loans to clients with valid title deeds as security.

For your information, banks often perform official searches at the Ministry of Lands to prove validity of property offered as collateral.

On the other hand, investors can also easily secure capital from the moneylenders for development of their land.

Moreover, dealing in registered property reduces court cases over ownership, as the size and ownership of the land or home are conclusively established and determined.

In addition, a purchaser of property from a registered seller ensures full commercial confidence in the transaction protected by law.

For instance, property registered under the Registration of Titles Act (RTA) and the Government Lands Act (GLA) offers absolute proprietorship to owners.

Land fragmentation

Back to registration; it also prevents unreasonable and unnecessary sub-divisions or fragmentation of, especially, agricultural land.

Generally, fragmentation of land may lead to low production, thus hindering benefits of large economies of scale for agricultural reasons.

Therefore, prospective investors of such property require consent of the Land Control Board before any sale or sub-division.

Similarly, permission for planning, development and using land within urban areas is necessary, according to the Land Planning Act of 1968.

The law also protects subdivision of registered land in urban areas into partitions that would impact negatively on their proper use.

For the Government, registration makes it easy to identify property owners to levy tax on or rates on the same, as land transactions must be registered.

Unfortunately, registration of some trust lands across the 175 municipalities countrywide is incomplete, making it difficult for local authorities to levy rates.

The writer is an advocate of the High Court of Kenya

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