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What made news in the property sector in 2015

REAL ESTATE
By Mkala Mwaghesha | January 1st 2016
Swahilli houses surround section of the Waitiki land at Likoni, South Coast in Mombasa County. (Photo: Maarufu Mohamed)

As 2015 comes to a close, MKALA MWAGHESHA looks back at some of the major events that shaped the real estate sector in the year, and their implications Capital Gains Tax

The government re-introduced the Capital Gains Tax, levied at five per cent, on January 1. Most players had opposed the tax, saying it would lead to an increase in property prices.

The tax is charged on the profit realised from the sale of a property that was purchased at a lower price and is paid together with stamp duty during transfer of the property.

In June, The National Treasury lifted the tax on stocks and shares but continues levying it on property despite concerns raised by various players on the negative impact it is likely to have on the real estate sector.

First Real Estate Investment Trust (Reit)

Kenya welcomed its first Real Estate Investment Trust in October, joining the few African countries that include South Africa, Ghana and Nigeria, which have introduced the investment vehicle into their property markets.

Reits allow firms to list properties on the Nairobi Securities Exchange, thereby making it possible even for small investors to own property by buying shares of the listed piece of real estate.

Kenya’s first Reit launched in October was sponsored by Stanlib Ltd and is known as Fahari I-Reit. The initial public offering for the Reit ran for about one month and raised Sh3.6 billion, which was less than the Sh12 billion, but Sh1 billion higher than the minimum threshold. The money will be used to acquire three properties in Nairobi, including Greenspan Mall in Donholm.

Charity Ngilu suspension

After an eventful 2014 that saw the combative Lands Cabinet Secretary Ardhi Houses offices in Nairobi to clean up lands registry, Ngilu would be shocked in March year when she was among government officials were suspended over corruption claims.

Though she still maintains her innocence, the seasoned politician who had been embroiled in turf wars with the National Land Commission chairman Muhammad, was arraigned in court over corruption allegations that touched on the Karen land saga.

She was accused of obstructing investigations into the saga. She was later dropped from the Cabinet in the November reshuffle.

President freezes registration of land-buying companies

President Uhuru Kenyatta in September froze registration of land buying companies as part of efforts by the government to solve problems bedevilling such forms. The freeze took effect immediately, with the president saying it would only be lifted once MPs pass laws to regulate the conduct of such firms.

He said land-buying companies that were already registered should also clear with the Ministry of Lands before conducting any business as well as show where the land they are buying is located, the directors involved and a clear succession plan for the firms, he added.

Interestingly, the president made the announcement at Kihiu Mwiri scheme in Gatanga, Murang’a County, after issuing title deeds to shareholders of the controversial land buying firm.

Eight directors of Kihiu Mwiri firm have been killed in mysterious circumstances related a dispute over land allocation to shareholders. Others have gone missing.

Kihiu Mwiri directors arrested

In September, again, the Director of Criminal Investigations ordered all current and former directors of the controversial Kihiu Mwiri land-buying company to attend a meeting at the CID headquarters in Kiambu Road. Sixteen of them were arrested and charged in court with murder.

They were arrested after two more directors were killed, bringing the number of Kihiu Mwiria officials murdered to ten in the last two years.

The Omnibus Bill

The then acting Lands Cabinet Secretary Fred Matiang’i published and vigorously defended the controversial Land Laws (Amendment) Bill 2015, which has fiercely been opposed by the Council of Governors and the National Land Commission (NLC).

According to the two bodies, no consultations were done by the ministry to ensure the bill complied with the new Constitution, terming it “retrogressive and unconstitutional”.

The bill, among other things, seeks to create a powerful land registrar with the powers to alter land records. It also seeks to eliminate the role of the NLC by giving the Cabinet Secretary for Land more powers.

These are among the changes spearheaded by the State targeting three land laws: the Land Registration Act 2012, the National Land Commission Act 2012 and the Land Act 2012.

Prof Jacob Kaimenyi appointed to the Lands docket as CS

Prof Jacob Kaimenyi, the combative Education Cabinet Secretary, was appointed to the Land, Housing and Urban Development docket in a Cabinet reshuffle in November that saw suspended Cabinet secretaries and principal secretaries dropped.

Prof Kaimenyi replaced Fred Matiangi, who had been acting as the Lands CS for months after the suspension of Charity Ngilu. He is expected to help find a solution for a ballooning housing deficit that is in the region of 250,000 units per year.

Waitiki land deal finalised

The government announced in November that it had finally reached an agreement with Evanson Waitiki, the owner of the controversial 930-acre Waitiki Farm in Likoni, Mombasa, on which thousands of squatters live.

President Uhuru Kenyatta announced that the government had agreed on a framework with Waitiki to solve the ownership dispute over the property, which the government plans to give to squatters who have lived there. Waitiki land has been a hotbed of tribal violence, squabbles and court cases.

The deal came after Waitiki set stringent conditions in February for the government to meet before he could surrender or sell the land for the settlement of squatters. He demanded Sh10 billion in compensation, even though government valuers put its value at Sh2.64 billion.

Court rules against NLC

The Supreme Court in November delivered a ruling that placed the power to register land and issue title deeds in the hand of the Minister for Lands and not the National Land Commission (NLC). The ruling dealt a blow to the NLC, which had been embroiled in battles with the ministry on who was mandated to issue title deeds.

The court, while stressing the need for the two bodies to cooperate and collaborate, also ruled that the NLC does not have the power to collect land taxes, but only to assess them as outlined in Article 67(2) of the Constitution.

The court intervened after the parties failed to reach a consensus as they had initially been advised by the High Court.

After the ruling, NLC wants the government to recall the proposed laws currently pending before Parliament and align them to the Supreme Court ruling.

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