The Sale Agreement and the Transactional Costs involved in Transfer of Property

1.0 Sale Agreement and Deposit
Once the search has been conducted, the Vendors advocates prepare the sale agreement. Upon execution by both parties, the agreed deposit is paid by the purchaser through their advocate to the seller’s advocate account. Standard sale transactions in Kenya take 90 days and the standard deposit is 10%.

2.0 Property transactional costs

Buyers will incur certain transactional costs when buying either residential or commercial property in Kenya.

          i.            Stamp Duty/Land Tax: This levy is centered on the property value and the State relies on the amount returned by the Government Valuer or the purchase price agreed upon, whichever is higher.

            o     4% for land/property within a municipality

            o     2% for agricultural land or property outside a municipality

            o     1% if a property is registered as a company and transfer is by way of shares rather than title Legal fees:

Each party pays for their own legal fees based on a percentage of the purchase price on a scale stipulated in the Advocates Remuneration Amendment Order, 2014. The only exception which appears to be a common practice, is where buyers are required to pay legal fees for both parties when buying an apartment. The argument for this is based on the fact that the seller’s lawyer is the one who does registration for all the leases on behalf of the buyer.

Commercial properties attract VAT and the current prevailing rate is 16% of the purchase price.

         ii.            Agency fees: The agent is paid by the party who instructs them; either by the seller who instructs the agent to market their property or the buyer who instructs the agent for a property acquisition. The fee is on a scale capped at a maximum of 3% of the property’s value.

        iii.            Registration and disbursement fees: Buyers are generally responsible for the cost of registration of titles in their name(s) together with other disbursement costs as may be advised by the seller’s advocate.