Hidden Land Transaction Cost when a 50 by 100 plot price in Kenya is being negotiated from Land buying companies in Kenya
When buying land in Kenya, most investors focus on the price and forget the undisclosed costs. These are other costs that may arise during the land transactions. Hidden costs can be major or minor but increase the cost of buying land altogether.
At Denvers, we focus on giving you valuable investment insights. This blog post will highlight some hidden costs in Kenya’s land-buying transactions. Let’s get started.
1. Stamp Duty Fee
This is the government tax fee imposed on the legal documents used to transfer properties or assets. This payment is made at designated banks, and it’s usually charged at a 2% -4% rate, depending on where the property is located. This payment goes to KRA from the land-selling company in case of a property transfer.
Any land buyer needs to find out if the stamp duty fee is included in the cost of the land.
2. Legal Fees
Legal fees cater to the legal services needed during a land transaction. According to the Kenyan Advocates Remuneration Act, the minimum amount you can pay a lawyer is 35,000. The legal fees go to preparing sale agreements and land transfer forms, among other legal documents. Budgeting for the legal fee is important, but first, ask the land seller if the overall land price covers it.
3. Registration Fees
The lands registry pays the registration fee for the title’s entry and printing. The fee is usually between $5 to $10, and it is another cost that you need to ask your seller if they have included it in the overall land price.
4. Rates and Rents
Rates and rents mostly apply to leasehold properties. The property’s registered owner pays the rates to the county government of the land’s location. Rent, on the other hand, is paid to the National government. If you are the land buyer, request the updated records of these payments for future safety in case of any queries.
5. Consents of Transfer
These are written and irrevocable permissions of the proprietor, relevant authority,manager, or other important individual who is interested, as required by land registration laws. Specific consents, such as consent to transfer from the lessor or Land Control Board Consent, may be necessary depending on the land tenure. Clearances may also be required. However, you should always factor in this cost in your budget.
6. Valuation Costs
The land valuation process is analyzing a property to determine its market value for tax calculation, leasing, or selling purposes. The land valuation costs vary depending on several factors, but luckily, some real estate companies cover the costs on behalf of their customers. Confirm if this cost is included or needs to be covered separately.
7. Plot Deposit
Most real estate companies in Kenya require a certain percentage of the purchasing price as the deposit for booking. Therefore, you must inquire about this arrangement and find out if the deposit will be part of the total cost. You don’t want to discover that it was a hidden cost in the future.
8. Tittle Deed Search
A title deed search is done to retrieve documents that show the history of a property or land. It also helps in determining the details and regulations of the same. If the land is in the lands registry, you can search online. However, there is also a manual option, and the fee is 500.
Purchasing a piece of land isn’t a walk in the park. It’s costly and demanding no matter where the land is. However, it is advisable not to make assumptions about the costs of land transactions. The above are hidden costs you should know when buying land. This will enable you not to carry unexpected financial burdens.
In most cases, land sellers include these costs in the price of the land, but it’s always good to ask to avoid unpleasant surprises. At Denver, we are committed to giving our clients comprehensive information regarding land investment.