Land rent and rates

Suits have been filed contesting the slapping of land rates to freehold tenure properties. Due to widespread misunderstanding between land rent and land rates, some of these will be needlessly lost. Land rents are tenure specific, and are payable to landlords for land they may have leased. Therefore, where one has leased land from either the county or national governments, they are eligible to pay annual rents to these governments.

On the other hand, land rates are jurisdiction specific, and are payable for leasehold and freehold tenure land within a defined and rateable jurisdiction. They are charged to support service provision therein. It’s however important to take note that the new National Rating Act, which received presidential assent in December last year, has introduced a fundamental exemption. The Act, which has been undergoing formulation for quite a while, provides a standardized framework upon which county governments may assess and impose rates on land and buildings in Kenya.

National Rating Act

It repeals the previous Rating Act and the Valuation for Rating Act. It establishes the office of a Chief Government Valuer to oversee valuation processes and provide advisory services countrywide. Also established is a National Rating Tribunal charged with resolving disputes related to property valuation and rating. Default on payment of rates will attract punitive sanctions.

Of importance to many proprietors is that this Act categorically provides that it shall apply to all rateable properties within the respective counties except freehold agricultural land. It further provides that the Cabinet Secretary shall make regulations on properties exempt from the payment of rates. Put simply, the new law exempts owners of freehold land designated as agricultural land from paying land rates. This provision, which wasn’t on the original bill, may have been introduced owing to countrywide pressure from owners of freehold land who have strongly opposed proposals to pay land rates for their land. While a welcome relief to targeted beneficiaries, the exemption opens a wide doctrinal debate since such beneficiaries will also be expected to receive services provided from land rates paid by other landowners.

Public purpose land

The exemption however implies that proprietors to freehold land that has been converted to residential, commercial and other non-agricultural uses, will have to pay land rates. These will be mainly landowners in urban areas, and those in the urbanized swathes of Counties such as Machakos, Kajiado and Kiambu. Just like the previous law, the new law excludes land exclusively used for public purposes from rating. This includes land under religious worship, cemeteries, crematoria, burial and cremation grounds. Land holding public health facilities, educational institutions and libraries is also exempt. Similarly, land holding public dams, wayleaves, museums, national monuments and land used for public outdoor events is exempt. However, this exemption isn’t applicable to public land used for profit-making or residential purposes.

Counties that had formulated their rating laws will be expected to review them to align accordingly, while those that hadn’t are now well guided.

Dated: 16th January, 2025