Annual land levy on freehold land

Through the Land Laws (Amendment) (No 2) Bill of 2023, the Government intends to have owners of freehold land within urban or city areas pay an annual land levy on freehold property. Sitting right inside the plethora of amendments proposed through the Bill, this seemingly mundane clause is easy to miss, but yet has grave implications to the affected property owners. Section 51 of this Bill seeks to amend Section 54 of the Land Act by inserting a new section 54A with this new requirement. Members of Parliament must beware the implications of this provision to themselves, and Kenyans with freehold properties within urban or city boundaries. They must reject the proposal. This is why.

Ancestral land and basic livelihoods

According to the Urban Areas and Cities Act, an urban area means a municipality, town or market center. While only Nairobi, Mombasa, Kisumu and Nakuru at the moment enjoy city status, the wide bracket of municipalities, towns and market centers includes most of the comprehensively developed areas in Kenya, most of which are constituted by freehold properties derived from ancestral lands. A lot of Kenyans who own these freehold properties are unaware that they are within city or urban boundaries. Most owners to these properties struggle to maintain basic livelihoods, and would be hard pressed to afford the proposed annual tax. With the enactment of such a radical provision, MPs risk rattling and antagonizing this category of citizens. The probability of default on the payment of such an annual levy en masse is high, hence defeating its very purpose.

Proposed levy discriminatory

The proposed charge appears to undermine freehold land rights since it’s a tax on freehold land only. It’s discriminatory because it is not applied on all categories and interests on land. The holders of freehold land pay all other taxes including rates, stamp duty, capital gains tax, income tax, rental income tax, VAT just like the holders of leasehold interests. Any value gains arising from land transactions such as planning, development or provision of government services is already charged for through these taxes.

Annual rent not chargeable to freehold land

Holders of leasehold interest pay land rent to the Government because the Government is the owner of such land and they are tenants (lessees). They therefore pay for holding and using such land for the period of the lease. On the contrary, holders of freehold land are absolute owners in perpetuity and therefore cannot be charged rent in the name of an annual levy for their own land. They are not tenants; they aren't lessees of government. The levy cannot therefore be equated to rent as the proponents seem to insinuate in the Bill. The questions that come to the fore are; what is it that the government is charging for? Are the proponents punishing holders of freehold rights? Is the Government indirectly seeking to nationalize freehold land without compensating the rights holders?

Dated: 10th January, 2024

Ibrahim Mwathane is a licensed surveyor and consultant on land governance: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Dr Mwenda Makathimo is a land economist and an environmental policy expert: This e-mail address is being protected from spambots. You need JavaScript enabled to view it