Hidden Charges That Hike Land Prices in Nairobi ¶
Buying land in Nairobi can be a daunting task, especially for first-time buyers. While the price of the property is a significant factor, there are other charges that can add up quickly, making the overall cost of ownership higher than expected.
According to real estate professionals, most buyers encounter additional charges beyond the price of a house or land, known as transaction costs. These fees can amount to 10-15% of the property's cost, but naive buyers often end up paying more if not well advised.
One of the most common charges is the plot viewing fee, which can range from Ksh500 to Ksh2,000. This fee is non-refundable and is charged by the real estate agent overseeing the sale of the property.
"A majority of the real estate, ours too, do not charge but only oversee all the aforementioned charges which are normal and procedural in land dealings," said Moses Muriithi, CEO at Fanaka Real Estate.
Another significant charge is the lawyer's fee, which is guided by the Advocates Remuneration Act. The minimum amount to be paid to any lawyer undertaking such a process is Ksh35,000, but this fee varies with law firms and the value of the property being purchased.
"The lawyer's fee is guided by the law. One cannot overcharge or charge below the stipulated amount. The figure stands at Ksh35,000 but it varies depending on the value of the property," said Lawyer Ken Mugambi.
Other charges include the search fee, which is usually Ksh500, and the facilitation fee for meetings with the Land Control Board, which can range from Ksh1,000 to Ksh5,000.
After the transaction is complete, a duty fee is levied on all the transactions, which varies depending on different locations and the price of the property. In areas around Nairobi, Mombasa, Nakuru, Kisumu, Eldoret, and other urban areas, 4% is levied for land and property, while those in rural areas are levied a fee of 2% on the value of the acquired property.
Additionally, there is also capital gains tax, which is required to be paid strictly through the iTax system. This is usually charged at 5% of the net gain value.
Other charges include the registration fee, which is roughly around Ksh500 to Ksh1,000, and the transfer of consent fee, which is Ksh1,000. There is also the valuation fee, which is Ksh1,000 for plots within the municipal council administrative unit and Ksh500 for those in urban centers.
Finally, there are utility fees, which can include water, electricity, and garbage collection, as well as security fees and road maintenance fees in some areas.
"In some areas, like here in Katani, Machakos county, one is expected to pay security fees and even for road maintenance. The prices vary, like for security each house is supposed to pay close to Ksh300 monthly while for road maintenance, each household is expected to pay Ksh4,000 annually," said an official of Shangilia residents association based in Katani.
