The Ministry of Lands Raises Stamp Duty on Land Transfers

By way of a letter dated 5 April 2024, the Principal Secretary of the Ministry of Lands, Public Works Housing and Urban Development directed all Land Registrars to charge, with immediate effect, stamp duty at the rate of 4% for the transfer of land, houses and apartments within gazetted towns and municipalities under the Stamp Duty Act. In effect, this increase will double the amount of stamp duty payable by purchasers in the affected areas which was previously 2% of the property value.

The directive came after the Council of Governors issued a letter dated 4 April 2024 listing the gazette areas affected by the increase in stamp duty, including Diani, Kiambu, Kitengela, Kajiado, Kilifi, Kwale, Lamu, Limuru, Naivasha, Nanyuki, Narok, Ngong, Machakos, Malindi, Mavoko, Mtwapa, Watamu, among others included in the complete list of the gazetted areas further below.

It was further indicated that the Land Registrars shall be held personally liable for failure to implement the directive and will be surcharged to the extent of the lost revenue. The consequence is that registration of transfers for properties located within the gazetted towns and municipalities will only be effected subject to the payment of stamp duty at the rate of 4%.

The Local Government Act grants power to the Minister (Cabinet Secretary) to establish any area to be or to cease to be a municipality, county, or township as well as to define its borders through publications in the Kenya Gazette and any one newspaper circulating in the affected area. This means that the areas in which stamp duty will be charged at 4% for the transfer of land may vary in future.

As such, it is prudent that purchasers with ongoing transactions in the gazetted towns and municipalities ensure adherence to this directive.

This alert serves the purpose of general guidance and is not intended to constitute specific legal advice. For legal advice concerning this alert, please contact our Partner at Harpreet.Ubhi@CMS-DI.com

Contributors*
Lillian Kiswili – Principal Associate