City Hall relaxes land titles rule in building plan approval

The Nairobi county government has announced plans to start recognising share certificates as genuine proof of land ownership in the city, offering relief to thousands of property owners without titles.

The decision is expected to unlock billions of shillings worth of investments in real estate, especially in the city’s sprawling Eastlands area where property ownership has lacked the backing of official land titles since independence in the 1960s.

“It is now more than 30 years and these people still do not have titles for their land,” said Tom Odongo, the Nairobi county executive committee member for Lands and Housing.

“Without titles, they have been unable to access development rights or even credit and can therefore not realise the full potential of their land.”

Allowing the property owners to use share certificates, said Mr Odongo, would help unlock the potential of such property as the county government and the Lands ministry explore ways of issuing official titles.

Recognition of share certificates as proof of bonafide land ownership should come as a big relief for those who acquired land through land-buying companies and Saccos but have yet to get titles.

City Hall now says such individuals will henceforth be required to present share certificates and a sworn affidavit from a director of the land-buying company that is holding the mother title deed to regularise ownership.

The list of individuals who stand to benefit from this plan includes those who purchased land in the Kasarani and Embakasi areas through 11 building societies in the 1970s. Some of the land-buying companies are known to have more than 6,000 members.

Mr Odongo, however, insisted that the landowners still have to meet all the set building standards, including public safety regulations as well as planning and environmental requirements to get City Hall’s stamp of approval.

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This means that those who have, for instance, built on road reserves or built flats of more than five floors without incorporating lifts could still fail to get approvals for their property.

To get their construction plans approved, land owners are currently required to present legal titles together with building plans to City Hall’s planning department – locking out thousands whose only claim to ownership has been share certificates.

Some land owners have consequently decided not to develop their land to avoid the huge losses that others have suffered in the past whenever the government decides to demolish irregularly built and unapproved structures.

The majority of the landowners have, however, thrown caution to the wind and erected structures that have only led to the mushrooming of unplanned estates in the city.

Besides inability to get their plans approved, the absence of share certificates has provided a fertile ground for unscrupulous brokers who have taken advantage of the situation to sell single pieces of land to multiple buyers.

“These individuals do genuinely own these pieces of land and most have unsuccessfully tried to obtain titles,” said Daniel Ojijo, the chairman of the Mentor Group, which owns real estate firms like Villacare and Homes Kenya.

Mr Ojijo said the decision to flex the law for such investors was welcome as it would encourage planned construction in areas that have only known chaos.

“It will also enable the county government to tap millions of shillings in revenue it has been missing,” he said.

Being on the wrong side of the law has not been the only impediment to Nairobi landowners wishing to develop their land. Lack of title deeds has also meant that they do not have one of the basic requirements to secure a bank loan — collateral.

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Habil Olaka, the Kenya Bankers Association chief executive, says that the county government’s plan for the targeted landowners will have to be made law before the lenders can accept share certificates as security.

“The county government should now amend the law in order to give these share certificates the validity they are seeking,” said Mr Olaka in an interview.

“Only then can banks get the comfort that by accepting land share certificates as collateral, they would have a legal recourse in case of default. If the declaration is not anchored in law, banks would be taking a risk.”

If the county government keeps its word thousands of land owners could finally be freed from years of endless court battles with the land-buying firms and run-ins with law enforcers.

Long-standing controversy

At the Embakasi Ranching Company, for instance, there has been a long-standing controversy involving alleged irregular allocation of 16,000 quarter-acre plots to individuals. Most still do not have title deeds.

Another 14,000-acre land in the same area is alleged to have been subdivided into thousands of pieces and sold to members, only for the new owners to be told that they were squatting on government land.

The plots, valued at billions of shillings, have over the years been surveyed and sold to members of the land-buying firm that former area MP Muhuri Muchiri founded in 1975.

A similar controversy is raging in Kahawa West where Kamuthi Housing Co-operative claims ownership of 415 acres but City Hall insists it bought 176.5 acres. It is estimated that only 500 of the co-operative’s 6,000 members have title deeds.

In October last year, City Hall started engaging the land-buying companies in the two areas with a view to regularising land ownership in the area. The process is expected to end mid this year.

City Hall expects to increase its land rates collections by at least Sh50 million upon completion of the exercise by bringing to the tax net a huge portion of properties whose owners do not pay land rates.

“Nairobi is estimated to have more than 300,000 registered properties but by July, 2013, the number of ratable properties stood at a paltry 124,000, leaving out more than 170,000,” Mr Odongo said.