Buying land is a big deal. It is the single most important asset you will own, and it’s not something you should take lightly.
Many Kenyans out there are looking at buying land but do not realize that there are many hidden costs associated with it. Don’t be blinded by them and make sure you know everything before making your purchase.
Ensure these 10 hidden costs are included in the purchase price of the land you are buying beforehand;
- Stamp Duty
This is tax that the government charges on transfer properties.
It is 2% of the land valuation for property in urban areas and 4% of land valuation for property in rural areas.
- Valuation cost
This is the fee paid to analyse the value of the property for purposes of tax as stamp duty is paid as a percentage of the valuation.
The government has its own valuers and they charge Ksh 1,000 for Municipal plots and Ksh 500 for plots in other urban centers.
Though private valuers are efficient, they charge a minimum of Ksh 15,000 for valuation.
- Title deed search
A title deed is proof of ownership of land.
To perform a title deed search , you will have to part with KSh 500 but if you enlist a lawyer it will cost you more.
You can perform a title deed search at ministry of lands offices in your county or visit any of their desks at Huduma centres country wide.
- Legal fees
This is money payable to a lawyer to draw up the sale agreement and do research to check and alleviate the risk involved in purchasing the property.
According to the advocates remuneration order ,the minimum fee that a lawyer should charge in transfer of property is Ksh 35,000. But this is not cast in stone and you can negotiate with the lawyer as it depends with the scope of work given to him.
- Consent for transfer
This is an irrevocable written permission by the owner of the land or house.
This is given by the land control board in the Ministry of lands in the county you are purchasing land in. It will cost you an average of Ksh 1000 but if you use a lawyer it will cost you more.
- Land registry registration fees
This is fee used to search and register property in the land registry.
The registration fee is Ksh 500 while search fee is Ksh 1,000.
- Land rates
Find out if the land you are purchasing is freehold or leasehold.
If a property is lease hold, find out from the local county government if there are any accumulated rates that have not been paid over the years as you will be liable for them.
- Plot Deposit
Most land sellers require you to pay a deposit upfront to show your commitment.
Ensure the deposit is part of the overall payment of purchase of the land and should be clearly captured in the sale agreement.
- Value addition
Ensure that all value added services such as borehole, fencing, electricity and road maintenance are captured in detail in the sale agreement and are included in the price so as there are no unpleasant surprises.
Ensure all transport and miscellaneous expenses incurred to view the property are included in the final purchase price.