Buying and selling costs of real estate transactions in Kenya

Unsurprisingly, there are various transactions involved in buying and selling property, which generate fees and taxes. In Kenya, you incur charges from the moment you start looking for feasible investment companies.

While some costs are set, such as registration and required search fees, many costs associated with buying and selling real estate in Kenya are highly variable and are based on:

• The type of real estate

• property location

• Commissions and fees charged and earned by the various professionals (also often based on the type and location of the property)

• The type of transactions

• Documents you want or need

The estimated sum for round-trip transactions can range between 4.5% and 6.8% of the sale/purchase price of the property.

Real estate agent fees

• Search Fees – Fees vary depending on property type, size and cost with an urban apartment in an upscale neighborhood costing up to Ksh5,000

• Viewing Fees: Varies between estate agents, but usually ranges from Kshs500-1000 for residential houses and over Kshs5,000 for commercial properties.

• Listing Fees: Varies based on property size and location and owners pay as low as 2% of property value

• Agent commission (buyer and seller): 1.25% of the sale price

Property Requirements Search Fees

• Prerequisite Search Fee: Ksh500

• Costs of obtaining requirements completion documents (seller): Kshs500

registration costs

• Entry Fee: Ksh500

• Bank Check Fee: Kshs600

• Land Rental Settlement Certificate: Kshs 7,500

stamp duty

Stamp duties are taxes linked to documents and transactions for the sale of real estate. It is usually based on the sale price of the property.

• Duly signed sales agreement: Kshs200 per original copy and Kshs20 for each copy

• Transfer of real estate (real estate within municipalities): 4% flat rate

• Farm transmission (outside municipalities): 2% flat rate

• Mortgage: 0.1% of the mortgage amount

• Property leased for less than 3 years: 1% flat rate

• Property leased for a period of 3 years: 2% stamp duty flat rate

Taxes

• Income tax (non-residents): 30% of gross rental income

• Income tax (foreign companies): 37.50% single rate

• Annual Property Tax – Varies by location and property value, but is typically 1% of property value

• Property Tax – Varies depending on the location of the land and is most expensive in major cities, such as Nairobi, with rates as high as 8%.

Legal and Mortgage Fees

• Legal charges related to taking out a mortgage

  • It depends on the size of the mortgage you take out (higher mortgages mean higher fees), but mostly the rates are between 0.5 and 1.5% of the property value.
• Homeowners insurance: Varies based on length of loan repayment and lender
• Mortgage life policy: charged to 0.3% and 0.6% of the mortgage loan per year
• Mortgage Negotiation Fees – Although it varies, most lenders ask for 1% of the mortgage amount
• Mortgage indemnity insurance – often 5-10% of property value
• Legal fees related to the lawyer supervising the sale process: 1.5%

Other Important Costs

• Survey Fees: Ksh 5,000 inquiry fee.

  • Survey fees are determined by the survey work performed.
• Valuation Charges: Usually Kshs5,000 consultation fee
  

  • However, the actual appraisal rate depends on the value of the property. For example, valuation charges for urban properties valued at Ksh10 million means Ksh40,000
• Residence Permit Fees: Accompanied by non-refundable processing fees and fees vary depending on the type of permit you need. For example:

1. Class D- Kshs200,000 per year with 10,000 non-refundable fees

2. Class I: Kshs 5,000 with a non-refundable fee of Kshs 1,000

3. Class A- Kshs250,000 and 10,000 non-refundable etc.

Business setup costs: Depends on the type and size of the business and its location

Utility reconnection fees include

• Electricity deposit fees: standard Ksh2,500

• Water deposit fees: standard Ksh1,000