Foreign Citizens, Investors Left in Limbo: Are Property Rights Under Threat in Kenya?

Foreign Citizens, Investors Left in Limbo: Are Property Rights Under Threat in Kenya?

Andrew Franklin, a U.S. citizen in Kenya, is a frustrated man; the culmination of trying to untangle government bureaucratic red tape for the last three years. It is a process that threatens to leave him homeless.

Since 2010, Franklin has been frequenting the Kenya government and U.S. Embassy offices as well as private law firms following up the status of his property in the Nairobi suburb of Lavington.

The promulgation of Kenya’s new Constitution in August 2010 led to the government revoking all freehold titles held by non-citizens, a move that affected the New Yorker who has called Nairobi home since 1991.

The plan was to have the government set up the National Land Commission (NLC) that would request foreigners owning parcels of land to submit copies of their documents proving ownership and thereafter review them and issue new titles.

Laws establishing the NLC were enacted in 2012 and only began working on the foreign ownership issue in 2013. Ever since, Franklin has been frantically submitting documents but he is yet to make any headway on the status of his property.

“I can state without any contradiction that three political appointees have ignored my requests for assistance whether in writing or face to face. U.S. Government employees at the U.S. Embassy have inexplicably failed to acknowledge my legitimate concerns regarding the arbitrary and discriminatory revocation of my legally acquired freehold interest in my home,” Franklin wrote in a letter to embassy officials.

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He says that he is in a state of limbo because no one has replied to his emails, letters, phone calls and whenever he meets any of the officials in person, they literally avoid him.

In the absence of a way forward, Franklin’s land has become somewhat of an alligator property. Since land rates still have to be paid on it, he can’t unlock any value from the land. Furthermore, banks cannot lend on property without genuine title deeds — a hazard to investing in Kenya’s booming property market.

The slow pace of resolving the matter amidst a heating property market has posed an opportunity cost to Franklin. In 1994 he purchased the property for the equivalent of $73,000 but today the piece of land can fetch up to $1.15 million.

An ingredient in the fuel that has heated property prices in Nairobi suburbs to such high degrees was the revision of by-laws in the early 2000s, which allowed developers to put up apartments in areas that were once strictly controlled by resident associations.

Since then prices have skyrocketed, even by international standards.

The Wealth Report 2012 by Knight Frank and Citi Private Bank, a subsidiary of Citigroup, showed that property prices in Nairobi and the Coastal region increased by double-digits, earning the two first and second positions respectively of 71 cities surveyed globally.

Prices in the high-end areas of Nairobi, such as Lavington, where Franklin’s property is located, have been increasing in value by at least 20 percent year on year, beating most other asset classes.