Kenya's Property Ownership: Made Easy by the Sectional Properties Act 2020

For years, buying an apartment or office in Kenya involved navigating a complex legal maze. The process, governed by an outdated system of sub-leases and management companies, often left owners with indirect rights and significant bureaucratic hurdles. But that has all changed. The enactment of the Sectional Properties Act, 2020 (SPA 2020) has revolutionized property ownership in Kenya, ushering in an era of clarity, security, and alignment with global standards.¹

Whether you’re a current homeowner, a prospective buyer, or an international investor, this landmark legislation directly impacts you. Here’s what you need to know.

Table of Contents

The Old Way: A System of Sub-Leases and Complications

Before the SPA 2020, when you bought an apartment, you weren’t typically buying a direct title to the property. Instead, you were acquiring a long-term sub-lease from the developer, who held the main “mother title”.²

Your stake in the common areas—like parking lots, gardens, and lobbies—came from holding shares in a management company set up under the Companies Act.⁴ This structure was fraught with problems:

Complex Transactions: Selling your unit meant transferring both the sub-lease and your share in the management company, a cumbersome and often costly process.⁶
Financing Hurdles: Banks were often hesitant to lend against sub-leases, making it difficult for owners to use their property as collateral.⁸
Management Disputes: The management companies, often initially controlled by the developer, were a frequent source of conflict over service charges, financial transparency, and control of the property.¹⁰
Insecure Ownership: Your rights were ultimately tied to the developer’s mother title, creating a less secure form of ownership.¹²

The New Era: Direct Ownership and Clarity with the SPA 2020

The SPA 2020 dismantles the old system and replaces it with a modern, transparent framework known as “strata titles,” a practice common in many parts of the world.¹³ The change is fundamental: you now get direct and independent ownership of your unit.

Here is a clear comparison of the two systems:

Feature	Old Sub-Lease System	New SPA 2020 System
Title Document	Long-term sub-lease from a mother title ⁷	Direct Certificate of Title (freehold) or Certificate of Lease (leasehold) for each unit ¹⁴
Ownership Security	Indirect, dependent on the developer and management company ¹²	Direct, independent, and legally secure ownership of the unit ⁹
Management Body	Management company registered under the Companies Act ⁴	A “Corporation” automatically formed upon registration of the sectional plan, regulated by the SPA 2020 ⁶
Common Property	Reversionary interest held by the management company ⁵	Owned by all unit proprietors as “tenants in common” in proportion to their unit factor ⁸
Financing	Difficult, often requiring developer/management consent ⁸	Simplified, as the individual title can be directly used as collateral ⁸
Transactions	Complex, involving transfer of lease and company shares ⁶	Streamlined, following standard land transfer procedures ⁷

Key Benefits for Owners and Investors

This new legal framework provides tangible advantages for anyone involved in the property market.

Rock-Solid Ownership Security: The single most important change is the issuance of an individual title (Certificate of Title or Certificate of Lease) for each unit.¹⁴ This is your proof of direct ownership, independent of the developer, giving you the same legal standing as someone who owns a standalone house.
Simplified Transactions and Increased Liquidity: Selling, transferring, or inheriting a sectional unit is now as straightforward as any other land transaction.⁷ This efficiency makes the market more liquid, allowing owners to exit their investments more easily.
Easier Access to Financing: With a clear, bankable title, owners can readily use their property as collateral to secure loans and other financing without needing consent from a developer or management entity.¹²
Greater Transparency and Developer Accountability: The Act introduces crucial protections for buyers. Developers are now prohibited from selling any units before the sectional plan is officially registered.⁶ They must also provide purchasers with a comprehensive set of documents, including bylaws and details of any existing encumbrances, preventing misrepresentation and hidden liabilities.⁹
Efficient and Owner-Controlled Management: Instead of a separate company, a “Corporation” is automatically formed by all the unit owners upon registration of the property.⁶ This body, governed by the SPA 2020, manages the common areas, ensuring that decisions are made by and for the owners themselves.

What About Existing Properties and Foreign Investors?

The law mandates that all properties previously sold under the old sub-lease system must be converted to the new sectional title framework.⁶ While the official deadline for this conversion has passed, creating some uncertainty, the process is ongoing. If you own a property under a sub-lease, it is crucial to engage with your developer or management company to initiate the conversion process.

For foreign investors, the SPA 2020 is a welcome development. It aligns Kenya’s property laws with familiar international standards, reducing perceived legal risks.⁷ However, it’s important to remember that under the Constitution of Kenya, non-citizens can only hold property on a leasehold basis for a maximum term of 99 years.²

The Bottom Line

The Sectional Properties Act, 2020 is more than just a legal update; it’s a fundamental reform that empowers property owners and strengthens Kenya’s real estate market. By providing clear titles, simplifying transactions, and enhancing transparency, the Act makes owning an apartment, maisonette, or office a more secure, valuable, and straightforward investment for everyone.

(Photo by Wambui on Unsplash)

Works cited

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