7 November 2012

Kenya: Art or Science? Policy-Making in the Real Estate Sector


We often read about certain laws or regulations having been passed and the people talking about them assume everyone knows it. Yet, few Kenyans are ever aware of the policy making process or even how it affects them and what recourse if any, is available.

Public policy is generally the principled guide to action taken by the administrative or executive arm of the government with regard to a class of issues in a manner consistent with law and institutional customs.

For instance, the constitution of Kenya 2010 is the foundation, which then gives birth to the National Land Policy, upon which legislation such as the Land Act 2012 is made.

Not many Kenyans are versed or informed in matters legal and we tend to shy away leaving it to our experts to interpret these provisions. Regrettably, it has happened that five different lawyers can produce five vastly disparate interpretations of the same law.

After the various land related bills were passed into law, sections of the financial services sector realised the folly of not being keen on the policy making process.

Parts of the new land laws - the Land Act, the Land Registration Act and the National Land Commission Act - now expose lenders to higher risks of litigation by clients.

For instance, where provisions for a charge (security for loan taken when acquiring land or a house) do not conform to some provisions of the new pieces of land legislation, a client has enough grounds to sue. Some financiers may at this point be forced to revisit agreements for loans disbursed in the past before the enactment of these laws.

The Land Act is one of the four new laws meant to revise, consolidate and rationalise the previous 25 land related laws. But section 78 of this law for instance in part says: "This part applies to all charges on land including any charge made before the coming into effect of this Act."

In the Land Registration Act, section 28 provides for additional overriding interests including spousal rights over matrimonial property, trusts, leases, and rights of compulsory acquisition, among others, which will be affected "without their being noted on the register."

Section 80 of the Land Act also says that every charge instrument shall contain the terms and conditions of sale, an explanation of the consequences of default, and the reliefs that the charger is entitled to including the right of sale.

This simply means that most power over property used as security has shifted to the borrowers. Yet few Kenyans may have noted and understood this fact. Perhaps because we are yet to understand the concept of public participation in the policy making process.

The new constitution is not as simple as expected. As a public policy framework, few Kenyans understand how they can derive benefits from it, or even protect their rights under it. Basic civic education is needed far beyond just elections and voting.

Mr Nabutola is Consultant-in-Chief, MyRita Consultants - a knowledge management, research and advisory firm, and President of Commission 8 at the Federation Internationale de Geometres (FIG).

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