Acquiring business premises in Kenya.

01

Decide whether to buy or lease

Ownership may offer control, collateral value and protection from relocation, but ties up capital and exposes the business to title, development and market risk. A lease can preserve capital and make expansion easier, but creates recurring cost, renewal uncertainty and dependence on the landlord.

Consider a conditional agreement or heads of terms that preserves the ability to withdraw if title, approvals, financing or technical investigations fail.

02

Investigate title, authority and occupation

The Land Registration Act governs registration and interests in land. Obtain an official search through the applicable registry or Ardhisasa where the service is available, and compare the result to the title, survey plan and physical site.

Searches are snapshots, not guarantees. Investigate rates, land rent, litigation, compulsory-acquisition notices, succession, spousal or trust issues where relevant, and obtain lender or third-party consents before completion.

03

Confirm the business may operate there

The title's user, county development plans and approvals determine what may lawfully happen on the site. The Physical and Land Use Planning Act provides the planning and development-control framework.

Check change of user, development permission, building approvals, occupation status, environmental approval, fire and public-health requirements, signage and the sector licence. A landlord's statement that similar businesses operate nearby is not an approval.

Make the lease conditional on essential permissions where possible, and state who applies, pays, supplies title documents and bears the risk of refusal. Fit-out approval should cover drawings, contractors, structure, services, reinstatement and ownership of improvements.

04

Calculate the full occupancy cost

Headline rent rarely captures the full commitment. Model the deposit, advance rent, escalation, service charge, utilities, parking, insurance contribution, security, maintenance, fit-out, legal costs, stamp duty, registration and applicable taxes.

Define the measurement basis and lettable area. For service charge, require a budget, permitted categories, allocation method, annual statement and audit or inspection rights. Exclude landlord capital expenditure unless the commercial bargain deliberately includes it.

Align rent commencement with handover and the fit-out period. If the premises or access is incomplete, the business should not pay for space it cannot lawfully or practically use.

05

Negotiate the operating rules

The lease should accurately describe the premises, rights and permitted use. Attach a plan and condition schedule, and document access, common areas, parking, loading, utilities, signage and building rules.

1. Term, renewal, rent review and any break option.
2. Deposit custody, use, replenishment and refund deadline.
3. Repair split for structure, services, interiors and latent defects.
4. Insurance responsibility and treatment of uninsured risk.
5. Alterations, fit-out approval and reinstatement.
6. Assignment, subletting, group sharing and change of control.
7. Damage, interruption, rent suspension and termination.
8. Default notices, re-entry, dispute resolution and remedies.

Check consistency between the offer letter, lease, building rules, fit-out manual and any side letter. A commercial concession is fragile if it appears only in an email.

06

Identify a controlled tenancy

Certain tenancies of shops, hotels and catering establishments are “controlled tenancies” under the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act. Common triggers include the absence of a written lease or a written tenancy for a qualifying period or with particular termination provisions.

Controlled tenancies are subject to statutory notice and Business Premises Rent Tribunal procedures. The parties cannot safely treat termination, rent alteration or possession as an ordinary contractual matter without first determining whether the Act applies.

Do not manipulate the stated term without understanding the consequence. The wording that creates flexibility for one party may bring the entire tenancy into a specialised statutory regime.

07

Stamp, register and close properly

Completion should be an evidence-based exchange: executed instrument, title and consents, payment, possession, keys, meter readings, condition record and registration documents. For a purchase, control the transfer and funds through agreed completion mechanics.

KRA explains that stamp duty applies to legal instruments including property and land transactions and publishes filing and payment guidance . Assess the actual instrument and current deadline rather than relying on a generic estimate.

Register leases and transfers where required. Registration protects priority and creates a reliable public record. Preserve the stamped instrument, registration evidence, receipts, consents and the final signed plan in a permanent property file.

08

Foreign investors face tenure limits

Article 65 of the Constitution restricts non-citizens to leasehold tenure for a term not exceeding 99 years. A company is regarded as a citizen for this purpose only if wholly owned by citizens. Incorporating a Kenyan subsidiary with foreign shareholders does not convert it into a citizen landholder.

Foreign investment structures should therefore align the intended land interest, project term, financing, licence conditions and exit. Agricultural land and controlled transactions may engage additional restrictions and consents.

09

Plan handover on the day of entry

Prepare a signed photographic condition schedule at possession. It gives both sides a baseline for repairs and reinstatement. Keep approvals for every alteration and evidence of landlord maintenance requests.

Before exit, calendar notice dates, renewal options, break conditions, repair works, utility closure, staff relocation, licence changes and removal of data and equipment. Agree a joint inspection and written defect list instead of discovering deductions after the deposit is withheld.

The lease should state when and how the deposit is returned, what may be deducted and whether the tenant may remove fixtures. Continuing confidentiality, signage removal, address changes and records retrieval also belong in the exit plan.

PREMISES CHECKLIST

Before signing or paying

1. Decide whether ownership or leasing fits the business plan.
2. Verify owner, title, authority, boundaries and occupation.
3. Check charges, restrictions, rates, rent and litigation.
4. Confirm planning, user, environmental and sector approvals.
5. Model the total occupancy cost and escalation.
6. Document rights, repairs, alterations and service charge.
7. Determine whether the tenancy will be controlled.
8. Make essential approvals and consents conditions precedent.
9. Stamp and register the instrument as required.
10. Record condition, possession and the exit process.