Increased demand for land has pushed Nairobi residents to devise new ways of making money out of idle land. The practice has also extended to other parts of the country, especially with devolution.
By leasing, the land owner grants exclusive possession of the property under terms and conditions defined under their agreement. The law allowing leasing is contained in section 56 of the Land Act, where the owner can grant possession to another person for a definite term.
The trend, which was not common in the country, is becoming an increasingly popular enterprise close to the erstwhile urban centres, with Nairobi county leading.
The increased demand for leasing property is partly because of improved transport networks, security and other basic amenities.
In Nairobi, common business ventures for leasing land include roadside eateries, carwash businesses, churches, car bazaars, fuel stations and garages, among others.
However, entrepreneurs seeking to set up temporary structures such as container shops and premises that can be relocated easily have increasingly placed bids to lease land in the city.
"Keeping leased public land undeveloped for a long period stifles urban development and denies residents access to employment, business opportunities, decent housing, infrastructure and leisure.
Such undeveloped land leads to urban sprawl and informal developments in the rural areas surrounding the urban centre and may, in the long run, affect overall agricultural productivity in the region and lead to slum development," the Institution of Surveyors of Kenya stated in their report.
Key Factors to Consider Before Leasing Land
Search For Property
After finding a potential lessor and establishing the purpose of leasing, it is advisable for one to do a search to establish who owns the property and other laws relating to land use in the area.
Doing a search enables an entrepreneur to come up with irreducible minimums before sealing the agreement.
One can source information regarding a piece of land from the internet, newspaper and other land agents.
Under this process, one can establish whether the person willing to lease land has the capacity to do so.
This also helps determine the size of the land set to be leased and where it is located.
"A lessor cannot purport to issue or confer the rights of ownership of land such as exclusive possession unless they really, truly are the owner of the land, unencumbered.
It will be important to not clearly identify the owner but also to identify the parcel of land you are leasing, including its boundaries," the Institution of Surveyors of Kenya insisted.
Most developers recommend that it is vital to have a written agreement during the leasing process. Unlike oral agreements, written agreements contain finer details that can be used in a dispute.
The written agreement also ensures strict adherence to policies between the two parties.
Registering Lease Agreement
Just like buying land, its is advisable to register the lease under the relevant land registry.
The reason for lease registration is to protect the leaser and the lessee's rights.
An exit plan provides for the period immediately before disengagement with the lessor.
It charters the way for a mutual parting of ways between the leaser and the lessee.