A Brief Overview of the Land Value Index Laws (Amendment) Bill, 2018

Introduction

The Land Value Index Laws (Amendment) Bill, 2018 (the “Bill”) seeks to amend the Land Act, the Land Registration Act and the Prevention, Protection and Assistance to Internally Displaced Persons and Affected Communities Act to provide for a land value index in respect of compulsory acquisition of land, determination of Land Rent, Rates and Stamp Duty payable on land.

The main objective of the Bill is to standardise and harmonize the value of land across the country for the primary purpose of ensuring that rent, rates, stamp duty and compensation of land is predictable, rational and not prone to subjective valuations during compulsory acquisition of land. The Bill proposes to amend the Land Act in order to ease the acquisition of and access to land or rights over land in order successfully implement public infrastructure projects.

The Bill also seeks to put an end to the rush by speculators to own land near proposed government projects with the expectation of being compensated when the land is compulsorily acquired for the purposes of the project.

In this article, we shall review the Bill, pinpointing the notable provisions of the Bill including the establishment of the Land Acquisition Tribunal.

Notable Provisions

(a) Restriction on Dealing with Land Earmarked for Acquisition

Clause 5 of the Bill prohibits the dealing with any land that is earmarked for compulsory acquisition. It further provides under Clause 6, that in assessing the value of land for compensation, the improvements or developments that shall be considered are those that were put up within 2 years from the gazette notice on the intention to acquire the land. This is unless the owner can prove that the improvement was bona fide and not made in contemplation of the acquisition of the land. Any improvement done after the gazette notice shall be disregarded unless it is proven that the improvements were necessary for the maintenance of any building in a proper state of repair.

This is a step in the right direction in putting a stop to speculators who drive up property prices during acquisition by quickly buying properties earmarked for acquisition and then putting up structures to claim for compensation thereby driving up the price implementation of government projects like the on-going standard gauge railway.

(b) Criteria for Assessing Value for Compulsorily Acquired Land

Clause 6 of the Bill seeks to introduce section 107A to the Land Act which provides the criteria for assessing the value for a freehold land to be compulsory acquired. It proposes that valuation of a freehold land and community land should be based on the land value index to be developed jointly by the nation-al government and county government. Section 107A (2) defines “land value index” as an analytical representation showing the spatial distribution of land values in a given geographical area. This valuation and mapping of the land is required to be done before issuance of the notice of intention to acquire the land.

Section 107A (8) also provides for assessment of compensation to be made to occupants in good faith of land compulsorily acquired who may not hold title to the land with respect to land used as ancestral land or land traditionally occupied pending adjudication.

Clause 6 further seeks to introduce section 107B to the Land Act which provides that where a lessee of a public land is in breach of any terms or condition of the grant, the land shall revert back to the national or county government as the case may be and therefore shall not attract compensation.

It is important to note that the Bill proposes that in calculating the value of the land, the increase in the potential value occasioned by the intended use or development of land shall be disregarded. The value shall also disregard the degree of urgency that has led to the acquisition, any inconvenience caused to a person interested in the land or damage likely to be caused after the date of the notice among others.

The Bill however notes that the following should be taken into account in assessing the value of the Land; the damage sustained or to be sustained by reason of severing the land from another land, if the acquisition will injuriously affect other property whether movable or immovable, if as a consequence the person will be compelled to change residence or place of business, damage genuinely resulting from diminution of profit ( a person claiming for profit shall be required to provide proof of existence of profit including evidence of tax returns).

All in all, we note that the objective of clause 6 is to ensure that compensation payable to a proprietor of land shall not in any case exceed the value of the structures and improvements on the land.

(C) Forms of Compensation

Clause 7 of the Bill amends section 111 of the Land Act by inserting section 111 (1A) which provides for forms of compensation for compulsorily acquired land. The various forms listed are:

i) Allocation of alternative parcel of land of equivalent value and comparable geographical location and land use to the land compulsorily acquired;

ii) monetary payment either in lump sum or in instalments spread over a period of not more than one year;

iii) issuance of government bond;

iv) grant or transfer of development rights as may be prescribed;

v) equity shares in a government owned entity; or

vi) any other lawful compensation.

It is the proprietor of the land to be compulsorily acquired to elect the form of compensation listed above.

The Bill also expressly prevents public bodies from being compensated with respect to land that has been compulsorily acquired unless there is demonstrable inference that the land was bought and developed by that public body.

(d) Restriction on court orders

The Bill also seeks to address the injunctions that are issued by the judiciary stopping ongoing projects due to the issue of compensation of the land owners. It provides that upon taking formal possession of the land, no order stopping any development in the land may be issued by any court if public funds have already been committed. This is a peculiar restriction and it is yet to be seen whether the Bill shall be passed into law with this provision and whether the same shall be held to be valid.

Any disputes must be taken to the tribunal in the first instance.

(e) The Land Acquisition Tribunal

Clause 18 of the Bills seeks to introduce Part VIIIA in the Land Act which establishes the Land Acquisition Tribunal (the “Tribunal”). This clause further provides for the composition, term of office and jurisdiction of the Tribunal.

The tribunal is to consist of five members appointed by the Judicial Service Commission of whom two shall be advocates of the High Court of Kenya of not less than ten years standing; two shall be registered valuers with not less than ten years’ practical experience in statutory valuation in a public body; and one shall be a registered surveyor of not less than ten years’ standing.

The Tribunal has jurisdiction to hear and determines appeals from the decision of the NLC in matters re-lating to the process of compulsory acquisition of land in the first instance and upon the formal taking of possession of land by the NLC, no order stopping any development on the land may be issued by any court if public funds have already been committed. A person dissatisfied with the decision of the NLC may within thirty days appeal to the Tribunal and the Tribunal is required to determine the same within ninety days after filing of the appeal.

A party dissatisfied with the decision of the Tribunal may appeal to the Environment and Land Court. An ap-peal from the decision of the Tribunal may be made on a question of law only.

Conclusion

The Bill indeed seeks to regulate the long and protracted process of compulsory acquisition of land of land and harmonise and standardise the compensation thereof as well as seal loopholes in the law with respect to speculative ownership of land near proposed government projects which in turn pushes the price of the project and burdens the taxpayers. Indeed, the ease with which the government is able to acquire land for public development purposes as well as certainty with respect to determination of the value to be paid for projects signals Kenya’s quality in ease of doing business, since it determines the pace at which public infrastructure investments can be realized.