Conveyancing Lawyers Kenya 2026: CGT, Stamp Duty, Sectional‑title Conversion and Lender Protections

The landscape for conveyancing lawyers Kenya practitioners navigate in 2026 has shifted on two fronts simultaneously: the Sectional Properties Act is now fully operational, requiring developers to convert multi-unit developments into individually registrable sectional titles, while the Income Tax (Amendment) Bill 2026 has introduced material changes to the capital gains tax regime governing property transfers. Together, these reforms touch every stage of a conveyancing transaction, from the first sale agreement clause to the final registration of a charge. This guide provides developers, lenders, in-house counsel and conveyancing solicitors with the practical checklists, clause templates and step-by-step processes needed to transact with confidence under the new rules.

Specifically, this article delivers:

• A legislative summary of the 2026 changes and a timeline of key compliance dates.
• CGT and stamp duty analysis, who pays, when, and how to draft for it.
• A sectional-title conversion process map for developers and their conveyancers.
• Lender protection clauses and a security registration checklist.
• A ready-to-use clause library covering CGT indemnities, withholding covenants, developer warranties and discharge provisions.
• A comprehensive conveyancing checklist for pre-transfer due diligence.

What Changed in 2026, Legislative and Policy Summary

Two legislative instruments dominate the conveyancing reform agenda in Kenya for 2026. The Sectional Properties Act, enacted to replace the patchwork of long-lease and co-ownership arrangements previously used for apartments and mixed-use developments, has now reached full operational status following the publication of its commencement regulations. Separately, the Income Tax (Amendment) Bill 2026, introduced in the National Assembly and tracked through its committee stages via the Parliament of Kenya, adjusts capital gains tax provisions applicable to property disposals, widening the scope of reportable transactions and tightening the timing for CGT remittance.

Key Changes at a Glance

Timeline of Key Dates

Industry observers expect the combined effect of these changes to be a more transparent but procedurally demanding conveyancing process. Practitioners who update their templates and workflows promptly will be best positioned to avoid delays at the Land Registry and KRA.

CGT and Stamp Duty Kenya 2026, Who Pays, Calculation and Timing

Key takeaways for conveyancing lawyers Kenya practitioners:

• Capital gains tax on property transfers in Kenya is levied on the transferor (seller) based on the gain realised on disposal.
• The Income Tax (Amendment) Bill 2026 tightens the remittance timeline, CGT must be paid and a CGT certificate obtained before the Lands Registrar will accept transfer instruments.
• Stamp duty remains payable by the transferee (purchaser) unless the parties agree otherwise in the sale agreement, and the stamp duty payment certificate must be presented at registration.
• Certain transfers, such as those between spouses or to registered family trusts, may qualify for exemptions, but practitioners must confirm eligibility against the current KRA guidelines.

Capital Gains Tax: Calculation and Process

CGT is calculated on the net gain, being the difference between the transfer value (sale price or market value, whichever is higher) and the adjusted cost of acquisition. Allowable deductions include the original purchase price, documented improvement costs, and legal fees incurred on both acquisition and disposal. The transferor is required to file a CGT return via the KRA iTax portal, pay the assessed tax, and obtain a CGT clearance certificate. Under the 2026 amendments, the practical effect is that conveyancers must build CGT payment into the pre-completion checklist, no transfer instrument should be lodged at the Land Registry without a valid CGT certificate.

Stamp Duty: Payer Liability and Payment Process

Stamp duty under the Stamp Duty Act is the purchaser’s obligation. The rate is applied to the consideration stated in the transfer instrument (or the property’s market value as assessed by the government valuer, whichever is higher). The payment process requires the purchaser or their conveyancer to submit the transfer instrument for assessment, pay the assessed duty through the KRA e-Stamp system, and obtain a stamp duty payment certificate. Only stamped instruments are registrable at the Land Registry, an unstamped or under-stamped instrument will be rejected.

Worked Example: Sale of a Residential Apartment in Nairobi

Consider a property purchased for KES 10 million, with KES 1.5 million in documented improvements, being sold for KES 18 million. The net gain is KES 6.5 million (18 million less 10 million less 1.5 million). CGT is calculated on this net gain at the applicable rate. The seller must file and pay this before completion. Separately, the purchaser pays stamp duty on KES 18 million (or the government valuation, if higher) at the prevailing rate for properties within a municipality. Both certificates must be in hand before the conveyancer lodges the transfer at the Land Registry.

Sale Agreement CGT Clause: Essential Drafting Points

Every sale agreement executed under the 2026 regime should include clauses addressing the following:

• CGT indemnity. The seller warrants that all CGT arising from the transfer will be settled before completion and indemnifies the purchaser against any liability, penalties or interest resulting from the seller’s failure to pay.
• Withholding and gross-up. Where the purchaser is required (by law or KRA directive) to withhold a portion of the purchase price towards the seller’s CGT liability, the sale agreement should specify the withholding amount, the mechanism for remitting it to KRA, and a gross-up provision so that the seller receives the agreed net price.
• Stamp duty covenant. The purchaser covenants to pay stamp duty and to obtain the stamp duty payment certificate within an agreed period before completion, with a longstop date for late payment.

Sectional Title Conversion, Step-by-Step for Developers and Conveyancers

The Sectional Properties Act establishes a mandatory framework for converting qualifying multi-unit developments into individually registrable sectional titles. The Act applies to any building comprising two or more units capable of individual ownership, whether residential apartments, commercial office suites or mixed-use developments. This section provides conveyancing lawyers Kenya practitioners and developers with a detailed process map for Sectional Properties Act conversion.

Developer Obligations Under the Act

• Sectional plan preparation. The developer must engage a registered surveyor to prepare a sectional plan showing each unit, common areas, and accessory areas. The plan must comply with the Act’s prescribed format and be certified by the Director of Surveys.
• Completion certificate. The developer must obtain a certificate of practical completion for the building (or relevant phase) from the relevant county government before applying for registration of the sectional plan.
• Management corporation formation. Upon registration of the sectional plan, a management corporation is automatically constituted, comprising all unit owners. The developer’s obligations include preparing initial by-laws and handing over common-area maintenance responsibilities.
• Disclosure to purchasers. Any sale agreement entered into before conversion must disclose the intended sectional-title structure, the estimated service charge, and the purchaser’s rights and obligations as a future unit owner and member of the management corporation.

Registration Checklist: Documents and Timelines

Common risks to flag: Existing mortgages encumbering the parent title can delay or block sectional-plan registration unless the mortgagee consents. Planning or land-use approvals that do not match the intended sectional layout will trigger rejections at the Surveys stage. Conveyancers should run preliminary title and planning searches well before the developer commissions the sectional plan.

Lender Protections, Drafting, Registration and Enforcement in 2026

Key takeaways for lenders and their counsel:

• The transition from whole-parcel charges to unit-level charges creates priority risks that must be managed contractually.
• CGT and stamp duty non-compliance can delay enforcement sales, lender security documents should include tax indemnities.
• Lenders should insist on conversion-consent clauses to prevent a borrower or developer from converting a charged property to sectional title without the lender’s prior written approval.

Security Registration Checklist for Lenders

• Confirm title status. Before disbursement, verify whether the property is registered as a whole parcel or has already been (or is in the process of being) converted to sectional title. Run searches at both the Land Registry and the Directorate of Surveys.
• Register charge against the correct title. If the property has been converted, the charge must be registered against the individual unit title, not the parent title. If conversion is pending, register the charge against the parent title and include a contractual obligation for the borrower to procure re-registration against the unit title upon conversion.
• Obtain mortgagee consent wording. The security documentation should contain a covenant that the borrower will not apply for or consent to sectional-title conversion without the lender’s prior written consent, and that the borrower will cooperate in re-registering the charge against any resulting unit title.
• Tax compliance verification. Verify that the borrower has a valid KRA tax compliance certificate and that all CGT and stamp duty obligations relating to the property have been discharged. Request copies of the CGT clearance certificate and stamp duty payment certificate as conditions precedent to disbursement.

Enforcement Considerations: Sectional Unit vs Whole Parcel

Where a charge is registered against an individual sectional unit, enforcement (whether by private sale, auction or receivership) proceeds against that unit only, the lender cannot enforce against the entire building or common areas. This changes the valuation calculus for lenders accustomed to holding charges over whole parcels. Security documents should define the “secured property” with precision, referencing the unit number, sectional plan number and parent title, and should include a covenant from the borrower to maintain the unit’s proportionate share of common-area obligations. Industry observers expect lenders to begin requiring enhanced valuations that separately assess the unit’s market value, the condition of common areas and the management corporation’s financial health.

Sale Agreement and Security Clause Library for Conveyancing Lawyers Kenya

The following clause templates are designed for adaptation to specific transactions. Each should be reviewed and tailored by qualified counsel before inclusion in any binding agreement.

• CGT Indemnity Clause. Purpose: Protects the purchaser from seller’s CGT default., “The Seller warrants that it shall, prior to the Completion Date, pay in full all capital gains tax assessed or assessable in connection with this transfer and shall deliver to the Purchaser a valid CGT clearance certificate issued by KRA. The Seller indemnifies the Purchaser against all losses, liabilities, penalties and interest arising from any failure to discharge this obligation.” Drafting note: For lender-side versions, extend the indemnity to cover the mortgagee as a named beneficiary.
• CGT Withholding and Gross-Up Clause. Purpose: Addresses scenarios where the purchaser must withhold CGT., “In the event that the Purchaser is required by law or by KRA direction to withhold any portion of the Purchase Price on account of the Seller’s CGT liability, the Purchaser shall deduct and remit such amount directly to KRA and the balance shall constitute full discharge of the Purchase Price. The Seller shall not be entitled to any additional payment in respect of the withheld amount.” Alternate (seller-favourable): Include a gross-up mechanism requiring the purchaser to increase the payment so that the seller receives the net agreed price after withholding.
• Stamp Duty Covenant. Purpose: Ensures timely stamp duty payment and registration., “The Purchaser covenants to assess, pay and obtain the stamp duty payment certificate in respect of the Transfer Instrument no later than [number] business days before the Completion Date. Failure to obtain the stamp duty payment certificate by the longstop date shall entitle the Seller to rescind this Agreement and retain the deposit as liquidated damages.” Drafting note: Adjust the longstop mechanism to suit the transaction’s risk profile.
• Seller Warranty on Title Conversion. Purpose: Protects the purchaser where sectional-title conversion is pending., “The Seller warrants that the Property has not been the subject of any application for sectional-title conversion under the Sectional Properties Act, save as disclosed in Schedule [X], and that no such application shall be made without the Purchaser’s prior written consent.” Drafting note: For off-plan purchases where conversion is intended, replace with a developer completion covenant (below).
• Developer Completion Covenant. Purpose: Binds the developer to complete sectional-title conversion., “The Developer covenants to prepare, lodge and procure registration of the Sectional Plan within [number] months of the date of practical completion and to deliver to the Purchaser an individual unit title registered in the Purchaser’s name within [number] months of lodgement.” Drafting note: Include a penalty or price-reduction mechanism for delay beyond the covenant period.
• Lender Consent Clause. Purpose: Prevents conversion without lender approval., “The Borrower shall not apply for, consent to, or permit any sectional-title conversion of the Secured Property without the prior written consent of the Lender, such consent not to be unreasonably withheld. Upon conversion, the Borrower shall procure re-registration of the Charge against the relevant unit title at the Borrower’s cost within [number] days.” Drafting note: This clause should appear in both the facility agreement and the charge instrument.
• Discharge and Priority Clause. Purpose: Clarifies priority on discharge after conversion., “Upon full repayment of the Secured Obligations, the Lender shall execute and deliver a discharge of charge in registrable form within [number] business days. Where the Secured Property has been converted to sectional title, the discharge shall be lodged against the individual unit title and the Lender confirms that it claims no interest in any other unit or common area arising from the original charge over the parent title.”

Conveyancing Checklist Kenya, Pre-Transfer Due Diligence

The following conveyancing checklist Kenya practitioners should follow before registering any transfer or charge in 2026. It incorporates the additional steps required by the Sectional Properties Act and the revised CGT rules.

1. Conduct an official search at the Land Registry to confirm the current registered proprietor, any encumbrances, caveats, restrictions or cautions on the title.
2. If the property is within a sectional-title development, search the sectional plan register to confirm unit boundaries, common-area allocations and management corporation status.
3. Obtain a KRA tax compliance certificate for the seller (and, where applicable, the purchaser and developer).
4. Confirm that the seller has filed the CGT return and obtained a CGT clearance certificate from KRA.
5. Obtain a land rates clearance certificate from the relevant county government confirming no outstanding rates.
6. Verify planning and land-use approvals, confirm that the property’s current use conforms to the approved development and that no change-of-use applications are pending.
7. Where conversion to sectional title is pending or recently completed, obtain a copy of the registered sectional plan and confirm it matches the physical layout.
8. Obtain written consent from any existing mortgagee if the property is subject to an existing charge and a transfer or conversion is proposed.
9. Confirm that all stamp duty has been assessed and paid and that the stamp duty payment certificate has been issued for the transfer instrument.
10. Review the management corporation’s financial statements and by-laws (for sectional-title units) to identify any outstanding levies, disputes or litigation that may affect the unit.

Red flags to watch for:

• Cautions or restrictions lodged by third parties that have not been withdrawn or discharged.
• Discrepancies between the sectional plan and the physical layout of the unit, this may indicate unapproved alterations.
• Outstanding land rates or service charges that could crystallise as a charge on the property.
• A seller who cannot produce a valid KRA PIN or tax compliance certificate.
• Existing mortgages on the parent title where the mortgagee has not consented to sectional-title conversion.

Practical Timelines, Responsibilities and Comparative Table

Reporting Obligations by Entity Type

Before and After 2026: Comparative Overview

Conclusion, Immediate Actions for Conveyancing Lawyers Kenya

The 2026 reforms demand that every conveyancing lawyer in Kenya updates their standard-form agreements, due diligence workflows and client-advice letters without delay. Developers must prioritise sectional-plan preparation and management corporation formation. Lenders must insist on conversion-consent clauses and verify CGT and stamp duty compliance as non-negotiable conditions precedent. Purchasers and their counsel must build additional time into transaction timetables for the new registration and tax-clearance steps. The practitioners who adapt fastest, embedding new clauses, running dual-title searches and aligning with KRA’s updated processes, will deliver the most reliable outcomes for their clients. For tailored drafting, due diligence support and transaction advisory, consult a specialist through the Global Law Experts lawyer directory.

This article provides general guidance on conveyancing practice in Kenya as of May 2026. It does not constitute legal advice. Practitioners and parties to transactions should obtain bespoke legal counsel tailored to their specific circumstances.

Sources

1. Kenya Law (National Council for Law Reporting), Sectional Properties Act and Land Registration Act
2. Parliament of Kenya, Income Tax (Amendment) Bill 2026
3. Kenya Revenue Authority (KRA), CGT and Stamp Duty Guidance
4. Ministry of Lands and Physical Planning, Registration Procedures
5. Chambers and Partners, Kenya Conveyancing Practice Guide
6. PwC Kenya, Tax Advisory Commentary on 2026 Changes