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LEGAL ALERT: Stamp Duty (Valuation of Immovable Property) Regulations, 2020

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Under Section 119 of Stamp Duty Act, the Cabinet Secretary for National Treasury and Planning has powers to prescribe regulations to operationalize various provisions of the Act.

The Cabinet Secretary for National Treasury and Planning recently prescribed the Stamp Duty (Valuation of Immovable Property) Regulations, 2020; (‘the Regulations’) which took effect immediately. The objective of the regulations is to improve ease of doing business by simplifying and expediting land transactions.

Private Valuers

Regulation 3 of the Regulations empowers the Chief Government Valuer to appoint private valuers to carry out valuation of a property for stamp duty purposes. This is a change from the previous position where only government valuers could carry out such valuation. The private valuer has to apply using the prescribed form and prove that they are registered under the Valuers Act, have a physical address and a valid tax compliance certificate.

A person is not allowed to practice as a private valuer if they are not appointed by the Chief Government Valuer.

Upon application, the Chief Government valuer shall communicate her approval or rejection of the application within 30 days, and if she rejects an application, she is required to give his reasons in writing.

The Chief Government valuer is additionally required to maintain a list of appointed private valuers, and any given appointment is valid for 3 years, and upon lapse, they are required to apply for reappointment.

Further, during the period of their appointment, private valuers are required to maintain compliance with their tax and status under the Valuers Act, without which, their appointment ceases.

Valuation

Under Regulation 4 of the Regulations, a transferee of land or their authorized representative is required to apply to the Chief

Government Valuer for the valuation of the property for purposes of ascertaining the stamp duty payable. This application should be made electronically, and the applicant can choose either to have a government or a private valuer for the task.

When an applicant chooses the option of a private valuer, the Chief Government Valuer is required to assign the task to a private valuer on his list and notify the applicant of the person appointed within 7 days.

Where the applicant chooses to have the valuation conducted by a private valuer, he/ she shall cater for the costs of the valuation.

Valuation Report

Regulation 5 requires that a valuation report be submitted to the Chief Government Valuer within 21 days if conducted by a government valuer, and if conducted by a private valuer, the report should be submitted immediately the transferee pays for it.

Further, under Regulation 5(2), the valuation report presented to the Chief Government Valuer must be accompanied by a copy of the cadastral maps indicating the location of the property, a copy of the title deed, the transferee’s KRA Pin Certificate and any other necessary information.

The valuation report reveals a number of details relating to the land; including its registered owners, location, the land reference or land title numbers, its tenure system, the valuation methodology applied, the basis of the valuation, the open market value as well as any other details or information obtained from the valuation. Each valuation report must be signed by a valuer.

Once the detailed valuation report is submitted to the Chief Government Valuer, he/ she reviews its contents and if in agreement, notifies both the transferee and the Collector of Stamp duty of the approved market value of the property and the stamp duty payable. An approved valuation report is valid for of 12 (twelve) months from the date of approval by the Chief Government Valuer.

Objections to Valuation

Pursuant to Regulation 9, if one is dissatisfied or aggrieved with the valuation report, they may lodge an objection; with the Chief Government Valuer within 21 days of receiving the notification of approval of the valuation by the Chief Government Valuer. However, this period may be extended for not more than 1 year; on the grounds that the objector was sick, outside Kenya or any other reasonable grounds and this may be done with or without conditions as the Chief Government Valuer may prescribe in line with Regulation 12.

Any objection to the valuation must detail the grounds of objection and disclose the value the objector contends to be the correct value of the property. An objection can only be made by the person liable to paying stamp duty; that is, the transferee and is deemed to have been lodged when the Chief Government Valuer receives it.

Regulation 10 of the Regulations limits the grounds on which a person may lodge an objection. These grounds include the value assigned, the apportionment of the area,

dimensions or description of the property, the ground that an immovable property that ought to have been included in the valuation has been valued separately or that the person identified in the report is not the true transferee of the property.

When an objection is filed, the Chief Government Valuer shall consider it within 21 days of receiving the objection, and may adjust the valuation report if he finds that the objection is justified, but if he finds that the objection is not justified, he shall dismiss it; and communicate his decision to the objector in writing pursuant to Regulation 9(5).

Under Regulation 13, an objector may also withdraw an objection by notice in writing to the Chief Government Valuer.

Professional Regulation of Valuers

Regulations 6 and 14 prescribe additional professional regulation mechanisms for valuers. Valuers are required to conduct themselves professionally and in line with the standards of practice while rendering valuation services, and where a valuer commits professional malpractice, they may be reported to the Valuers Registration Board who may sanction those found culpable in line with the Valuers Act.

Under Regulation 15, the Chief Government Valuer may revoke the appointment of any valuer who fails to meet the requirements for appointment or commits fraudulent acts which are aimed at defrauding the government of any stamp duty or aides or abets the evasion of stamp duty by destroying books of account.

The Regulations have re-affirmed the government’s desire to embrace technology as Notices by the Chief Government Valuer or other communications can be sent either by delivery to the recipient, postage to the recipient’s registered post or through electronic means. All applications for valuation or even objections can only be made electronically unless the Chief Government Valuer prescribes any other means with reasons. This is in line with Regulations 17 and 18.

The Gazettement of these regulations is a big step towards expediting land transactions as delays in valuation for stamp duty has been a pain point for those who wish to transact on land because of the shortage of valuers. The move is transformative for all transactions that require valuation for stamp duty. With proper implementation, it will help expedite valuation process and ultimately quicken the turnaround time in the process of transfer of property.

Should you require further information and guidance on this please get in touch with Mr. Tom Onyango (tonyango@tripleoklaw.com ), Renice Midar (rmidar@tripleoklaw.com , or any member of our Real Estate and Conveyancing Team.

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