New national law ends county rate rules, makes land in towns taxable

The National Assembly passed a new national rating law that repeals the Rating Act and the Valuation for Rating Act. [File, Standard]

Counties will now be required to use a common national law to collect land and property rates, following the passage of a new national rating law by the National Assembly.

The law mandates that all related county legislation must align with its provisions.

It repeals the previous Rating Act and the Valuation for Rating Act, and also allows for the auctioning of properties in case of default to recover outstanding rates.

The legislation, known as the National Rating Act of 2024, was enacted by President William Ruto and is already in effect.

The law effectively nullifies existing county valuation rating acts, declaring all residential and income-generating freehold, as well as all leasehold land, as ratable properties.

"All areas within a county government shall be a rateable area for the purpose of this Act," states Section 28 of the law, underscoring the broad scope of ratable areas.

Currently, counties are racing against time to collect land rates from property owners before the end of the month, as they implement the new National Rating Act to boost own-source revenue.

Many devolved units are using media advertisements to announce waivers on interest and penalties accrued from non-payment to encourage land owners to settle their dues.

Legal experts note that since the new law requires county valuation acts to "comply" with its provisions, counties with existing rating laws will be expected to review and align them accordingly.

Kiambu County is among those affected. It had enacted the Kiambu County Valuation and Rating Act, 2016, which was amended last year to exempt subsistence farming land from paying rates.

However, under the new law, counties like Kiambu must revise their legislation to align with national standards.

The National Rating Act of 2024 was introduced to provide county governments with a unified framework for rating land and buildings, and for valuing rateable property. Its goal is to establish consistent legislation and mechanisms for land rate assessment and collection across the country.

While Section 5 of the Act states that it applies to all rateable property within counties-"except freehold agricultural land"-experts note that this exemption does not apply to developed freehold land.

"The exemption for freehold land, however, implies that proprietors of freehold land converted to residential, commercial, or other non-agricultural uses will still be liable to pay land rates," explains Ibrahim Mwathane, a land governance consultant. He adds that this will largely affect landowners in urban areas and rapidly urbanizing counties such as Machakos, Kajiado, and Kiambu.

According to the Act, a rateable owner is defined as "a person in whose name a particular property is registered," as well as "a beneficial owner who receives profits and rent from the rateable property."

Experts interpret this to mean that freehold land used for commercial purposes-such as rental housing, commercial agriculture, or other income-generating activities-qualifies as rateable.

Ayub Naburi, a registered and practicing valuer, agent, and a lecturer at the Technical University of Kenya, says the new national law requires counties to review their existing rating acts to ensure they align with the National Rating Act of 2024.

Counties must rate all gazetted urban properties equally, as they benefit from public services funded through property rate collections.," he explains.