For over sixty (60) years, land valuation and the imposition of rates were governed by the Valuation for Rating Act and the Rating Act. However, on December 4, 2024, the President signed the National Rating Bill, 2022 into law (the National Rating Act, 2024 (the Act)). The Act, which came into effect on 24th December 2024, repealed the above two statutes.
Scope, Purposes and Objects of the Act
The Act introduces a comprehensive and uniform legal framework and mechanism for imposition of rates on, and use of technology in valuation and rating of, land and buildings by County Governments. It also provides for the role of Chief Government Valuer in collation of valuation rolls.
Highlights
Devolution of Rating Powers to Counties
The duty to levy rates on land and buildings now vests with the County Governments, which will apply the basis and methods of rating prescribed in the Act alongside applicable county laws relating to levying of rates. Effectively, rating powers have been devolved from the national government to the county governments in line with Article 209(3)(a) of the Constitution of Kenya, which entitles County Governments to impose property rates.
Expansion of the Scope of Rateable Owners
The Act has expanded the definition of “rateable owner” to ensure that the responsibility for paying rates is attributed to those with a significant stake in the property, even if they are not the “registered owners”. The definition of a rateable owner includes registered owners, leaseholders with terms of at least twenty-one (21) years; executors or administrators of deceased persons’ estates; administrators, liquidators, or receivers of companies; trustees; holders of sectional property; occupiers; and beneficial owners receiving profits and rent.
All Areas Rateable, Excluding Freehold Agricultural Land and Exempt Areas
All areas within a County Government’s jurisdiction will be rateable (i.e. rates will be levied on such parcels) excepting freehold agricultural land and “public areas” used for public purposes such as public religious worship; cemeteries and burial grounds; public health facilities; public educational institutions and libraries; dams; wayleaves; museums and national monuments; or public outdoor sports.
However, places of public religious worship will not be exempt from payment of rates if they operate profit earning ventures in which case only the place of worship will be exempted.
Further, any property leased for purposes of foreign embassies and missions, but still registered under a rateable owner, will pay rates.
Establishment of the National Rating Tribunal
The Act establishes the National Rating Tribunal to hear and determine disputes arising from valuation and rating decisions. The Tribunal has powers to review decisions made by County Governments and may grant equitable relief including injunctions, penalties, damages, or specific performance. Appeals from the decisions of the Tribunal shall be made to the Environment and Land Court.
What This Means for You
For Rateable Owners of Land and Buildings
Payments
Every rate levied by a county government shall become due in the financial year for which it is levied and shall become payable on the day appointed by the County Executive Committee (CEC) member responsible for matters relating to land. The CEC shall sixty (60) days prior to the due date, publish a notice in the Kenya Gazette, indicating the day for payment of rates and the amount payable. After the notice is published, rateable persons will have a duty to pay the amounts due. The County Government may prescribe that payment be made one-off or in instalments.
Enhanced Enforcement Mechanisms to Recover Unpaid Rates
The Act requires rates to be paid promptly as and when they fall due and introduces additional overdue rates recovering mechanisms. For instance, under the Act, where any person fails to pay any rates or interest due from them within the time specified by the County Government, the County Government may give a written demand for payment to be made within sixty (60) days after service of the demand. In default, the County Government may levy a penalty at Central Bank of Kenya rates, deny certain county services, institute a suit against the defaulter, register a charge against the rateable property, appoint a receiver to recover rent from tenants and occupiers, apply to be a beneficiary in a deceased’s estate, levy attachment of debts or auction the rateable property to recover the rates.
Remission, Discounts and Waivers on Rates
Rateable owners may apply to a County Government before the rate payable is due or within fourteen (14) days after the rate payable is due for a remission of part or the whole of the rate. Upon receipt, the County Government shall respond in writing to the application within thirty (30) days. If the County Government declines to grant remission, it shall provide the reason(s). If the County Government fails to respond within thirty (30) days of an application for remission, the remission shall be deemed to have been granted.
County Governments are required to prescribe the criteria for the grant of discounts and waivers on the payable interest and penalty rates due to it by rateable owners through legislation.
For County Governments
Enactment of Legislation and Setting of Rates
County governments will be required to enact, review or revise county laws on rating and formulate the regulations contemplated under section 58(5) of the Act, all while ensuring all these align with the provisions of the Act. Specifically, the CEC member responsible for finance will be required to set up the rates struck (the percentage of tax rate levied on the assessed value or rateable value of property) in the Finance Act of the relevant financial year for consideration, approval and passing by the County Assembly.
Contributions by the National Government in Lieu of Rates
The Act provides a mechanism for assessing and collecting contributions in lieu of rates from National Government entities for public land located within county jurisdictions. This will ensure that the National Government contributes to county revenue for services provided in areas where it holds public land that is not exempted from payment of rates. A County Government is required within three (3) months before the rates fall due, to lodge a claim to the National Treasury through the National Lands Commission for the contribution in lieu of rates.
Guiding Principles, including Transparency and Public Participation
The Act sets out the principles to guide County Governments in implementing the provisions of the Act and emphasizes transparency and public participation in the valuation and rating process. County Governments are required to publish notices and invite comments from the public before adopting any form of rating. Property owners and other interested parties have the right to inspect valuation rolls, lodge objections, and appeal decisions to the National Rating Tribunal.
Transition from Previous Laws
Existing valuation rolls prepared before the commencement of the Act shall be deemed to have been prepared under the Act and if they do not align with it, the County Governments shall, within twenty-four (24) months from December 2024, ensure that the rolls are aligned with the Act.
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Read the original publication at Dentons Hamilton Harrison & Mathews
