Bungled shift to one-stop-shop delays billions of investments

It was billed as a game-changing one-stop-shop, but two years since its launch, Ardhi Sasa is the bane of many stakeholders in the real estate sector.

Lawyers, property financiers, property agents and surveyors estimate that transactions worth at least Sh100 billion are stalled at Ardhi House due to the inefficiency of the Ardhi Sasa system–an online national land information system– on delivering on the transaction processes and approvals required during conveyancing.

Property players who represent buyers, sellers or those seeking equity release on their properties say over the last six months, thousands of their transactions have been pending at the Ardhi Sasa system awaiting approvals with no given timeline.

At the heart of the delay is the verification of surrendered original certifications based on physical files which have since been moved to Ruaraka for storage away from the Ministry of Lands headquarters in Nairobi.

Physical verification

“The whole cadaster needed to have been digitised and automated before rolling out the Ardhi Sasa system. Why say a system is digitised and still use physical files for verification? It is even more disturbing when the physical files to be used for verification are stored in the other part of town and not at the Ministry of Lands,” says Mwenda Makathimo, a land management expert.

The delay, he points out, is adding to the cost of doing business in the sector instead of being an enabler.

“The worst bit is that no one tells you when the process will be complete as you are only told verification is still going on,” says Mr Makathimo.

Lawyers had earlier protested the delays with the ministry pledging to iron out the kinks within two months.

The Law Society of Kenya (LSK) says it will this week move to court after the two months and a seven-day ultimatum it had issued lapsed.

“Our clients continue to express their frustration with unexplained delays that are blocking banks from issuing billions [of shillings] in loans thereby negatively affecting business and the economy,” reads a March 23, 2023 letter by LSK chair Erick Theuri addressed to Cabinet Secretary at the Ministry of Lands Zachary Njeru.

Legal uncertainty

“Individual owners of land and property are also unable to transact with their properties. There is also considerable uncertainty regarding sections of the law that require amendments to enable seamless and predictable registration process.”

In its original conception, the Ardhi Sasa system was designed to be a one-stop-online-shop where anyone can register land documents and searches, make valuation requests, pay and issue land rent certificates, pay for stamp duty, registration and consent fees, and apply or withdraw caution, caveats or restrictions on a property.

The system was also meant to have interlinkages with other subsystems such as Kenya Revenue Authority for payment of taxes involved in conveyancing, surveyors so as to ascertain details of a property, planning department—a devolved function—to ensure that development plans are in compliance with local designations and plans.

Withheld billions

“Banks have been unable to complete the charging of properties (so as to release the money to sellers),” notes Gikonyo Gitonga, the chief executive of Axis Real Estate.

“The government continues to miss revenue as no stamp duty or capital gains tax can be collected when property transactions are stalled,” he adds.

In its current state, players say that the Ardhi Sasa system has limited coverage as it only caters for Nairobi County and has limited access to quality property data to ensure that the system is effective and useful as initially designed.

They say that many titles that were recorded in NAIROBI/BLOCKXX/XXX have not been uploaded to the system and as such cannot be searched or verified meaning no one can do due diligence on such properties.

The stakeholders have also expressed concern over security given that the system carries important information such as title deed.

“There is no inter-operability of the system with the other functions of government,” says Mr Makathimo.

“Ardhi House should overhaul the whole system, and re-design the workings. Meanwhile, find a way to clear the backlogs because it is hurting the economy.”

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