New Powers for County Governments

A new legal framework, the National Rating Act, 2024, has granted county governments in Kenya significant new powers to recover billions of shillings in unpaid land rates. President William Ruto assented to the bill on Wednesday, December 4, 2024, and the Act came into force on Tuesday, December 24, 2024, repealing outdated laws that had been in place for over 60 years. The most consequential provision of the new law permits county governments to auction a rateable property if the owner fails to clear outstanding dues within a 60-day notice period. This enforcement mechanism can be initiated without seeking a court order, a departure from previous legislation that officials argue will streamline revenue collection.

Boosting Devolved Revenue

The Act is designed to create a standardized and uniform legal framework for the 47 county governments to impose and collect property rates, a critical source of own-source revenue. For years, counties have struggled with inefficient collection and outdated valuation rolls, leading to significant revenue shortfalls. A 2018 study by the National Treasury, supported by the World Bank, revealed that counties had substantial unrealized revenue potential from property rates, which catalyzed the push for new legislation. Proponents argue the new law will empower counties to finance public services and infrastructure development more effectively by aligning property rates with current market values and ensuring compliance. For instance, the Nairobi City County government has already threatened to auction nearly 200,000 properties to recover an estimated KSh 54 billion in arrears.

Constitutional Challenge and Public Concerns

The provision allowing for property auctions without judicial oversight has drawn immediate legal opposition. On Wednesday, October 23, 2025, lawyer Shadrack Wambui filed a petition in court challenging the constitutionality of these sections of the National Rating Act. The petition argues that empowering counties to auction private property without court approval violates constitutional protections of property rights and the right to due process. The petitioner is seeking to suspend the enforcement of the law pending a hearing by a multi-judge bench, citing the significant constitutional questions at stake. The lawsuit also contends that the law was enacted without adequate public participation as required by the Constitution.

Key Provisions of the National Rating Act, 2024

Beyond the auction powers, the Act introduces several other major reforms to Kenya's land rating system:

• Updated Valuations: Counties are now required to review and update their valuation rolls every five years, with a possible two-year extension, to ensure rates are based on current market values.
• Expanded Definition of 'Rateable Owner': The law broadens the definition of who is liable for rates to include not just registered owners, but also long-term leaseholders (21 years or more), property trustees, and holders of sectional properties like apartments.
• Dispute Resolution: A National Rating Tribunal is established to hear and determine disputes related to property valuations and rates, aiming to resolve cases within six months.
• Chief Government Valuer: The Act creates the Office of the Chief Government Valuer to standardize valuation methods and advise both national and county governments.
• Reduced Exemptions: The list of properties exempt from rates has been narrowed. Private schools, charitable organizations, and private libraries are no longer automatically exempt. However, land used for public religious worship, public cemeteries, and public health and educational facilities remains exempt.

Implications for Kenyan Property Owners

The law places a greater onus on property owners to ensure their rates are paid promptly. County governments are empowered to use several enforcement mechanisms before resorting to an auction, including levying penalties at the Central Bank of Kenya rate, denying county services, registering a charge against the property, and appointing a receiver to collect rent. With counties like Nairobi already issuing final demand notices and SMS warnings to thousands of property owners, the era of low compliance appears to be ending. Property owners are advised to verify their rate payment status with their respective county governments to avoid penalties or the potential loss of their property. Counties have until December 2026 to align their local legislation with the new national Act.