In a bold but controversial move, Nairobi County has announced plans to auction more than 200,000 properties in pursuit of KSh 54 billion in unpaid land rates, a step county officials say is necessary to plug long-standing revenue leaks and restore fiscal discipline in Kenya’s capital.
The order, issued under the National Rating Act No. 15 of 2024, gives counties the power to seize and auction properties whose owners have defaulted on rates for years. According to City Hall, only one in five property owners currently pays their dues.
“Out of 250,000 land parcels in the city, we have only between 50,000 and 60,000 paying accounts,” Governor Johnson Sakaja said. “That’s less than 25 percent compliance, yet these same property owners expect roads, garbage collection, and water services. That’s not sustainable.”
A Decade of Debt and Delay
Nairobi’s land-rate arrears stretch back decades, ballooning to an estimated KSh 1.45 trillion according to the county’s finance department, an amount that could “fund City Hall operations for more than 40 years.” Previous governments tried softer tactics. Several amnesties and waivers, including one in 2021 and another in 2023, encouraged defaulters to clear their arrears, but compliance remained low.
Now, under the new law, the county has introduced automated billing, SMS reminders, and, most notably, auction notices. Thousands of landowners in high-value estates such as Kilimani, Westlands, Upper Hill, and Industrial Area have already received final warnings.
The Legal Muscle: National Rating Act, 2024
The National Rating Act No. 15 of 2024 allows counties to auction land, place caveats on titles, and even freeze bank accounts of rate defaulters. It also shifts valuation from land size alone to property use, meaning commercial developers and landlords could now pay higher annual fees. County Attorney Lilian Wambui defended the law, saying it brings long-needed clarity:
“For years, we have depended on outdated valuation rolls and manual records,” she said. “This law modernizes county revenue management and ensures that landowners pay their fair share based on property usage and value.” However, critics warn the timing could trigger panic in the property market. Real-estate analyst Charles Mutiso mentioned that while revenue recovery is important, mass auctions could spook investors. “If enforcement is done hurriedly, it may depress property prices and discourage new investment,” he said. “The county should phase the process and allow negotiation or structured repayment plans.”
Business Impact: Between Compliance and Collapse
For business property owners, the new approach presents a serious liquidity risk. Some developers hold multiple parcels as collateral for loans, meaning an auction could disrupt financing agreements and credit lines. Banks, too, are watching closely. A senior manager at a tier-one bank, who requested anonymity, noted that “property auctions by government could affect loan portfolios if collateral values fall or titles are flagged for arrears.” Small businesses leasing premises face indirect consequences as well. Landlords are likely to pass the cost of unpaid rates onto tenants, increasing rent in commercial buildings and small markets already strained by inflation.
Revenue Pressure and the Politics Behind It
City Hall’s crackdown comes amid growing pressure on counties to expand own-source revenue (OSR) and reduce reliance on national transfers. Nairobi’s OSR rose slightly from KSh 12.8 billion in FY 2024 to KSh 13.5 billion this year, still below targets. Analysts say the push coincides with President William Ruto’s recent assent to eight major
amendment bills, including the Land Amendment Bill (2024) and the National Land Commission (Amendment) Bill (2023). Together, these laws signal a policy shift toward tightening land management, digitizing registries, and unlocking idle property for revenue generation.
“It’s no coincidence that enforcement is ramping up right after the new laws,” said governance expert Dr. Eric Ochieng’, a policy lecturer at the University of Nairobi. “The government is trying to send a message that property ownership comes with responsibility, and taxation is part of it.”
What Next?
The county has given defaulters 30 days to clear their arrears or risk losing property. Payment can now be made online through the NairobiPay portal, an effort to ease compliance. Still, urban planners warn that the auctions could expose a deeper challenge: decades of poor record-keeping, unverified land titles, and political interference in Nairobi’s property market.
As economist Faith Wachira sums it up: “This is not just a revenue story, it’s about trust. When citizens see fairness and transparency, they pay. When they see inconsistency, they resist. The solution is not just enforcement but rebuilding confidence in public institutions.”
Whether Nairobi’s land-rate blitz will close the revenue gap or open new wounds in Kenya’s real-estate sector remains to be seen. What’s clear is that the era of silent default may be ending, and property owners, from small traders in Eastleigh to developers in Upper Hill, will soon feel the weight of the law.