There are a range of Kenya real estate options to suit every type of buyer. These range from luxury beach homes which make for excellent second homes or vacation rentals, to villas, town houses and apartments.
Kenya is a reasonably big economy so besides Nairobi, there is a vibrant property market in Mombasa, Lamu, Malindi and Kisumu. Chances therefore are that you will be spoilt for choice when searching Kenya properties for your ideal home.
However, before you sign on the dotted line, ponder over the tips below very carefully.
1. Research the Neighborhood
When you identify a piece of Kenya real estate you like, drive or walk around the neighborhood. Is it lush and are there unplanned structures such as kiosks on the roadside?
Are the roads paved and how many alternative routes can you use to get to the city center? Does the neighborhood have a vibrant association that advances the community’s common interests?
Is your dream house near a shopping center so that you don’t have to drive to the other end of town to do your weekly shopping? If you have school-going children, how good are the schools in the area?
Is the house located near slums? The latter is an important consideration as it devalues your investment and may increase the incidence of crime. Although classified as posh suburbs for example, parts of Lavington, Loresho and Runda border slums so steer clear of these.
It may be a good idea to drive around the neighborhood at unusual times such as very early in the morning, after office hours and late at night to check out the traffic flow and the general environment in the neighborhood.
Some areas in the country are more prone to power and water outages than others. So walk into one of the local shops and ask about these issues so that you can make an informed Kenya real estate decision.
2. Do your Due Diligence on the Identified Property
Once you have thoroughly researched the neighborhood, it’s time to research the property at both the Ministry of Lands and the relevant city or municipal council.
Carrying out a search at the Ministry of Lands helps you to ascertain a couple of things…
First, the copy of the title will indicate whether the person purporting to sell the property is indeed the owner.
Second, it indicates the outstanding lease period if it is a leasehold property. It may not be wise to buy a property with a remaining lease period of less than 20 years. If, however, you will finance the purchase of the property with a mortgage, be aware that financial institutions will require a much longer outstanding lease period.
Third, any encumbrances on the property will be noted on the title. If, for example, the title holder has mortgaged the property, the mortgager’s interest will be noted on the title. As such, the property transaction cannot be finalized without this lender’s consent so you should plan to obtain this.
A search at the city or municipal council offices will help you ascertain whether all the annual rates have been paid. If there are arrears, the transfer of property cannot be effected by the Ministry of Lands as the city or municipal council will withhold their all-important certificate of clearance.
Negotiation is another important tip for getting value for money when buying Kenya real estate. Buying a house is, by all accounts, a major investment so do don’t be embarrassed to bargain. Try and lop a million or half a million Kenya shillings off the advertised price…
Timing is critical here though as it is easier to get a discount on uncompleted developments. Developers are keen to give considerable discounts when construction has just started in return for a substantial down payment. So, be prepared to pay substantially more than the 10 percent of the purchase price typically required upon signing of the sale agreement.
How much down payment you will eventually be required to make is entirely up to your negotiation skills so hone these in good time.
4. Identify a Good Lender
If you will be financing your home purchase with a mortgage, you need to research the mortgage providers in Kenya so that you pick the one who most meets your needs.
Several banks, building societies and mortgage companies provide 80-100 percent mortgages. These include Housing Finance, Kenya Commercial Bank, Barclays and Commercial Bank of Africa. In Kenya, mortgages typically attract variable rather than fixed interest rates but read the fine print to ensure that there are no hidden costs or oppressive clauses.
Obviously, before taking on a mortgage, make sure you can service both your existing and additional debt. This will avert that dreaded risk of foreclosure in future.
5. Hire a Good Lawyer
Lawyers play an irreplaceable role in concluding Kenya real estate transactions so you will need to hire one.
As with everywhere else, Kenya has a few wayward lawyers so choose your lawyer very carefully. If you don’t know one, ask your family or real estate agent to recommend a reliable one.
As an extra safeguard, do not grant your lawyer the power of attorney because this gives him a free license to do with the property as he pleases. So, you could be cheated out of your Kenya real estate investment.
Instead, set aside some money to have all documents that require your signature couriered to you. You will also need to courier these back. This may cost you a few hundred dollars and delay conclusion of the transaction by a few weeks but is well worth it to protect your interests.