Category: Housing

Buying an apartment in Nairobi, Kenya can be an exciting and rewarding investment opportunity. However, the process can be complex and daunting, especially for first-time buyers. In this article, we will walk you through the step-by-step process of purchasing an apartment in Nairobi, highlighting key considerations, legal requirements, and helpful tips along the way.

Determine Your Budget:

Before starting your apartment search, it’s crucial to assess your financial situation and set a realistic budget. Consider your income, savings, and any potential financing options available to you. This will help you narrow down your options and ensure you focus on apartments that fall within your price range.

Research and Location:

Nairobi offers a diverse range of neighborhoods, each with its unique characteristics and amenities. Research various areas based on your preferences, such as proximity to workplaces, schools, transportation, and lifestyle conveniences. Consider factors like security, infrastructure, and future development plans in the chosen location.

Engage a Real Estate Agent:

Working with a reputable real estate agent can significantly simplify the apartment buying process. They possess in-depth knowledge of the local market, access to a wide range of properties, and can guide you through negotiations and paperwork. Look for licensed agents with a good track record and positive client testimonials.

Property Search:

Based on your budget and desired location, your real estate agent will help you identify suitable apartment options. Arrange property viewings to assess the condition, layout, amenities, and potential for future value appreciation. Ask questions about maintenance costs, community regulations, and any pending legal issues.

Legal Due Diligence:

Before committing to a purchase, conduct a thorough legal due diligence process. Verify property ownership, review title deeds, land documents, and conduct searches to ensure there are no encumbrances or pending disputes. Engage a qualified lawyer to guide you through the legal aspects and ensure a smooth transaction.

Financing Options:

If you require financing, explore different mortgage options available from banks or financial institutions. Compare interest rates, terms, and eligibility criteria to find the best fit for your financial situation. Prepare the necessary documents, such as proof of income, identification, and property valuation reports, to support your loan application.

Offer and Negotiation:

Once you’ve found your ideal apartment, work with your real estate agent to prepare a purchase offer. Consider factors like the property’s market value, prevailing market conditions, and any necessary repairs or modifications. Negotiate the price, payment terms, and inclusions with the seller, aiming for a mutually agreeable deal.

Sale Agreement and Deposit:

Once your offer is accepted, a sale agreement will be drafted by your lawyer. Review the agreement carefully, ensuring all crucial terms are included, such as payment schedules, completion timelines, and any special conditions. Pay the agreed-upon deposit amount, usually around 10% of the property value, to secure the apartment.

Finalizing the Purchase:

Work closely with your lawyer to fulfill all legal requirements, including property transfer documentation, tax payments, and any necessary permits. Conduct a final inspection to ensure the property’s condition aligns with the agreed terms. Once satisfied, proceed with the final payment and complete the transfer of ownership.

Post-Purchase Considerations:

After acquiring the apartment, update utility accounts, insurance policies, and register your ownership with the relevant authorities. Familiarize yourself with any homeowners’ association rules or management fees that may apply. Take proactive steps to safeguard your investment, such as property maintenance and security measures.

Conclusion:

Buying an apartment in Nairobi requires careful planning, thorough research, and professional guidance. By following the steps outlined in this article, you can navigate the process with confidence and increase your chances of making a successful purchase. Remember to engage reputable professionals, exercise due diligence, and prioritize your long-term goals as you embark on this exciting journey.

When it comes to investing in real estate, the decision between purchasing land or an apartment can be a challenging one. Both options offer unique benefits and considerations that can significantly impact your investment and long-term goals. In this article, we will delve into the advantages and drawbacks of each, providing you with valuable insights to help you make an informed decision.

The Advantages of Buying Land:

1. Flexibility and Customization: Owning land provides you with the freedom to build a custom-designed property that perfectly suits your needs and preferences. You have the opportunity to create a unique living space tailored to your vision.
2. Potential for Appreciation: Historically, land has shown the potential for substantial appreciation in value over time. As population growth continues, the scarcity of available land may drive up its worth, making it a promising long-term investment.
3. Diverse Utilization: Land offers versatility in terms of usage. You can develop it for residential purposes, commercial ventures, or even as agricultural land. This flexibility allows you to explore various avenues for potential income generation.

The Advantages of Buying an Apartment:

1. Convenience and Amenities: Apartments often come with built-in conveniences and amenities such as swimming pools, fitness centers, security systems, and maintenance services. These features can enhance your quality of life and save you time and effort in managing day-to-day responsibilities.
2. Rental Income and Cash Flow: Apartments can provide a steady stream of income through rental opportunities. If the location is desirable and the demand for rental properties is high, owning an apartment can be a lucrative investment, allowing you to generate consistent cash flow.
3. Community and Social Interaction: Living in an apartment complex provides an opportunity for increased social interactions and a sense of community. Shared spaces and common areas create opportunities for building relationships with neighbors, fostering a sense of belonging.

Considerations and Drawbacks:

1. Maintenance and Upkeep: While land requires maintenance, the responsibility of maintaining an apartment complex typically falls on the management or homeowner’s association. However, this can come at a cost, as monthly maintenance fees may be required.
2. Affordability and Financing: Apartments are generally more affordable upfront compared to purchasing land, as the cost is divided among multiple units. Additionally, securing financing for an apartment may be easier than obtaining a loan for undeveloped land.
3. Long-Term Vision: The decision between land and an apartment depends on your long-term goals. Land offers potential for development and customization, while an apartment provides immediate occupancy and rental income.

Conclusion:

Choosing between buying land or an apartment requires careful consideration of your personal circumstances, financial goals, and preferences. Land provides flexibility, potential for appreciation, and diverse utilization options. On the other hand, apartments offer convenience, amenities, rental income potential, and a sense of community. By evaluating these factors, you can make an informed decision that aligns with your investment objectives and lifestyle aspirations. Ultimately, both options can serve as valuable assets; it is essential to prioritize your unique needs and long-term vision when making a choice.

In Kenya, locals and foreigners are permitted to buy commercial and residential real estate/lands located within a town or municipality without any restrictions whatsoever provided that comply with the laid down procedures. 

However, for the agricultural land, foreigners or privately-owned companies whose shareholders are not all Kenyan citizens are not permitted to buy such land unless where such transaction has been exempted from the provisions of the Land Control Act by the President pursuant to section 24 thereof. The land control boards, which are established under the said Act, are prohibited from granting consent to transfer in respect of persons or companies that do not qualify to hold agricultural land.  

Under the new Kenyan Constitution 2010, persons who are not citizens of Kenya, as well as companies whose shareholders are not Kenyan citizens, can only own land on a leasehold basis for a term not exceeding 99 years. In other words, such persons cannot own land on freehold tenure.

In summary, the procedure for buying land in Kenya is as detailed hereinbelow.

N/B: It is extremely important for buyers to use professional and reputable lawyers whenever they are buying land in Kenya in order to receive proper legal advice and representation in the entire sale process and thus avoid unnecessary pitfalls and dealing with cons. Equally important, the purchaser should avoid making any payment directly to the vendor or his agent, and such monies are better channeled through his lawyer so that he can take the requisite precautions.   

1. Identification of the Land

The process of land purchase starts with the buyer identifying a suitable land for purchase. One can enlist the services of a reputable real estate agency firm to assist him in identifying a suitable land for purchase and connect him to the seller. Once the land has been identified, the buyer should endeavor to visit the site and satisfy himself or herself that the land meets the desired criteria including its physical location and boundaries.

2. Conducting the requisite searches and preliminary investigations

Land in Kenya is registered under three registration regimes

The previous land registration laws (that is, The Government Lands Act, the Registration of Titles Act, and the Registered Lands Act) have now been repealed and replaced by the Land Act, the National Land Commission Land, and the Land Registration Act. The Land Registration Act provides for a registration unit in every district and the land registries established under the repealed laws are still operational.  

 The buyer or his lawyer should get a copy of the title and National Identity Card of the seller and conduct the requisite searches both for the land at the relevant lands office and also of the person named in the title as the registered owner at the Registration of Persons Bureau.  The latter will help to confirm that the purported owner of the land is the real owner of the land an impostor.  

To conduct a search, one is required to file a search application form and attached a copy of the title deed. The search is then required to be lodged at the registry and the requisite search fees (current at KShs. 500/- paid. It takes 2-3 days to get search results from the Lands registry. The search result should be able to reveal the following details:-

• the registered owner of the property;

• its size;

• any encumbrances registered against the titles like prohibitions, court orders, cautions, and caveats;

If the search results are satisfactory, one should also check whether the land is included in the Report by the Commission of Inquiry on the Illegal and Irregularly Allocated Land, commonly known as the Ndung’u Land Report.

Moreover, it is usually prudent for the owner to enlist the services of a registered surveyor who shall be able to confirm the beacons on the land and conduct further preliminary checks at the Survey Department.  

3.  Price and terms negotiation and the sale Agreement 

If the proposed buyer is satisfied by the preliminary investigation and check highlighted in 2 above, he should, together with his advocates, or alone, engage the vendor or his agent for purposes of discussion and agreeing on the terms of sale including the price and the terms of payment. Usually, the buyer is required to pay a 10% deposit and the balance of the purchase price upon completion of the sale transaction. 

Once the parties have agreed on the terms of sale, the Vendor’s advocates should prepare the sale agreement and send the same to the vendor for his approval.

The sale agreement will set out the terms of sale including the name of the parties, the purchase price and mode of payment, the completion period (which is usually 90 days) and the completed documents to be furnished by the seller/ vendor to enable registration of the transfer of property in favor of the purchaser. Invariably, the sale agreement will incorporate the Law Society Conditions of Sale (1989 Version), which is a codification of the customary terms of sale adopted by the Law Society of Kenya, and these terms will apply, by reference, to the agreement of the parties unless otherwise excluded or varied by the parties in their agreement. It is also common for the sale agreement to incorporate a suitable arbitration clause, which provides for a mechanism of ease dispute resolution.  

Where the balance of the purchase price is being financed by a bank or financier, the same should be stated in the sale agreement. In such a case, the transfer of land in favor of the purchaser and the charge over the property in favor of the financier are registered concomitantly, and once the original title and security documents have been forwarded to the financier by the financier’s advocates, the financier shall settle the financed balance of the purchase price to the Vendor or his advocates.

 It is important to note that where the purchase is being financed in the payment of any part of the purchase price, any part of the purchase price that is not being financed must be paid to the vendor’s advocates and the purchase’s advocates or the advocates acting for the financier must furnish the vendor’s advocates with a suitable professional undertaking to secure the payment of the financed balance of the purchase price. If such undertaking is satisfactory to the vendor’s advocates, he should forward the requisite completion documents to the financier’s advocates to undertake the stamping and registration formalities.

Once the terms of the sale agreement have been agreed between the parties, the agreement is engrossed and executed by the parties or their power of attorney.  The purchaser should be the first to sign the sale agreement, which should be forwarded to the vendor’s advocates for the vendor’s execution accompanied by the deposit cheque or evidence of the payment of the same.  

Once the vendor has executed, the vendor’s advocates should note to present it for stamping with duty (currently KShs. 200 for the original and KShs. 20 for each counterpart) at the land’s office. This is important because of the rule that unstamped documents cannot be accepted by a court of law as evidence in the event of a dispute.

It is important to note that the deposit monies should be held on stakeholders’ terms (as trustee) by the Vendor’s advocates pending the completion of the sale and should not be released to the vendor unless otherwise agreed by the parties. Moreover, where the purchase price is paid in full, the same should be held on stakeholder’s terms by the vendor’s advocates until completion of the sale transaction, which is signified by the registration of the transfer at the lands office in favor of the purchaser. For this reason, the purchaser must insist on the vendor’s advocates being the reputable firms of advocates, and where the vendor’s advocates cannot be trusted, the monies should be held in a joint account in the name of the vendor and the purchaser’s advocates or an independent escrow agent.  

4. Preparation of the Transfer and Getting the Completion Documents

The transfer is usually prepared by the purchaser’s advocate and approved by the vendor’s advocate. The documents should also be signed by both parties. 

Unless otherwise stated in the sale agreement between the parties, it is usually the vendor’s duty to obtain all the requisite completion documents, which are required to effect the registration of the property in favor of the purchaser) at his own costs. These documents include:-

• The original title for the property
• The transfer of property duly executed by the vendor/ seller (in triplicate);
• Identity Card/ Certificate of Registration of the vendor/ seller and Pin Certificate;
• Three(3) passport-sized photographs of the seller/vendor. If the seller is a company, photographs of two of its director or a director and company secretary and their Pin Certificate will also be required; 
• Land Rent Clearance Certificate for the Property, where the land is a leasehold from the Government;
• Rates Clearance Certificate for the Property issued by the relevant local authority (if applicable);
• original receipts evidencing the payment of rates and rates;  

(Consent to transfer the property issued by the Commissioner of land, the relevant land control board, or where the land is a leasehold from a local authority, the consent is issued by the Town Clerk of the relevant local authority.

(Valuation form duly completed by the Vendor or his advocate;

 If the property is a flat/apartment or office space and comprised the of a lease, additional completion documents will include:

• the original lease for the property and the transfer of lease duly executed by the parties, as appropriate; 
• the consent by the lessor and/or the management company, incorporated in the transfer of lease,  
• the letter from the management company confirming that the seller has paid all the outgoings;
• the original share certificate in the management company;
• the transfer of share form duly executed by the parties;
• Form D in respect of the share transfer duly signed by the company’s auditors; 

5. Stamping and Registration Formalities

The purchaser is usually responsible to cater to the costs of the stamp duty on the transfer of property and registration charges.  The stamp duty on the transfer of property is collected by the Kenya Revenue Authority and is payable pursuant to the provisions of the Stamp Duty Act, chapter 480 of the laws of Kenya. Before duty is determined, the vendor’s advocates must apply for the valuation of the property at the Land Office, which is undertaken by the government valuers, who are required to determine the market value of the property. This application is done by lodging the duly signed transfer of property and the valuation for stamp duty form duly signed by the vendor or his advocates (referred to above).

Once the valuation has been completed, the market value of the property (not necessarily the value indicated by the transfer) will be indicated on the original transfer of property by the collector of duties. Thereafter, the vendor’s advocates will need to present the documents to the lands office for assessment of the duty payable. This is done by filling a form known as the stamp duty Declaration, Assessment, and Pay-in Slip, which is complicated in quadruplicate.

As stated before, the stamp duty is collected by Kenya Revenue Authority and should be paid to the Commissioner of Domestic Taxes through various banks which have been appointed as collecting agents. Currently, these banks include Kenya Commercial bank Limited (KCB), and National Bank of Kenya Limited (NBK).

 Once the duty has been paid over the counter through the collecting either of the collecting agent banks, the documents are then lodged at the lands office for stamping with duty. The collector of stamp duties will normally stamp the documents once he is satisfied that the collective amount of stamp duty has been paid. 

The following are the rates applicable on the transfer of land:-

Where land is in a municipality- the duty is 4% of the market value of the land as determined by the Government valuer. The market value may be higher than the value indicated by the parties in the transfer documents.

Where land is agricultural or outside a municipality- the duty is 2% of the market value of the land as determined by the Government valuer. 

In respect of a charge or mortgage – the duty payable is 0.1% of the mortgage amount. 

Once the transfer of land or charge over the property has been stamp duty with duty, the transfer documents accompanied by the original titles, land rent and rates clearance certificate, consent to transfer, the duly completed valuation for stamp duty form, and the stamp duty declaration, assessment and pay-in-slip should be booked of registration.

Where the purchaser is being financed, the charge over the property and consent to charge must also be booked or lodged for registration together with the transfer.

6. Registration 

The final process of land purchase is the registration of the transfer in favor of the purchaser, or the transfer of property/lease and the charge in favor of the purchaser and the financier, as the case may be.

Once the duly registered transfer has been released to the purchaser or his advocate, it is important to verify registration by conducting a search of the property.

Where the purchaser is being financed, the duly registered documents including the original title for the property, transfer, and the charge are forwarded to the financier to enable its to settle the balance of the purchase price. These will be held by the bank/financier until the loan has been repaid in full.

7. Development Permission 

Where the property is intended for use in the construction or erection of a building, after the purchase, the owner will be required to obtain the requisite development permissions from the relevant local authority.

If the proposed development is likely to have any adverse impact on the environment, the owner will also be required to commission an environmental impact assessment report and obtain an environmental license from the NEMA before undertaking any development on his property.

It is not late to get yourself a land near Nairobi city.

Juja Farm

Juja Farm is one of Kiambu County’s fastest-growing towns.

It is situated in Juja Farm Shopping Center, only a one-hour drive from Nairobi Central Business District (CBD) and around 10 kilometres from Juja town.

It is also 10 minutes from the Thika Superhighway and can easily be accessed via Northern and Southern Bypasses too.

Juja Farm has modern amenities and infrastructur, water and electricity, and a good road network.

Kenyatta Road

Kenyatta Road is one of the fastest-growing satellite areas in Kiambu and the Nairobi metropolis.
It is located off the Thika superhighway, the area is accessible via Thika Road, Eastern bypass and Northern bypass.
Buying land at Kenyatta Road allows you to invest and develop it in your own way. You can decide to build commercial or rental plots, farm or lease too.

Ruiru Kamakis

You can buy land at Ksh4.5 million only with Fanaka Real Estate. Ruiru Kamakis is 40 minutes away from the Jomo Kenyatta International Airport (JKIA) via Utawala.

You can also avoid traffic jams on Mombasa Road and Nairobi CBD, and Thika Road.
Its also near the Ksh500 billion Northlands City, an 11000-acre estate comprising residential, industrial, and commercial units hosting over 250,000 people, considered Kenya’s next biggest frontier.
Fanaka Real Estate can sell you land at Green Park Court – a new commercial project along Eastern Bypass.
It is located at Kamakis along the Eastern Bypass.
Green Park Court is about 1km off the Eastern Bypass in Kamakis in a fast-growing area within the commuter zone of Nairobi City. Each plot goes at a cash price of 4.5 million, payable in full and in 12 monthly instalments.

With Fanaka, you get ready for title deeds. We also offer flexible payment plans, from one-off payments to monthly instalments and also link you with banks for affordable loans.
Other areas you can buy land this Christmas are Ruai, Kamulu, Joska, Malaa, Kantafu, and Koma along Kangundo road.

Everyone hopes to own a piece of land somewhere. It’s the most valuable fixed asset that you could possibly own today. However, if you are planning to buy a piece of land anywhere in Kenya, there are certain important procedures which you should follow. Here are legal steps to purchase land in Kenya:

1. Searches and inspection of the title

Once you identify land it’s always recommended that you visit the lands registry so as to conduct a search of the parcel in question. You will need a copy of the land title deed from the seller to facilitate the search. This will normally take three days to get the results of the real owner of the land and if there is any caution put against the land.

2. Preparation of offers and price negotiation

Once the buyer is satisfied with the search results as presented by their advocates from the lands registry and the company registry, then they will okay their advocate to prepare an offer. The advocate involved should prepare a letter of offer or intent showing the details of the seller and purchaser, the description of the property on offer, and the proposed purchase price and modes of payment.

3. Sale agreement and deposit payment

Once you all agree that’s the buyer and the seller there is a need to ensure that the offer has both the terms and conditions included. It is normally drafted by the seller’s advocate and presented to the buyer’s advocate for approval.  Upon the execution of the sales agreement, the agreed deposit is paid by the purchaser through their advocate to the seller’s advocate’s account.

4. Payment of land rates

A few years ago, the City Council of Nairobi “clamped houses” that had failed to remit rates. Buyers should be aware of such property because the payment of rates on land is a legal obligation of landowners and the seller should clear any pending rates on the land before completing the transaction.

5. Transfer documents and consent to transfer

The seller’s advocate prepares transfer documents that will be executed by both the buyer and the seller. The transfer documents will only be executed after consent to transfer has been issued by the commissioner of lands.

6. Valuation

For purposes of stamp duty, an application for valuation is always made to the government valuer, who makes a site visit to enable him or her to prepare the requisite valuation report. Stamp duty is important as it is used in registering the property.

The payable duty is determined by a government valuer and the valuation is done to determine the true value of the land on the open market as at the date of transfer.
The intention is to gauge the value declared in the instruments presented for registration for purposes of ascertaining whether the value declared in the instruments will be raised or not.

7. Payment of Stamp Duty

It is the responsibility of the buyer to pay the stamp duty, a tax levied on all lands.

8. Registration of transfer

Once the registration process is complete, the legal ownership of the land shall have legally changed hands.

9. Exchange of documents

Upon receipt of the complete documents from the seller, the buyer is obligated, in exchange of the documents, to pay to the seller the entire balance against the land through his advocates to finalize the registration of the documents after paying the requisite stamp duty.

What comes into your mind when you hear the word “MORTGAGE”?

Tells us that in the comment section below.

If you are like most people, you will agree that owning a house or a home in Kenya today is one of the most accomplished undertakings. It is expensive and frustrating to do that.

The cost of land is ever-rising; the price of construction materials is on the roof, and so much more.

Now, imagine a way that would make owning your dream house a reality regardless of your net worth. That is where a mortgage comes in!

This is a guide on:

• What mortgage means
• What you need to get a mortgage
• Where to get a cheap mortgage
• Top mortgages providers in Kenya

What is a mortgage?

A mortgage is a loan. It is a loan offered by banks and other financial institutions to homebuyers. The property is used as collateral for the loan. To get started, most banks will require a down payment of 20% of the value of the property.

An advantage of taking a mortgage is that you own a little piece of the property every time you pay off the mortgage. Conversantly, this is not the case with paying rent.

Taking a mortgage on a property strips the ownership into two: equity, which is what you own, and debt, which is what the bank owns. Therefore, when making a mortgage repayment, you buy more equity and end up owning the property by the end of the amortization period.

Another advantage of taking a mortgage is that you can trip the value of the property once you have bought it. Let say, for instance, you take a mortgage of 4,000,000 ksh and buy a property.

Say, you find a person who is interested in the property and is willing to pay you 7,000,000 Ksh. If you chose to sell the property at that amount, you will have made a cool 3,000,000ksh. You only require paying the bank what you owe them, and not a cent on the profit you made.

Types of mortgages in Kenya

There are two types of mortgages in Kenya. This classification is based on the rate paid on the loan.

The loan you take on your property can either be a:

a) Floating rate mortgage

Also called a variable or adjustable-rate mortgage, this type of homeowner’s loans factors in fluctuating credit market rates. What this means is that the mortgage rate will go up or down depending on the market.

When the rates in the credit market are high, the mortgage rate of the repayment will be high and vice versa.

Though risky, variable rates are often cheaper compared to fixed rates.

b) Fixed-rate mortgage

As the name suggests, the fixed rate does not fluctuate with the credit market. This type of mortgage has a fixed interest rate that runs through the entire term of the loan.

Fixed rate mortgage is considered the safest but are often more expensive compared to variable rate mortgages. In addition, you risk locking yourself in a higher rate in cases where the interest rates are falling.

Types of loans you might be offered

To entice a huge number of borrowers, financial institutions try as much as possible to tailor the mortgage for different clients.

Most banks and other financial institutions are likely to offer the following loans:

• Owner-occupied residential mortgage. This is for those who wish to live in the property they purchase with the mortgage.
•  Investment residential mortgage. This is for those that purchase the property as an investment and not as their primary residence.
• Construction loan for those looking to build from the ground The amount is often sent to the contractor are the professionals overseeing the project.
• To up loans also called Equity loan. This is an easier way of getting extra funds using the equity you have accrued. The loan can be used for other reasons.

What you need to get a mortgage

Therefore, now that you know all about mortgages, here is what you will need to get started with your dream homes.

For most banks and other financial institutions, you will need the following documents to get a mortgage. Note, however, that the exact documents required may vary from one institution to the other. Check with the lender you prefer just to be sure.

Here is a mortgage checklist you will need.

• A signed mortgage application form
• Original copies of your identification documents, ID or Passport
• An introduction letter from your employer (for those employed)
• 3 months’ payslip
• Certified bank statement for at least 6 months
• Letter of offer or a sales agreement (when looking to purchase)

Top mortgage providers in Kenya

Here are some of the top mortgages providers in Kenya, and what they charge as the average annual interest rate.

You might want to check them out when looking to buy your dream home.

1. Housing finance group
2. Standard chartered bank 12.2%
3. Citibank Kenya 12.5%
4. Commercial Bank of Kenya 12.9%
5. KCB Bank 13.3%
6. NIC Bank Kenya 13.4%
7. CFC Stanbic bank Kenya 14.1%
8. Barclays Bank of Kenya 14.4%
9. Co-operative Bank 14.9%
10. Consolidated bank 15.1%

Disclaimer: the figures are just an estimate and may vary with time.