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5 Kenya Real Estate Buying Tips
There are a range of Kenya real estate options to suit every type of buyer. These range from luxury beach houses, to excellent second homes or vacation rentals, to villas, town houses and apartments.
Kenya is a fairly large economy so apart from Nairobi, there is a vibrant property market in Mombasa, Lamu, Malindi and Kisumu. So chances are you will be spoiled for choice when searching for Kenya properties for your ideal home.
However, before you sign on the dotted line, carefully consider the tips below.
1. Research the neighborhood
When you identify a piece of Kenya real estate you like, drive or walk around the neighborhood. Is it scenic and are there unplanned structures like roadside kiosks?
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 common good of the community?
Is your dream home close to a shopping center so you don’t have to drive to the other side 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 a settlement? The latter is an important consideration as it devalues your investment and can increase the incidence of crime. For example, despite being classed as posh suburbs, avoid parts of the border townships of Lavington, Loresho and Runda.
It may be a good idea to drive around the neighborhood at unusual times, such as early in the morning, after office hours, and late at night, to check traffic flow and the general atmosphere of the neighborhood.
Some areas of the country are more prone to power and water outages than others. So visit one of the local shops and ask about these issues so you can make an informed Kenya real estate decision.
2. Do your due diligence on the identified property
Once you’ve thoroughly researched the neighborhood, it’s time to research the property at both the Ministry of Lands and the relevant city or municipal council.
A search at the Ministry of Lands will help you discover some things…
First, a copy of the title will indicate whether the person trying to sell the property is truly the owner.
Second, if it is a leasehold property it indicates the outstanding lease term. It may not be wise to buy a property with a remaining lease term of less than 20 years. If, however, you finance the purchase of the property with a mortgage, be aware that financial institutions require a very long outstanding lease term.
Third, any encumbrances on the property will be noted on the title. If, for example, the title holder has mortgaged the property, the mortgagor’s interest will be noted on the title. As such, the property transaction cannot be finalized without this lender’s consent so you must plan to get it.
A search at the town or city council offices will help ensure that all annual rates have been paid. If there is arrears, the Ministry of Lands cannot hand over the property because the city or town council will withhold their all-important clearance certificate.
Negotiation is another important tip to get value for money when buying Kenya real estate. Buying a home is, by all accounts, a major investment so don’t be shy about haggling. Try and shave a million or half a million Kenyan shillings off the advertised price…
Timing is of the essence here although it is easy to discount incomplete developments. Developers are willing to give substantial discounts when construction has just begun in exchange for a substantial down payment. So, be prepared to pay more than 10 percent of the purchase price, which is usually required when signing a sales contract.
How much you ultimately need to pay down depends on your negotiating skills so it’s time to do it.
4. Identify a good lender
If you are financing your home purchase with a mortgage, you need to research mortgage providers in Kenya so that you choose one that meets your needs.
Many banks, building societies and mortgage companies offer 80-100 per cent mortgages. These include Housing Finance, Kenya Commercial Bank, Barclays and Commercial Bank of Africa. In Kenya, mortgages usually attract variable rather than fixed interest rates but read the fine print to ensure there are no hidden costs or restrictive clauses.
Obviously, before taking out a mortgage, make sure you can service both your existing and additional debt. This can prevent that dreaded risk of foreclosure in the future.
5. Hire a good lawyer
Lawyers play an irreplaceable role in the conclusion of Kenya real estate transactions so you should hire one.
Like everywhere else, there are few good lawyers in Kenya so choose your lawyer very carefully. If you don’t know, ask your family or a real estate agent to recommend a reliable one.
As an added safeguard, don’t give your attorney a power of attorney because it gives him free license to do whatever he wants with the property. So, you could be cheated out of your Kenya real estate investment.
Instead, set aside some money to get all the documents that require your signature. You will also need to courier these back. It may cost you a few hundred dollars and delay the conclusion of the transaction by a few weeks but it is well worth it to protect your interests.
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