Ultimate guide to buying a house in Kenya

Ultimate guide to buying a house in Kenya

Buying a house is one of most people’s largest investment decisions and usually has a big financial outlay. As you make one of the most important financial decisions, knowing what do no and not to do is key. The process of buying a house in Kenya can be challenging more so when buying a house for the first time. Whether you are a foreigner seeking to buy a house in Kenya or a citizen, there are several steps, tasks and regulations you need to be aware of to avoid making an expensive mistake. To ease your anxiety and ensure you are on the right path, we have created a step by step guide to buying a house. Whether you are a seasoned real estate investor or a beginner in real estate, the top 5 factors to consider when buying a house in Kenya are:

1. Determine your real estate investment needs

As you start looking for a house to buy, determine your wants and both current and long-term needs. If you plan to expand your family, you should consider buying a house with an extra room to grow into. For instance, if you are living in a one-bedroom house and plan to expand your family, the best option is to search for not less than a 2-bedroom house. As buying a house is a long-term decision, this helps to ensure you can live in the house for some time before the need to move arises.

Make a consideration of the amenities that you need the neighborhood to have. Some factors include schools, access to public transport, parking, entertainment spots, shopping malls and your social network. Consider factors like schools if you have or plan to have kids. Ideally, houses should be close to good schools so that the commute for kids is easier. If you drive a car and you are buying a house to live in, then you should only buy a house with a designated parking. If you do not drive, then the house should have ease of access to public transport.

 As you think though your decision, consider the house type that best suits your needs. This could range from apartments, bungalows, villas, townhouses or whether you prefer a single or a multiple dwelling house. Also consider if you prefer to live in a gated neighborhood.

Itemize all the features that your house should have. This is for both must haves and good to have features. If you have an idea of sizes, itemize these as well. Some features could range from swimming pool, front and backyard, electric fence or the finishing’s as well. If you need a house with a certain type of roofing, have that itemized as it will make the search faster.

Once you identify your needs, factor in some flexibility as well because other considerations like price could affect some of the items you have identified. Determine what the property you buy must have and what you can do without while still ensuring that the final house you purchase fits both your needs and wants as closely as possible.

2. Determine the available budget

We have now determined our needs and to narrow down our search further, you need to have a look at your finances. How much money do you anticipate spending while buying your house? If you are unsure of the amount you need, you can use a mortgage calculator to determine the price range to operate within. This will help determine readiness to move ahead with the process of searching for a house. Determining the available funds allow us to assess ability to pay for both upfront and any recurring costs associated with the purchase of the house. Most people buy houses in three ways- either through cash, mortgage or through an off-plan purchase.

If you are buying on cash, consider if you have all the cash needed or a top up is necessary. Saccos and banks offer unsecured and secured loans which can help bridge the gap between the savings you have and the cost of purchasing the house. If you plan to buy a house in cash, you may also consider liquidating some of your existing investments to ensure you have the full cash amount needed.

If you are using a bank issued mortgage, its advisable check out several banks offers before settling on a lender. Banks have different offers on amount they can pay for a house with banks offering up to 105% financing on properties for sale. The 5% is meant to cover stamp duty costs payable to the government and other government fees.  Some banks require you to meet certain upfront costs like a down payment while others offer to pay all fees from legal, transfer and stamp duty costs. Banks also differ on loan terms, interest rates and processing fees. You need to ensure that the rates offered are the most advantageous you can find.  

Other than the purchase price of the property, consider stamp duty costs in Kenya. It is the responsibility of the buyer to pay the stamp duty.

There are many companies currently offering off plan purchases. The way this works is you make an initial deposit and then make the remaining payments within a given period as construction progresses. This method has the flexibility of getting a house at a relatively affordable price while offering affordability. There are however risks with delayed completion periods and developer integrity that have made this a sub optimal avenue for most first-time home buyers.

After you buy a property, you will also incur additional costs like moving costs, furniture costs and purchasing new appliances to make your home comfortable. You may also need to make a few renovations on the property. Include these as well in your budget.

3. Selecting a real estate agent.

While reading the blog articles like First-Time Homebuyer’s Guide helps, it may not be specific enough for the market you are in.  it is very important to have someone guide you in the process of buying a house. This could be a friend, family member or a real estate agent.  Our recommendation is to have both a real estate agent and a trusted person to work with. if you do not know a real estate agent, you could ask friends and family members for references. An online search also helps but you would then need to do a background check

When choosing a real estate agent, find someone with the right experience, local knowledge and you can ‘click’ with. An agent helps to their extensive network and can alert you on even property that have not been advertised yet. A good agent should communicate with you as often as needed.

Check on the real estate agents negotiating skills. If they are good negotiators, this will be critical in ensuring you are able to get the best deal from the property purchase act as the advocate for you and your interests throughout the process of purchase. An experienced agent helps you prepare the correct paperwork and protects you from minefields that you could encounter if you go it alone. Most agents are conversant with the process of buying and selling a house which leaves you to concentrate on working on the finer aspects of the actual house you need and not the process.

4. Analysing the Property Market and Selecting a House.

Now that you have nailed down your budget, house specifications and have an agent, it’s time to start the legwork. The first option would be to use online real estate listing platforms in Kenya to start your property search. On the online listing platform, filter homes that are available for sale within your preferred neighborhood and for a price you can afford. Online platforms help compare prices with other houses within the neighborhood. Review the photos available and see if any of the houses appear within your preferences.

When reviewing online listings, a description of the house for sale is key. Lok out for description on the number of rooms, bedrooms and bathrooms to know if this meets your needs. Most agent explain other factors within the description like finishing’s, whether in a gated estate or not, parking availability, Wi-Fi and cable internet availability. This description will help you narrow down your options and save you time.

The real estate agent will support you to identify properties that are not on listing platforms. Most agents have a network they can call or are members of various online platforms for real estate providers.

When you have time, take a walk or drive within the preferred neighborhood.  Look out for any for sale signs and make enquiries. As you make visits to various houses make reviews on items like space, lighting and finishes on the house. Your agent will support you inspect the house for any defects.  While there are so many unscrupulous agents and conmen, ensure that your real estate agent accompanies you to any property that you want to view. Additionally, do not make any deposits or payment for potential properties before enlisting the services of a conveyancing lawyer. As you make these tours, determine how the neighborhood feels in terms of safety and security. Assess the noise levels as well. Visit the neighbourhood at various times of the day to determine how safe it is and how comfortable you feel at night. Do a morning drive to help you estimate the time needed go get to work to ensure that you can deal with the commute daily. For schools, check when kids are picked and dropped off.  Speaking to neighbors about this really helps.

When deciding to buy a house, you must take advantage and use both your emotions and trusting your instincts. Use your emotions to make sure you are buying a house that you love. As you will be spending a lot of time in the house, falling in love with the house is advisable. Use your instincts as well. If you feel the house is overpriced, get a professional valuer to give you a better assessment of price.

5. Making an Offer, Negotiating and Transfer.

Now that you have viewed several house options and decided on the house to buy, the final step is making an offer to buy.  When making an offer to buy, consider your budget, the original price offered for purchase, agents price advise, valuer price and what you consider to be reasonable and a fair market value of the property.

Make an offer to the seller and include any conditions that you want included. These conditions include any repairs needed, amount of deposit needed, documents that you need for due diligence and any payment terms that you. The seller will either accept your terms or negotiate on them. This process of offer and counteroffer continues until you either reach a deal or decide to call it quits. Make sure your agent negotiates on your behalf and remember you can always change agents if you feel the real estate agent is not supporting you to make the best deal for you.

When making any purchase deposits, ensure you have guidance of a lawyer conversant with the conveyancing process in Kenya. This lawyer will support in the due diligence process of property transfer.

 Conclusion

The process of buying a house to live in can be a daunting task and is not for the faint hearted. However, you have not worked hard to fail at the finishing line. There are many companies in Kenya that offer conveyancing services which makes the process of buying a house easier. Most lawyers understand the conveyancing law and practice in Kenya and you don’t have to worry about this.


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