Real Estate Investment is not a betting zone.
The growth in Kenya’s middle class has led to an increase in demand for residential real estate, and the speed of urban population growth currently exceeds the rate of development of new houses. In a bid to meet this housing gap, many Kenyans have recently fallen prey to various property developers and agents in a worrying culture of growing greed, ignorance and naivety. The 2014 demolition of multi-billion Diamond Park Estate in South B, Pink pearl Investments Ltd in Wetlands in 2015 and the recent 2017 Simple Homes case. An interesting wrinkle to these fact pattern is that the defrauding party gets to walk scot free though well known to the general public as serial thieves. Ignorance is not an excuse not to follow the law even the Bible Says my people are destroyed from lack of knowledge . Desperation, naivety and greed are not among the ingredients needed to be an investor in Real Estate. In this case, Simple Homes gave a very high red flag: Interest free mortgage loan facility spanning 49years and a purchaser would stay in their desired houses as they paid according to their financial capabilities?? That the government capped interest rates for banks is reason enough to give considerable thought to any campaigns from loaning institutions making the road to loans seem way easier. How then can it be that one can give cost-free credit?It is true what they say, If the property looks too good to be true – it is in the perfect location, has beautiful photos and is well below your budget. You send off an enquiry and receive a quick response: the landlord is currently overseas and cannot show you the home. But if you can wire through a deposit as soon as possible, the property is yours?? Think twice.
Due diligence is not negotiable.
A search with Ministry of Lands at district or county headquarters is important to show the true land owners and whether there are any pending transactions against the Land title. The search should be less than six months old after which you may proceed to the Local County offices with your clearance certificate to confirm the history of the land rates that contributes to the final buying decision. It is important to note that the land cannot be transferred in the event that there are pending land rates. The local surveyor is then involved to show a picture of the land (map drawn to scale) and neighboring farms. Usually the seller takes up the cost at this stage. Input from the community is necessary. It is important to engage the elders or the local community to note any disputes that could be related but not limited to boundaries. The surveyor and the seller then visit the grounds with the map to confirm the measurements and beacons, amending where necessary. The fifth step involves a land agreement that MUST be in writing. A lawyer is paramount at this stage to avoid later complications in terms of consent from existing family members or spouses. Your agreement stipulates clearly on the mode of payment that could be cash or by installment. Before the first payment to show the seller some commitment, it is advised to engage the Land Control Board that meets once a month and gives the final consent for the land to be sold. By the Time the Initial payment is being done, the lawyers should be in possession of the title deed and all other documents. The seller then proceeds with signing the Land transfer forms at the Ministry of Lands while in possession of the consent form from LCB, a legit and valid land search, clearance from the county for all land rates paid, passport photos, KRA PIN, agreement and old title deed. At this point, you may be required to pay for Stamp duty which is based on the value of the land. A valuation to determine the value of the land may be required or the official could use the purchase price of the land. Post purchase evaluation at the ministry of lands to find out that all the procedures were followed is necessary. This affirms that the transfer was done correctly.
Different stages have different prices which may vary depending on locations value of land and time.
Importance of tripartite agreement for Off-plan Purchase
This is an agreement between three parties; the buyer, the bank and the seller/ developer. This agreement lists the obligations of all parties involved and effectively states the relevant details of housing loan (mortgage) or leasing transaction in an under-construction project. Since the agreement contains all the details of the mortgage for the home/ apartment, the rights and liabilities of all the parties involved. It can be helpful to a buyer when he/she opts for a home loan to purchase property in an under construction project. The agreement also highlights the specifications of the property, the carpet area and all details concerning the financing (loan) of the property. The tripartite also includes the date of acquisition of property and specifies the details of the clause of penalty. Establishment of this agreement assists buyers of real estate property to acquire loans for property even if it’s against the planned purchase of the property. It allows for the name of developer/ builder to be included in an agreement with the bank especially since the home/ apartment is not in the agreement until possession. Inclusion of a declaration/ representation from the developer or the seller clarifies the ownership (title) and lets other parties be aware that the developer has not entered into any other agreement.
Moke Gardens believes in transparency, integrity, professionalism and efficiency. We believe in our buyers as partners when they’re buying a home. We like to walk with our clients through the purchase process and emphasize on the need to involve all the necessary professionals from both parties on the onset of the buying process. We provide our buyers with helpful information on homes and neighborhoods that isn’t easily accessible to the public to help influence their final decision. Having being in real estate since 2008,our team is equipped with knowledge of the home buying process as is required by our government laws and best of all, it doesn’t cost you anything to use our real estate consultancy services. Our experience and reputation is evident from our already existing projects: Beya Beya apartments in Nairobi West, Kuthi Apartments in Karen and Togo Apartments in Woodley all developed by Nesco services Ltd our mother company.
Visit our website www.mokegardens.co.ke for more on guidelines to buy a house.