Finally, after weeks of scanning the newspapers and trawling round the local estate agents, you’ve found your dream home (or something as near to it as you can get). But, if you’ve never bought a house before, you’ll soon find out that there are still several hurdles to cross before you can measure up for curtains and move in your furniture.
Buying a house is a big deal, not to mention a big expense. If you’re thinking about buying your first property, it pays to know your rights as a buyer and how the buying process works. If it’s been a while since you’ve been in the market this might be just the refresher you need. For many people, owning a home brings a sense of pride and freedom that cannot be matched by renting. When you own your own home, you aren’t bound by a landlord’s rules, and your monthly payments are actually building equity. Although buying a home may be the first step you take toward building long-term wealth, it is important to understand the process you will undergo prior to owning your own home.
Many people dream of home ownership but it mandates homework, legwork and considerable effort on your part to ensure that the process goes as smoothly as possible, and you don’t bite off more than you can chew. When you begin your due diligence, you will find that most real estate properties in Kenya appreciate depending on the area, supply, demand and political and economic situation in the country. In urban and developing areas, land appreciates greatly due to demand and the prospect of future appreciation by buyers.
In Nairobi’s South B and South C for example, houses that cost Sh4 million in 2004 now cost Sh7.5 million. An acre in the city centre now costs Sh300 million. Four or five years ago, it sold at Sh160 million.
The first step to purchasing property in Kenya is to procure the services of a real estate lawyer. A title search on the property is very important to ensure that what is reflected on the title is the true and accurate position of the title at the Lands Office. Once the property has been chosen and a price is agreed upon, the lawyer prepares a sale agreement as a conditional preliminary contract, signed by both parties. Upon execution, the buyer pays a deposit of 10% to 30% of the purchase price, which is usually refundable if the seller defaults on the transaction.
Completion Date is usually within 90 days from signing. During this time, the seller must obtain a land rent and rates clearance certificate, ensure all documents to effect registration to the buyer have been signed appropriately and utility and other bills have been settled. On Completion Date, these documents including the Original Title are then exchanged for the balance of the purchase price payable. Following this, the process of stamping and registration of the Property in favour of the buyer is then handled by the buyer’s lawyer. The process of stamping and registration usually takes between 30-45 days.
Stamping usually involves an assessment of the Property by a Government Valuer to confirm that the sale price is in accordance with the actual value. The buyer usually pays stamp duty at the rate of 4% of the sale price.
Once the Property is successfully registered in the name of the buyer, the sale proceeds are then released to the seller and vacant possession of the property is granted to the buyer.
It is also very possible to purchase a property in Kenya without being in the country. One can assign a lawyer to go through the whole process on the buyer’s behalf through a power of attorney.
Do your due diligence
- Clean title?
- Sale agreement reflects both parties intentions?
- How much Stamp Duty will I be paying and who pays the Stamp Duty?
- What are the legal fees?
- What are the registration costs?
- Agents commission- how much and who pays ?
Researching these issues can be tedious and time-consuming. However, you will be thankful that you took the time to look into these matters before buying your land rather than afterward. As with any transaction, having more information can only benefit you as a purchaser and, later, as a land owner and developer.