Sunday, June 23, 2024

Own your home in Kenya without paying a deposit

Owning a house seems like an unachievable dream for most Kenyans due to the unfriendly mortgage interest rates and exaggerated house pricing modules brought about by a recent boom in the real estate sector.

We keep hearing that the country is facing a housing deficit and real estate investors are allegedly working on overdrive to come up with tailor-made products that will appeal to and serve the needs of the local market.

According to a report published last year by the Kenya Property Developers Association (KPDA) and Hass Consult, Nairobi requires 200,000 new housing units every year in order to keep up with the growing demand. In 2013, only 15,000 units were released into the market, a telling factor that demand outweighs supply.


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One company that is striving to bridge the gap in Kenya is Kingspride Properties, which is based in Nairobi. The real estate firm introduced the zero deposit concept in Kenya last year, a first for the market, following strategies picked from a property expo in New Jersey, USA, in 2014.

Kenyans living in the diaspora kept asking about “zero down payment” financing model which got the developer thinking.

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The zero deposit plan allows people to own homes without necessarily having to pay the amount in full at one go. Instead, it requires individuals to make a first payment of Sh70,000 ($700) and pay the rest according to an agreed arrangement.

Lock the price

Home owners are, in this way, able to lock the price of the houses after paying the deposit at the start of the off-plan project. They also do not suffer an extra cost as the property appreciates in price. For instance, current buyers of Runda Royale, a middle class development in Thindigua, on Kiambu Road are today forced to part with Sh12.5 million for a three-bedroom apartment that retailed at Sh6 million before groundbreaking early last year.

“The expo in New Jersey was very successful and everyone was excited about the concept because we knew that it would work to unlock the local market,” says David Karau, CEO and chairman of Kingspride Properties.

Based on the customer’s income, the real estate firm comes up with a tailor-made payment plan. And while there are those who pay the full amount by the time the project is complete, some are put into a mortgage programme once the construction period lapses and they still have payments to make.

“This structure gives the buyer long-term payment options to help them meet the 20 per cent mortgage condition,” explains George Fundi, chief operating officer of the company.


“By the time they are ‘buying’ the house you will have met the conditions and we go a notch higher to ensure that the customer goes on to service the loan at the same the rate,” he added.

The history of a customers’ consistency in paying the instalments helps them access loans and/or mortgages, with banks using the house as collateral.

To ensure that there is a seamless adjustment from the developer to the banks, the real estate firm has negotiated for lower interest rates and conditions on behalf of their buyers, an extra effort that is winning them customers.

Current house rates may be reviewed downwards as the firm is in discussions with four banks for more facilities.

The diaspora market has been largely attracted by the Kingspride’s offerings mainly because of the flexible payment method. Karau says that home buyers living outside Kenya, most of whom have Sh100,000 ($1,000) to spare every month, have resorted to such investments because they are safer compared to projects managed by families – where there have been reports of investors losing millions of shillings to ghost projects.

Rental programme

The firm is also in the process of introducing a rental programme whereby clients will be allowed to pay for houses they occupy. In this arrangement, money that would have gone into rent will be considered as payment for the house.

The real estate firm has completed six projects since it began operations in 2009, and has more than 10 other projects in the pipeline. Currently, it has the capacity to embark on multiple projects due to a financing partnership it has with Shelter Afrique.

First home owners have a chance to buy Greenwood apartments in Ruaka, which are being sold at Sh6.5 million and Sh7.5 million for a two and three-bedroom, respectively. Runda Park, is another project that is supposed to start in four months and is selling at Sh5.5 million and Sh6.5 million for two and three bedroom houses respectively.

Among the complete projects is Telagen Gardens in Lavington, selling at Sh22.5 million for a three-bedroom all-ensuite house with a DSQ.

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