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Owning A Home In Kenya: What Are The Challenges?

BY Juma · July 8, 2021 01:07 pm

KEY POINTS

Kenyan mortgage sphere is not mature. Few Kenyans take up mortgages. Stats show that Kenyans with mortgages are less than 500,000.

A man travels the world over in search of what he needs and returns home to find it. Simply put, home is where the heart is. That is why homeownership is one of the most fulfilling achievements one can attain.

However, homeownership in Kenya has been a challenge over the years. The lack of affordable housing in Kenya has been hanging like a noose around our necks since independence and it has been worsened by the slowdown in the country’s economic outlook.

Despite the grim outlook, things are still propitious. Measures like the move by the government to include affordable housing in its Big 4 Agenda as clear a sign that it is not lost on our leaders that housing is at the forefront of a secure socio-economic future of the people.

Currently, the production of housing units in Kenya is well below 50,000 annually. While this might sound ominous, one man’s poison can be another man’s meat.

In the old fashion way of seeing the glass half full rather than half empty, this provides an opportunity for the private sector, including real estate developers to help increase the supply of affordable housing while potentially receiving positive tax benefits and risk-adjusted returns.

The truth is everyone would love to own a home, but what are the means? What are the challenges? Will homeownership remain a dream and an illusion for millions of Kenyans forever?

The Cost

Owning a home/house in Kenya is not a walk in the park. One has to literally cough out quite a lot of money. Even when the talk is about ‘affordable housing, ‘ the price is always beyond reach for millions of Kenyans. With the current prices, many Kenyans will not own homes.

Fraud

In recent days, there have been cases of real estate companies swindling customers of their money. These companies have often lured Kenyans with products that seem affordable when the trick is just to get money out of unsuspecting Kenyans.

Mortgage options

Kenyan mortgage sphere is not mature. Few Kenyans take up mortgages. Stats show that Kenyans with mortgages are less than 500,000.

A mature mortgage market has the following characteristics:

Institutions that originate loans (primary mortgage market/lenders) such as banks and mortgage banking institutions.

The markets in which they are transferred (secondary mortgage market), such as mortgage refinancing companies. The secondary markets’ main function is to get money to lenders in the primary market so they can loan it to consumers, thus facilitating the flow of funds for real estate financing.

Investors, who are made up of institutional investors such as pension funds, insurance firms, and investment funds. They purchase the mortgage-backed securities, thus creating the capital needed to make mortgage loans.

Commercial banks such as Absa Bank Kenya have some of the most friendly mortgage products in Kenya. For instance, a reduced interest rate of as low as 12.5% p.a within industry rates. They also have an extended loan repayment period of up to 25 years.

Absa Bank also gives financing up to 90 percent, Non-financial benefits come from our mortgage team who guide customers throughout the mortgage and homeownership journey among others.

The bank signed a financing partnership with Mi Vida Homes where customers will enjoy a discounted rate of 12.5% p.a with up to 90 percent financing. It also introduced a 25-year mortgage facility targeting middle-income families seeking affordable homes within Nairobi.

Inadequate information

There is little information about real estate and homeownership in Kenya. There is a general belief that the sector is for the “chosen few” who have money and means. As much as this might be true, a lot of information needs to be given to unlock the sector.

Infrastructure

Poor roads, broken sewer lines, inadequate water, and electricity are among the challenges facing homeownership in Kenya. Lack of social amenities as hospitals and schools in most parts also pose a huge challenge on homeownership.

Want to learn more? This evening, Absa Bank Kenya is hosting an informative #TwitterSpaces on their Twitter Handle, @AbsaKenya on How to start your homeownership journey. Tune in and ask your questions.

Juma is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it. (020) 528 0222 or Email: info@sokodirectory.com

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