1o Things to consider when buying a property in Kenya
Here are 10 things most property buyers regret not considering or overlooking during the whole process of buying a property. The below checklist will serve as a guide during the process.
As a real estate investor, one cardinal rule you must never ignore is conducting due diligence. Take your time to investigate and understand the deal you are getting yourself into. Make sure that the property you are being sold exists both on paper and on the ground.
A valuer, an estate agent or a surveyor should help you to positively identify the property through the use of relevant documents such as survey/deed plans and registry index maps.
Even if the property exists, establish who the true owner is through an official search. An official search will show the name and address of the owner and a note of any inhibition, caution or restriction affecting his right of disposition. These restrictions or cautions are usually referred to as caveats.
The search will also give a brief description of the property, stating clearly whether it is freehold or leasehold. It will also note all the encumbrances or burdens on the property such as bank loans or mortgages.
Know the history:
A title from a bad mother title (an illegally acquired title) is invariably fake. Also make sure the land or the property you are buying does not fall within a road reserve or a riparian area. Even if you are buying an apartment unit, you still need to ensure the mother or original title is genuine.
Don’t leave all to the lawyer:
Most investors leave all the verification of the authenticity of the title and everything else in the process of buying a house to the lawyer.
A lawyer “cannot” read a map or do a structural survey of a building. If the lawyer doesn’t consult the necessary professionals, you might end up buying a collapsing building or a plot on a road reserve.
If you are buying land, get a reputable land surveyor. If you are buying a house, seek the services of a qualified and registered estate agent.
Abide by regulations:
Each property has a specific use into which it can be put. In Kenya, a property can be residential, commercial, institutional or industrial. The use must be physically possible, legally permissible, and financially feasible and that which will give the highest returns hence the concept of highest and best use.
Beware hidden costs:
When negotiating for financing, the borrower should be keen to know the true cost of borrowing. Apart from the interest rate, there are also hidden costs such as valuation fees, legal fees and loan negotiation fee among others. When taking a mortgage, also ensure you know the implication of taking a fixed rate mortgage or a variable rate mortgage.
Never buy a debt-ridden property. Land rates, payable to the local authority under whose jurisdiction the property falls, sometimes accumulate into millions of shillings. Legally, it is important to obtain a clearance certificate from City Hall to confirm that dues pertaining to the property are settled.
Failure to obtain the certificate means the buyer inherits the accrued debt from the previous owner. A property lawyer can help one avoid such pitfalls.
Insist on a title deed:
Under Kenyan land laws, only a title deed is recognized by the government as proof of ownership. A share certificate cannot replace a title deed.
If you are buying a completed house – whether new or old – make sure you get an expert to undertake a structural survey to ascertain that it is not falling apart.
According to us, the above are most important things to consider when buying a property not only in Kenya but in any other market as well.