Before You Sign the Dotted Line


Make sure you understand what you are getting yourself into before you put a down payment on that house.

Real estate in Kenya is at an all-time peak. However, once you reach the top you can only go down, and so there has been spirited debate about whether the real estate bubble is about to burst.

The one thing both ‘bubble-burst’ proponents and their opposers agree on this: If you are looking to invest in a house, proceed, but with caution.

Cash-flush individuals such as ‘new money’ businessmen and politicians are currently enjoying a bounty, snapping up top-end apartments or buying apartment blocks in middle-class areas hoping to get their returns in the form of rental income. Most of the developments targeted at the high end of the market promise the world, with their ‘one of a kind architectural and landscaping design, and themes’. It has however proved a living nightmare to get some of the developers to deliver on the promises they made during the signing of the sales agreement. Most of these agreements are verbal, and if contractual, carry no strict timelines. In some cases, it might be that the designs are not popular in the market. Golf cities, that were all the rage once upon a time, are one such example. They are not doing as well as projected in South Africa where this concept was executed big scale, and if the grapevine is to be believed, Kenya’s golf estates are not fairing much better either.

Another peculiar set of problems bedevils the middle-class housing market, where houses go for approximately Sh10 million. Many developers promise extra features that they do not deliver, such as clubhouses, estate kindergartens and primary schools, supermarkets, and malls. The developers who do deliver these facilities do a sub-par job, and the end result is far from what residents had pictured when they made the decision to buy a unit.

To be fair to them, developers are businessmen and long-term commitments for such plans would put them out of business. Ideally, all developers want to sell the units as quickly as they can and move on to the next site. Managing and guiding the residents’ association in managing a school or a mall for an eternity is not part of that strategy.

Plots of land marked for housing developments have also become a considerably popular option, especially now that devolution has taken place. It is no longer necessary to know a bit of the local lingo in order to facilitate a ‘smooth’ land transaction. Also, real estate firms like Optiven are selling value-added plots which are not only serviced but have designated ‘green zones’ as pre-approved building plans to create harmony in the estate. If you are looking to buy one such piece of land, find out if the property will actually increase or decrease in value (which is a possibility).

In general, there are some basic questions that all potential home owners must ask before signing that dotted line. Here are some of them.

Where Did You Say It Is Again?

This can include anything from the water pump to the hot water panels that are normally installed out of sight of the classy exterior. You will also need to find out whether those brand fittings are inferior quality compared to others in the market. Some marketers are cocky enough to mention the brand names to make it easy to look it up. Ask a lot of questions about your back-up generators – such as what it backs up. Does it cover all appliances? Lights only? Find out.

How Long Will It Take to Complete? Can I Have That in Writing?

Developers are businessmen. It is always about the bottom line. One sure way to make profit is to reduce costs. Most units are sold off-plan to enable the developer finance his bank loans as well as assure them (the bank) that his ambitions were not overstretched.

Off-plan selling is done when most of the units are not complete. Nevertheless, the units sold in their ‘current state’ are sold at a ‘discount’, which naturally excites most Kenyans. Sometimes, promises such as shared playgrounds, schools and shopping centres are not fulfilled. There are a documented number of cases in and around Nairobi where developers have failed to provide those facilities years down the line. This is after developers realise the real difficulty in providing these facilities. Many developments have been promising a number of ‘firsts’ to buyers in emerging areas. The tenants who are now forced to ferry their little ones to kindergartens away from the ‘emerging areas’ are obviously unhappy about this.

Unless you have the facilities’ completion date in writing, and the full business strategy of running them (i.e., supermarkets, a mall, gym, schools, clubhouse) don’t sign on the dotted line.

What About By-Laws?

If you are buying a serviced piece of land in a gated estate, find out what the by-laws are. Do building plans have to be pre-approved? Are there specifics on look, architecture and landscaping? How much leeway do you have with these? And what are the penalties should you fail to meet one of them? Ask your land agents all these questions and if possible, have it in writing as well.

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