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Kenyans are too familiar with stories of people who have bought “air” in the name of land or a house. Some, especially urban dwellers, have rented “air” instead of a house. People are being conned of their hard-earned money as they try to buy their dream homes or a piece of land where they can put up a dream house — or even when looking for a house to rent. We sought to unravel some key nuggets to consider when buying property in Nairobi or Kenya at large:-

Due Diligence: 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. To do this well, you must first make sure that you have completely detached your emotions from the deal (because fraudsters almost always play on buyers’ emotions) especially don’t be carried away by the feeling that you are only a cheque away from becoming Kenya’s latest property owner. Verification is important because many Kenyans have bought phantom property only to realize it when it is too late. Make sure that the property you are being sold exists both on paper andon 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, which are readily available especially in Nairobi where we have the survey offices on Thika road. Thereafter an official search from the relevant lands office will show the name and address of the owner and a note of any inhibition on the property, 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. At the end of it all, you are issued with an official search certificate. Remember you will have asked for the property’s title deed to enable you carry out the search.

Background Check: It is possible for someone who wants to defraud you to show you a property that belongs to someone else or that has hidden issues even with a clean tittle and clean official search e.g. family dispute or Government grabbed land to which you’re not privy and search will not show, only to get into hurdles in the purchase process. So it is advisable that after doing the search one goes to site and visits the neighboring properties or owners and asks about the property of interest e.g. Who does this property belong to? Is it being sold? For how long? Do you know the owner? Has there been any dispute etc. The red flag here is if the names on tittle don’t match what you’ve been told and if there’s been a family dispute over ownership or Government institution neighboring; in Syokimau (Mombasa rd), for instance, the sub-titles given to the subsequent property owners could not stand because the mother title belonged to the Kenya Airports Authority, which did not sell the land to the victims, a little background check here would have revealed some rumours of irregularity and avoided losses.

Price Check: It would be advisable to ask or get a valuation report done by a qualified Valuer to ascertain the value of the property in discussion for purchase.
In the absence of which an aggregate price assessment can be done by purchaser. On average most property prices don’t vary too much from one another in the same vicinity or similar units (e.g. Properties in Nairobi or urban centers like Thika, Kitengela, Mombasa etc) unless there are commensurate improvements that have been done. So even as one commits to a certain sale price it would be prudent to check on the price of similar units within the vicinity or with similar features to ensure that one is not being exploited by the vendor or selling agent.

Use professionals: When buying property, seek the services of a qualified and registered estate agent and avoid using sweet talking middlemen whose only interest is a one off transaction. And in the case of land confirm boundaries using a qualified surveyor. Never say it is expensive to hire an expert if you truly value the huge investment you are ready to pour into your dream property. Never deal with a quack, in this case, anyone who is not registered by the relevant authorities or associations. If you buy a fake plot after being advised in writing by a registered valuer or estate agent you can sue for professional negligence and get compensated by the valuer’s / Agents insurance company. Banks know this, which is why they insist on a valuation report before they finance you to buy a property.

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. If someone is selling you a property in the city centre, you must establish whatthe permitted user is. Planning regulations will clearly show you what the property should be used for. If you are putting up a new building, make sure you get all the approvals.

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.

Structural soundness: 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. It will cost you some money, but it is prudent that you do it. Many people do not bother to do this. But some of them start noticing cracks on the walls as soon as they occupy the house and are ultimately forced to bring it down. If you have money you want to invest in real estate, take your time and do due diligence. It will save you a lot of unnecessary heartache.

Buy Now: Forget high interest rates talk, buy now because tomorrow may be too late. “Don’t wait to buy a house, buy then wait,” says Patricia Githu, the chief executive of Developing Africa Limited. Speaking during the ground-breaking ceremony of Juja South Estate, a new housing project in Thika County, Ms Githu said many Kenyans miss out on real estate investments because they waited for a perfect time “which never comes”.

“There has never been a good time to do anything. When it comes to investments, many people give excuses. If you want to wait and invest when the interest rates are low, where are you putting that money now and will it be available when you need it?” she asked. These 7 nuggets if followed will help any investor in real estate avoid being conned or defrauded and above all make a sound investment decision which is what real estate is Kenya. Next month we look at what to consider before renting a property in Kenya.