BY VICTOR ADAR
You can laugh at the agony of someone who earns as little as Sh30, 000 to own a decent home. As always the case, this lot is priced out of most neighbourhoods, as satellite towns remain the saving grace. Some say if you earn so little, it is painful to set aside some.
Let’s say you get a one bedroom house in Roysambu or Zimmermann at around Sh9, 000, and spend nearly the same amount on your daily transport, airtime, and for personal up keep. Clearly it could be hard to make a big purchase. But then again you could sit and wait for a six figure net salary (that will never come through) only to realise that it is already a little too late.
Because of the usual bottlenecks, Commercial Bank of Africa is set to rewrite the rules of mortgage, which for decades have side-lined low income earners. According to the bank’s CEO for Kenya, Jeremy Ngunze, their latest agreements with both KOTO Housing Kenya and Bamburi Cement is expected to breathe life to the purchase of property, and will give room for offerings of affordable financing and access to a pool of experts.
“What many people do not know, for instance, is that if you are 24 years old and you earn a minimum salary of Sh25, 000 you qualify to get a mortgage that can enable you move into your own home,” says Ngunze.
This disruption to home ownership comes at a time when the current properties market consists of 24,500 mortgages valued at Sh203 billion as the number of houses being built remaining less than 50,000 against a current annual demand of 240,000 houses per year for a population of more than 40 million people – a huge number of whom aspire to own their homes.
“We are not yet there in terms of meeting the demand,” says Ngunze, adding that: “the journey towards home and property ownership in Kenya has always been long, tedious and often laden with uncertainties. These factors, singularly and combined, are enough to discourage one from investing in a home despite having the requisite income to enable them realize this noble dream.”
A report released by Cytonn Investments in April this year ranks Githurai as the most affordable market that calls for a median income between Sh25, 000 to Sh50, 000 to purchase a house using a mortgage. Nyari, Karen, Runda, Muthaiga and Kitusuru, however, remain a tad high with mortgage options only suitable for the wealthiest in town, those with a minimum of Sh1.3 million monthly incomes.
To increase uptake of mortgages, CBA has introduced mortgage financing of up to 105% of the property value thereby filling the gaps that once choked up the young low-earning Kenyans, joining the fray of institutions keen on reducing the complexity of buying homes.
Under a marketing campaign billed ‘105 Own Your Home (105OYO)’, customers are sensitised about the offering, which will also entail streamlining of processes to reduce the time taken before one can own the property, lower overall costs.
“We are driving the growing home concept by 105 own your own home proposition. The excess will cater for the duty; help meet legal and statutory requirements, among other things,” says Ngunze.
With KOTO homes, for example, more affordable light-weigh panels are used to build permanent houses within 30 days. Bamburi Cement on the other hand offers architectural drawings, bills of quantities and schedule of materials, on-site technical support as well as access to quality building materials through its partner outlets. Customers will have to walk into any CBA branch to take up these paths towards purchasing a house as well as other real estate property ownership.
“Start with one sitting room then build a model around it… this home can be extended over time as your income and family size grows, making it very convenient. And your peace of mind is assured,” he Ngunze.
It is curing the headache through partnerships with developers who go to an extent of negotiating better rates, lower overall costs and create value addition by bringing strategic partners into the mix of things. It is all of reducing the complexity.
Although experts say it is better to start a side business first in order to boost that meagre income before delving into building homes (which is a pricy affair especially when you are just starting), those with experiences urge the young people to start looking at the bigger picture at an early age. It is tricky for a 40-year-old guy, for instance, to take a mortgage as the risks are too high, and someone who is slightly younger has an advantage. It is never about one’s level of income, it is based on the areas of purchase that a buyer is interested in. If you cannot afford the up market areas, try satellite towns.
