Are you a real estate investor thinking of buying a residential property in Kenya? Get up to date with the hidden costs involved with purchasing property from legal fees to government fees. Learn how to budget smarter for your real estate investment.
Buying a home in Kenya is a major financial milestone for either first-time real estate investors or investors looking to add to their portfolio. Real estate investors need to look beyond listed property price (schedule 1 costs) so that they don’t get caught off guard by additional costs (schedule 2 costs) that arise throughout the property acquisition process. In this guide, we will explore the hidden costs involved.
Hiring a real estate attorney when buying property in Kenya is a must. First-time real estate investors may underestimate the legal fees involved. A real estate attorney will do things like due diligence (varies), land title search (KES 1050), land rates clearance, offer letter & sales agreement drafting. This ensures that an investment is secure by following the required legal procedures. Legal fees range between 1 and 2% of a residential property's value.
Stamp duty is a charge levied on legal documents by the government of Kenya, typically in the transfer process of residential properties. Stamp duty for residential properties in Kenya is 4% in urban areas and 2% in rural areas. For instance, the stamp duty of a residential property in Nairobi valued at KES 10,000,000 will be KES 400,000.
Valuation is the process of estimating the market value of a residential property based on location, size, condition and comparable properties. The minimum fee for any valuation is KES 15,000. Valuation for a residential property in an urban area is 1% for the first KES 2,000,000 property value and 0.25% for the residue property value. For rental value, the first 400,000 per annum rent is charged at 10% and the residue rent per annum at 0.5% .
Working with reputable real estate firms is important to secure your dream real estate investment. If you’re working with a real estate firm, they may charge a commission for helping you find a proper investment. Commission charges by real estate firms is typically 3-5% as laid out by the Kenyan law, but it depends on the agreement in place.
The hidden costs of buying residential property in Kenya can total an additional 8–12% of the property value. Accounting for these costs before making the move is important to avoid pitfalls. Working with the right people who will guide you from investment planning to property acquisition is instrumental to residential property acquisition.
Don’t navigate the complex real estate market alone. Let Roots Africa be your trusted investment partner in Kenya. Visit www.rootsafrica.co or contact us directly for consultation.
