HF rolls out plan to finance cashless landowners

HFC Managing Director Sam Waweru. FILE PHOTO | NATION MEDIA GROUP

What you need to know:

  • Under the model, owners would get funding through disposal of their properties or partnership with the group.
  • HF Group banking subsidiary HFC said it is currently engaging landowners in some high-end areas with a view to setting up residential and commercial properties.
  • HFC Managing Director Sam Waweru said they are also talking to owners of Small and Medium Enterprises (SMEs) to fast-track expansion of facilities in order to attract higher returns.

Mortgage lender Housing Finance (HF) Group has launched a plan to help landowners who have no money to develop their property.

Under the model, owners would get funding through disposal of their properties or partnership with the group.

HF Group banking subsidiary HFC said it is currently engaging landowners in some high-end areas with a view to setting up residential and commercial properties.

HFC Managing Director Sam Waweru said they are also talking to owners of Small and Medium Enterprises (SMEs) to fast-track expansion of facilities in order to attract higher returns.

“If a customer has business premises in Nairobi’s Kariobangi Estate, he will be helped to refurbish while a farmer in Kitale will get assistance in developing a warehousing structure,’’ said Mr Waweru (right).

He said they had formulated several products targeting low-income earners and non-salaried people who own land but have no funds to develop them.

No monthly income

“After restructuring our operations, focus is now on this person who does not have a monthly income, or payslip to confirm the same,” said the managing director.

HF Group has since launched a joint development property in Kahawa and Clay City within Kiambu County where they are putting up middle income apartments in partnership with landowners.

The Household Survey report by FinAccess revealed that 90 per cent of Kenyans earn less than Sh30,000 in monthly income with only three million people saying they are on a payslip.

Another survey carried out in 2014 found that an average pay in Kenya stood at Sh147,182, making it difficult for such individuals to set aside 30 per cent of their earnings to comfortably service an average mortgage of Sh7.5 million.

Mr Waweru said the Kenyan housing market, especially in urban areas, has a huge potential as only 30,000 houses are built every year against a demand of 250,000 units.

To fast-track its implementation, Mr Waweru said, they had created a one-stop shop strategy where Kenyans will be assisted to access financing, insurance and property development services.

Financing model

He said small firms with an annual turnover of between Sh50 million and Sh1 billion would be brought in through a joint property financing model that first conducts a feasibility study on an individual’s business before deciding the next move.

“Our strategy is a mixture of learning what the consumers want and how the market has evolved. Our customers want solutions that work but they were going to too many players. We saw a niche in that,” said Mr Waweru.

At the same time HFC, which has 25 branches countrywide announced plans to include hardware operators as their agents saying this would enable their clients’ access banking services within their localities.

An average mortgage price has risen steadily over the last three years to grow by more than Sh1 million, having risen to Sh7.5 million last year from Sh6.4 in 2012, according to a Central Bank of Kenya (CBK) mortgage survey.

Default risk

These figures show a huge likelihood of high risks of default and low uptake of home loans.

“We want to look at the challenges in the current market conditions, with an aim of turning them to opportunities for both our clients and the organisation,” said Mr Waweru.

People without a salary survive and have money but they are the most avoided, argues Waweru.

“Our experience has taught us that default rates for a common Kenyan out there, is actually lower than bigger corporate clients.

"We are not fearing the risks for this category of customers, because we believe it’s about having the right strategies to mitigate such,” he says.