Buy a house without ready cash - Daily Nation

Buy a house without ready cash

Thursday September 6 2018

A show house at Waiyaki Ridge Gardens.

A show house at Waiyaki Ridge Gardens. The developer, in partnership with two banks, has come up with a scheme that allows buyers to own a unit and pay at their convenience. PHOTO| ERIC WAINAINA | NATION 

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When Mr Muigai Thumbi, a real estate developer, started building high-end apartments for sale at Mountain View on Waiyaki Way in 2014, he knew that he was taking a huge risk, given that the costs involved and competition, which normally delays sales.

For Mr Thumbi, the director of Waiyaki Way Developers, the project known as Waiyaki Ridge Gardens, which comprises 226 two and three-bedroom units, delays were out of question since he had sought enough funding to complete the apartments.

The project, which sits on a 2.3- acre piece of land, comprises five, 11-floor residential blocks, with the work expected to be completed by October next year.

One of the blocks consists of 80 units while the other four will have 40 units each, whose sizes vary between 89 and 109-square metres for two-bedroom units, and 130 and 145-square metres for the three-bedroom units, currently selling at Sh13.5 and Sh15.5 million respectively.

Though Mr Thumbi had everything in place, he had one concern: how to make it attractive and convenient to prospective buyers of the houses, which have superior finishing, sell quickly.

He said this was because he was aware of the difficulties experienced by desperate Kenyans seeking to own homes but cannot due to lack of finances, which often delays sales and eventually affects returns to the developer.


To find come up with a solution, Mr Thumbi, who has undertaken other real estate projects, had to be innovative. This saw him go beyond just building and marketing the units, by looking for a ways to help potential buyers get bank loans to enable them to acquire the houses.

“There are very many people out there who want to own homes, but they do not have the finances. Not because they are not capable, but because most of them do not qualify for bank loans because they do not have collateral, making it impossible for them to purchase homes because most developers have deadlines by which buyers should clear their balance,” Mr Muigai told DN2.

So he partnered with Kenya Commercial Bank (KCB) and Commercial Bank of Africa (CBA), which are offering his clients up to 105 per cent financing, depending on the buyers’ financial status.

All the potential buyer needs to do, Mr Thumbi says, is identify the unit he or she wishes to buy and the through the partnership with the two banks, he or she gets a loan, with his or her unit acting as security.

"The potential buyers, without even paying a cent, come and identify the units they want. I then refer them to the bank where they are assessed and if they qualify for loans, the banks undertake to pay the amount, with the selected unit acting as the security. The client can move in and start repaying the bank according to the agreed terms,” Mr Thumbi said.

He said the plan has attracted many buyers and enhanced the project’s uptake, compared to the period before he came up with it.

If the homeowner is unable to clear to loan in future, the bank goes for their unit to recover the money.

This mode has also been adopted by other real estate firms, which have established in-house saving and credit institutions as they seek to empower their members financially to enable them to buy or develop plots.

For instance, Urithi Housing Co-operative Society Ltd, a real estate firm founded by Urithi Premier Saving and Credit Society with a view to creating a platform for accumulating savings and creating a source of funds to alleviate the member’s many financial challenges.


Members are offered affordable loans to help them raise the amount required to acquire land and houses offered by Urithi Housing.

Mr Pius Thuku, the chairman of Urithi Premier Sacco, said the outfit has eased the process of acquiring housing loans for its members, who use their balloted property as collateral, and idea that was previously unthinkable, considering how difficult it is to get a loan without ready ownership documents.

“So far, we have given loans worth more than a billion shillings and have proudly made many members house owners, landlords, and car owners, among other assets,” said Mr Thuku, adding that the Sacco’s establishment was prompted by the unreasonably high interest rates charged by the banks in the country before a law capping them was introduced.

The Sacco, which has 7,364 members, provides accessible and affordable credit facilities, ranging from personal to development and short- to long-term at an interest rate of one per cent per month on a reducing balance.

Mr Thuku said the Sacco has registered remarkable growth. For instance, during the last financial year, its asset base increased from Sh279 million to Sh382 million while the share capital shot up from Sh22 million to Sh40.3 million.

He said members’ deposits in the three-year old Sacco rose from Sh173 million to Sh322 million, which translates to an 85 per cent increase. He said the institution has helped most of their members acquire plots, on which the mother firm builds them houses.

Urithi Housing Chairman Samuel Maina said membership has grown, and currently stands at more than 26,500, including those in the diaspora, and many of whom have reaped big from the in-house Sacco.


Mr Maina said they have to issued more than 6,500 titles and handed over more than 550 homes over to members in their Own-a Room (OAR) I project in Juja, Nyumba Mia Spring-View Gatuanyaga, Nyumba Mia Lanet and Nyumba Mia Juja Plainsview Estate.

Another real estate firm, with an in-house Sacco, is Kamuthi Housing Cooperative Society, which was established by Kamuthi Savings and Credit Co-operative Society to boost its members’ financial muscles to enable them to develop the plots they have acquired in two projects they are developing.

The society’s officials said the Sacco will be lending money to the members who have acquired plots in their expansive projects known as Buffalo Hills and Golf Village in Kilimambogo, Thika, and Soya Dam Estate in Gatanga, at an interest rate of one per cent.

The housing society’s chairman, Mr Bernard Maina, said the aim of establishing a savings society, societies, which is autonomous, is to financially empower their members who were relying on bank loans with high interest rates to run projects related to the society.

“Often, members are left behind in society projects or cannot pay to have their title deeds processed on time because they do not money and sometimes delay the society’s activities. With the Sacco, members can get money and pay on time and even get to run their other individual projects,” Mr Maina said, adding that members’ title deeds, ballots and share certificates serve as collateral for the loans.