Here’s how to buy a house without paying any deposit

As the country continues to experience a housing boom, developers are looking for unique strategies to make home ownership easier and attract buyers.

That is what led Kings Pride Properties Ltd to allow potential home owners to buy homes without paying any deposit. The only pay monthly instalments.

As a result, the company has attracted more than 1,000 home buyers under its scheme, which does away with the 20 per cent deposit that has most mortgage buyers are expected to pay

The  group’s CEO and Chairman, Maj (rtd) David Karau, said the strategy has been well received, including by Kenyans in the diaspora, who had found the 20 per cent down payment a major impediment to home ownership. 

“We have been conducting diaspora home expos and when we saw this practice the US, we realised that Kenyans also needed it. Our company has many units with good funding, and we had to come up with a new strategy to unlock uptake and it is working well. It is just like paying rent and owning a home eventually without the headache of having to pay a deposit,” Mr Karao said.

Under the scheme, potential home buyers walk into the firm’s offices and say whether they are interested in the homes under construction or those yet to be started. The buyer is then presented with options, including the monthly instalment plans, after which he or she signs a deal with the company.

The buyer then begins paying the monthly installments as the construction, which lasts between 18 and 24 months, begins.  Once the house is complete, the buyer can rent it out or occupy it as the scheme is converted into a negotiated mortgage that either

lowers or maintain the monthly instalments.

The zero-down house sales strategy is intended to tap into the market comprising people whose income levels enable them to make monthly payments but cannot get a lump sum.

Kings Pride Chief Operating Officer George Fundi said the scheme has the advantage of enabling home buyers to escape the rapid value appreciation associated with the Kenyan property market.

“Most of the units even double in price between the time we start building and the time we complete them, so by locking down the price in the construction stage, the buyer knows what they are paying and which never changes. We have instances where,

by the time the house is completed, a tenant is readily available and the burden of monthly payments is completely relieved from the buyer. This is the way to go,”Mr Fundi told DN2.

The developers, who are funded by partners like Shelter Afrique, are now in discussions with four banks, which will offer mortgage to those whose houses are complete. The rates are negotiated so that the installments are maintained or lowered.

The buyers also enjoy the benefit of repayment track records demonstrated during the installments remitted as the house was being constructed. Those who settle in the houses will also have improved incomes after saving the money they used to pay as

rents. Banks usually require such records as proof of repayment abilities.

“Sometimes the buyers who opt to go beyond the scheduled payments complete paying for the building by the time it is completed. That basically makes them home owners who never had to hassle for deposits. Others get to the mortgage scheme when the

pending amounts are so low, they can take a personal loan and clear the balance, eliminating the need for a mortgage,” Mr Karao said.

The developers have apartments and town houses in various parts of the city including Langata, Karen, Kiambu road, Limuru Road, and Mombasa Road, Kitengela, South B, Runda, Lavington and Nairobi West.

Off-plan projects, where the home owners are given the designs and the expected final product then they are admitted upon satisfaction is mostly favoured with some monthly installments as low as Sh70,000 per month.