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A step-by-step guide for diaspora clients on buying property in Kenya

ByComplete Circle Properties

Featured Image: Sunpark Residence in Syokimau. 2 and 3 bedroom apartments available from 8M.

A step-by-step guide for diaspora clients on buying property remotely in Kenya can help simplify the process and ensure that they navigate it smoothly. Here’s a detailed guide:

Step 1: Define Your Investment Goals

  • Determine Purpose: Decide whether the property is for personal use, rental income, long-term investment, or future retirement.
  • Set a Budget: Establish a clear budget, factoring in costs like purchase price, legal fees, taxes, and potential renovation costs.
  • Choose Property Type: Decide on the type of property you’re interested in (residential, commercial, land).

Step 2: Conduct Market Research

  • Identify Ideal Locations: Research popular regions in Kenya for property investment based on your goals. For instance, Nairobi for urban living, Mombasa for coastal properties, or Kisumu for quieter, lakeside living.
  • Use Online Resources: Utilize online real estate platforms, forums, and social media groups to gather information about property prices, market trends, and potential risks.
  • Virtual Tours: Engage in virtual tours and video walkthroughs provided by real estate agents to get a better sense of the property without being physically present.

Step 3: Engage a Reputable Real Estate Agent

  • Research Agents: Look for licensed real estate agents or firms with a strong reputation, particularly those experienced in working with diaspora clients.
  • Verify Credentials: Check the agent’s credentials, including their licensing and track record. You can do this through professional bodies like the Estate Agents Registration Board (EARB) in Kenya.
  • Consultation: Arrange virtual consultations to discuss your needs, ask questions, and gauge their knowledge of the market.

Step 4: Shortlist and Evaluate Properties

  • Review Listings: Work with your agent to compile a list of properties that meet your criteria.
  • Detailed Property Analysis: Evaluate each property based on location, condition, potential for appreciation, and neighborhood amenities.
  • Site Visits: If possible, arrange for a trusted friend, family member, or representative in Kenya to visit the properties on your behalf.

Step 5: Conduct Due Diligence

  • Title Deed Verification: Ensure the property has a clean title deed, free of disputes or encumbrances. Your lawyer should conduct this verification with the Ministry of Lands.
  • Land Surveys: If purchasing land, conduct a survey to confirm the boundaries and ensure there are no issues with the land.
  • Check Zoning Regulations: Verify that the property is zoned for its intended use, especially for commercial or agricultural land.

Step 6: Make an Offer

  • Price Negotiation: Work with your agent to negotiate the best possible price. Your agent will present your offer to the seller.
  • Sale Agreement: Once the offer is accepted, your lawyer will draft a sale agreement outlining the terms and conditions of the sale, including payment schedules and timelines.

Step 7: Secure Financing

  • Mortgage Options: Explore mortgage options available to diaspora clients through Kenyan banks. Ensure you understand the interest rates, repayment terms, and eligibility criteria.
  • Alternative Financing: Consider other financing methods, such as savings or remittances.
  • Currency Exchange: Be mindful of exchange rates when transferring funds, as they can impact the total cost of the purchase.

Step 8: Transfer of Funds

  • Payment Plan: Follow the payment schedule as outlined in the sale agreement. Use secure methods for transferring funds, such as through a bank or escrow service.
  • Escrow Services: Consider using escrow services for additional security, ensuring that funds are only released upon meeting specific conditions.

Step 9: Complete the Transaction

  • Stamp Duty: Pay the stamp duty, which is typically a percentage of the property’s value (usually 2% for land and 4% for buildings).
  • Registration of Title: Your lawyer will facilitate the registration of the property in your name at the Ministry of Lands. This process includes transferring the title deed and updating the land registry records.

Step 10: Manage the Property

  • Property Management: If you’re not planning to occupy the property immediately, hire a reliable property management firm to handle maintenance, tenant relations, and rent collection.
  • Insurance: Insure the property to protect against risks like fire, theft, and natural disasters.
  • Monitoring: Use technology (like property management apps) to monitor the property remotely and stay in touch with your property manager.

Step 11: Stay Compliant with Legal and Tax Obligations

  • Tax Registration: Ensure you are registered with the Kenya Revenue Authority (KRA) for tax purposes, particularly if you plan to rent out the property.
  • Annual Returns: File annual tax returns and pay any applicable taxes, such as rental income tax and land rates.

Step 12: Plan for Future Visits

  • Periodic Visits: Plan to visit Kenya periodically to check on the property and manage any necessary updates or renovations.
  • Long-Term Plans: Consider your long-term plans for the property, such as future resale, inheritance, or personal use.

Final Tips

  • Stay Informed: Keep abreast of changes in property laws and market trends in Kenya.
  • Network with Other Diaspora Investors: Engage with other diaspora investors for advice, recommendations, and support.

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