Sunday March 18, 2018

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Eric Gitonga

Eric Gitonga

The taxman plans to have tenants pay part of the rent directly to his accounts. The Kenya Revenue Authority (KRA) says tenants will be expected to make simultaneous bank deposits, one to the landlord and then to KRA.

Landlords will be required to show compliance by producing the bank deposit slips.

The proposal seeks to simplify payment of rental income tax by landlords and will also introduce a flat rate of taxation on income received from tenants.

It will not take into account any costs or profitability of the buildings, but will be similar to a turnover tax on SMEs, which is currently set at a flat rate of three per cent. New legislation will be done to set the flat rate.

KRA commissioner-general John Njiraini said his institution had realised the biggest problem in paying rental income was the complexities associated with making calculations on costs of maintaining or putting up a building.

“Our objective is to make the payment of taxes simple. When we tried to find out why many landlords were not paying rental income tax, we found out that they didn’t even know where to start,” said Mr Njiraini.

He said many landlords had no records of the costs involved in maintaining the building and could not make calculations involved. As a result, they could not determine the amount of tax due from them.

The KRA has not been able to realise the targeted rental income tax with only Sh3 billion having been collected in the fiscal year 2013/14.

Many landlords also do not pay value added tax (VAT) on commercial rental properties, yet they may exceed a turnover of Sh5 million that is the minimum for payment of the tax. VAT is supposed to be charged on tenants, including for costs that the landlord may pass on to them such as renovations or service charge.

Currently, landlords are supposed to maintain details on the rental properties including the land reference number, gross rent received and all expenses incurred per property.

Landlords have difficulty determining what is to be included when calculating costs incurred on their property, as some expenses are legally allowed while others are not.

The allowable expenses include those incurred wholly and exclusively in the production of the rental income such as mortgages, land acquisition, professional fees, cost of building materials, labour and advertising.

The costs that are not allowed include depreciation, costs of maintaining the owner and family as well as hiring of non-commercial vehicles.


Borrowed from Business Daily

Saturday, 03 May 2014 09:08

Co-ownership in Property investment

ownershipIf you are fed up with paying your landlord's mortgage and want to buy your own home, but simply cannot afford it, then co-ownership may be the answer.
Investment property can be held through a variety of titles - owned in your name, a company, trust, shared ownership or joint ownership

Investing as a sole (private) purchaser

Here the property is registered in one name only - usually yours. Under this arrangement, rental income is received by you only, and expenses relating to the property can only be offset against your income.

Joint Ownership
Ownership of the property is split equally between two or more people, who could either be friends, a spouse or your family with income and expenses divided the same way. The arrangement usually works best if all owners expect to receive similar annual taxable incomes for the foreseeable future.

Shared ownership
This is when you buy a percentage amount of a property's value from a housing association or housing developer. This way you can get on the property ladder at a fraction of the price.
For example, if one of the parties is on a higher income, ownership of the property can be divided in the proportion 75/25. This way, three quarters of the income or losses generated can be allocated to the higher income earner and a quarter to the lower income earner.

Investing through a company

There can be advantages to using a company structure, especially if there are a large number of co-owners. It's easy to sell shares if one owner wants to exit the arrangement and the company tax rate is lower than the top personal tax rate.
However, companies can be costly to set up and maintain, and they must be run in accordance with strict legal requirements.

Investing through a trust

A trust may be a suitable ownership structure for a positively geared property as trusts can be useful for distributing income in a tax effective manner as well as offering asset protection.
The introduction of REITs in Kenya has given every Kenyan an opportunity to invest
The biggest advantage of REITs is that they are exempt from Double Taxation: no corporation tax, no VAT on rental income or on professional services, no capital gains tax, no stamp duty on purchase/sale/transfer of properties and no income tax. The only tax burden will be withholding tax on interest income and dividends.
Another is REITs will enable mobilizaton of savings from individuals and groups, i.e. you as an individual can invest sums as low as Kshs. 5000 depending on the structure of the REIT of course and your chama can invest even larger than that.
Developers will be able to go to the CMA for funding which means lower interest rates for developments i.e. lower mortgage rates for you as a buyer after banks follow suit and review their rates downwards.
Liquidity; unlike actual real estate property, these shares can be quickly and easily sold.
Diversity; because you're investing in a portfolio of properties rather than a single building, you face less financial risk.

Friday, 28 March 2014 05:08

What to Look for Before You Move In

Whether you're moving into a new apartment or ending your current lease and checking out of one, you need to make a thoroughly documented inspection of the entire unit. We know you're eager to get unpacked and start decorating the new place, but this is really important.
Before you complete a tour of your potential new unit, review this list to make sure you know what to look for before you move in. If there are any items that need to be repaired or replaced, make sure the landlord does this before you move in. If there are many things wrong with the unit, you might just want to pass.

Look For:

1. Floors
Look for scratches, loose tiles or parquet. Be certain that there are no pieces missing.
For kitchens and bathrooms, they are better inspected when the floors have been mopped and swept. Tiles should not be missing, scraped, scuffed or popping out.

2. Walls
Check every wall carefully before you move in. First and foremost, the paint should not be chipped and it should be consistent throughout the unit. Make sure there are no stains on the walls. If your walls are wood-paneled, be sure that there aren't any loose or rotten boards.
Check to see if any of the walls show signs of cracking or repairs. This may also indicate water seepage problems or may indicate a breech in the building foundation.

3. Windows
When inspecting the windows, make sure you can actually open them. You face a huge safety hazard if the windows do not open properly. Every room should have at least one window that can open.
Make sure the windows aren't leaky and that the glass isn't chipped or broken. You don't want any missing panes of glass, either. The windows should operate normally and lock from the inside.

4. Electricity
Flick all of the light switches in your apartment or house. Do they work? Make sure none of them appear damaged or have loose wires hanging out. Each switch should have a faceplate as well.
If the lights don't go on, check the bulbs. Usually, you're responsible for changing those in your apartment if they're burned out. Obviously, the lights shouldn't flicker or throw sparks either. Also, you'll want to plug a small appliance (or an electricity tester) into each of your outlets to make sure that they all work.
Open up the fuse box if your unit has one. It shouldn't seem damaged or look like it has switches missing.

5. Fire Safety
In as much burglar proof doors are good security fitting, they should not stand in the way of providing an emergency exit. A fire extinguisher will also be an added advantage.

6. Utility Bills
Always ensure you have a copy of the latest utility bills with the last meter readings, ensure that the current readings are indicated in the inventory during take over to avoid paying someone else bills.

7. Bathrooms
Go into the bathroom and turn on the shower. First of all, does the water flow, and does it get hot and cold? Does the water look less than clear in any way? Look at the walls of the shower to see if there are any missing or damaged tiles or if mold is present.
Check out the toilets. Are they clean, and do they flush properly? Do they run when they aren't in use? Make sure the toilet doesn't leak onto the surrounding floor, too.
Take a look at the sinks. Check to see if the water drains properly. Also, be sure to check the cabinet under the sink to note any leaky water, mold or strange smells.

8. Bedrooms and doors
Now let's take a look at all the doors in the unit. All of them should shut tightly and fit properly in the frame. There shouldn't be any problems with the doorknobs or any locks. Check to see if any paint is missing or mismatched as well. Also, make sure that you have two sets of keys to the apartment -- the front door should have a normal lock.
In the bedrooms, check out all the closets and make sure the shelves aren't loose. If you haven't checked any of the above items in the bedrooms, now's the time to do so.

9. Kitchen
Most apartments have a kitchen of some sort, and there's a lot to look for here. If the kitchen has a fitted gas cooker (stove), do all of the switches work, and do all of the burners get hot when you turn them on?
Check out the pipes under kitchen cabinets for potential leaks in plumbing. For the furnished apartments take a good look at the refrigerator. Is it cold? Is there any mold in there? Is it clean, and did the last tenant throw out all of the remaining food?
This is also the time to check for any mold or mildew that might be in the kitchen, especially inside cabinets. You should also look for animal droppings that indicate a pest problem.

10. Pests
Now let's get to the gross part of apartment inspections -- it's time to check around for insect and rodent droppings. It may be a bit unsettling, but it's necessary. Don't you want to know about any pest problems before you move in?
First of all, search around the apartment in areas where pests are known to enter or gather. Look at gaps or cracks in walls and ceilings, near the tub and plumbing, around utility wires, behind the gas cooker and in the cabinets. Do you see anything that looks like small brown pellets or insect eggs? Have you found any roaches or mice running around?

If you've found any of these things, it's time for some pest control. You should ask your apartment manager to remedy the problem, but you may end up having to do it yourself. Be sure to identify just what kind of pest issues your new apartment faces – It is easier to eliminate pests in an empty house than in an occupied one

Friday, 14 February 2014 07:33

What is a Serviced Plot?

The phrase "serviced plot" has become common in Kenya but what does it really mean?

According to the term serviced means: the supplying or supplier of utilities or commodities, as water, electricity, or gas, required or demanded by the public.

The supply of these amenities go beyond the basic needs of an estate and may include roads, water treatment plant, surface water drainage, landscaping and the list goes on. Consequently, the supply of these amenities derives the phrases "fully serviced plots" and "semi-serviced plots".

These amenities in Kenya are either provided by the three classes of local authorities: City, Municipality, and Town authorities or by private developers who come up with projects that have factored the cost of supplying these amenities.

What should a buyer look for when buying a serviced plot?

Basic needs

Every community has basic needs and with the change of time some secondary needs are quickly turning into basic needs e.g. Security was once well catered for by the government but now we have to reinforce security on our own, hence the popularity of gated communities and sophisticated security installations is increasing. People are looking for an enclosure where traffic can be monitored effectively and the cost shared among residents. Kenyans are shying away from developing a home in isolated locations therefore before buying a piece of land for building a home it is important to note the basic needs and the period of time within which both the basic and secondary needs will be met.

Central and County Governments

Some major infrastructures developments require the input of central and county governments. Until recently, Kenyans had zero confidence in the promises given by the said governments hence why private developers had to step in. Every county is now under public scrutiny to ensure they deliver on their promises. Nevertheless, the private developers' "serviced plots/projects" are more popular with investors.


Private developers are able to offer extras that guarantee buyers a return for their investment. These extra features create an ideal neighbourhood for a dream home and they range widely depending on the target market. They may consist of:

  • Golf course
  • Boulevards & street scapes
  • Recreation parks
  • Unique house designs
  • Cabro roads
  • Internet infrastructure
  • Health & recreation
  • Commercial nodes
  • Educational centers
  • Social infrastructure

Migaa, Juja Edge, and Buffalo Hills just to name a few are projects where you can find these serviced plots

Thursday, 23 January 2014 16:32

A Dream without a plan is a just a Dream

Every New Year is greeted with a lot of excitement, optimism, a lot of expectation, and quite a number of resolutions. While all this enthusiasm is important, the lack of a dream and proper planning will turn this year into just another year.

If 2014 was and is the year you decided you were going to invest in property, your biggest motivation should be the DREAM. If you ever dreamt of acquiring or investing in property, then you have already made the first step.

However, dreams without concrete plans remain just that, dreams. Dreams don't just stumble into reality, they don't bump into reality the way you would with a friend. It takes an active, deliberate, intentional, and conscious thought process to achieve your dream in property investment no matter the magnitude of investment. You need to make a clear path as to what you are after and write it down. Elaborate on it in great detail and with clarity.

Planning to invest in property can be equated to planning to start a business. The common denominator between the two is that both of them require planning, not just planning, but proper planning.

Planning helps you to;
• Assess where you are now
• Show where you want to be in future
• Determine how you will get there

Your plan to own property should have;
• Specific goals
• Specific strategies
• Specific deadlines

Achieving a dream in property investment demands that we;

1. Clarify that dream
This means being very clear on what you want and writing it down. Do not be ambiguous and avoid being general

2. Spend time researching your dream

Become an expert on what it will take to achieve your dream.

3. Layout a strategic plan

The idea of having a strategic and realistic plan is to progress towards the dream each and every day, week, month or year

4. Make a realistic timeline

The property market has a mind of its own, and operates on its own clock, find out how much time it takes to do certain things and lay your plans within that time frame. Keep in mind that the greatest property investments had a long term plan

5. You need people

It takes experts to realize dreams. No man is an island; you cannot make it by yourself. Always be prepared to work with a number of experts to bring your dream to life and colour. Below are some of these key people

Qualified and registered real estate agents
When you need to buy, sell, rent or have your property managed a qualified and reliable real estate agent with knowledge and contacts in the property market will ease your experience. Estate agents are privileged in interacting with all the parties that make up the property market

A real estate lawyer
You need to invest in a good, honest lawyer, with integrity as a brand to help you navigate your way around the maze that is property investment

Reputable Land Surveyor
You will require a reputable land survey when investing in land to help establish boundaries

Project Manager
When selling your property, you will need a project manager to create the project plan and see it through to the end, to make improvements to the concept, to do market research, and to do a feasible analysis of the property market

At times used as the lead consultants and very helpful in putting the design down on paper and bringing it to reality.

Quantity Surveyor
Enables the prospective home owner to calculate the cost of constructing a building for planning and budget purposes

Mechanical and Electrical
You don't just want to build a house, you want a building that will stand literally, and also stand out as a living legacy and to stand the test of time

So, in 2014, layout the plans to accomplish your dream, experience it in your mind, and enjoy the process of nurturing it into a reality.

Wednesday, 20 November 2013 00:00

Tips for Buying or Building a Valuable Property

Do you know how to value a house? A potential buyer may only notice whether or not there are granite countertops, an open floor plan or a well-groomed lawn when deciding whether to buy and what to pay for a home.

To get top value, it helps to know what could hurt your home's value, whether you're looking to sell now or later. Some factors are out of your control, while others have simple solutions.

Keep in mind, though, that every market, neighborhood and home is different, so the actual impact on each home's value can vary considerably.

1. Location

What are the three most important factors in determining a home's value? You guessed it: location, location and location.

If you build (an expensive) home in a location where it will be unique for the area, there is a good chance that the value will be much less than if you build that same home in an area where it is more typical.

Although you may have bought a piece of land and likely considered location when you bought, something may have changed since then: rezoning, an increase in crime or a nearby growing slum.

Unless you plan to uproot your plot and move it elsewhere, there's not much you can do about your home's location. So what can you do? Well, that depends on what about your location is bringing down the value. If you have a view of the city slum, for instance, you can plant some privacy hedges to make it less of an issue. Play up your home's strengths; make sure every interior and exterior detail is perfect.

2. Floor Plan

Appraisers classify that as a functional problem and determine value based on the market. A bad floor plan can reduce an appraised value by much compared with similarly sized homes. A good floor plan should complement the structure. Pay particular attention to roof lines, trim details and window sizes and styles.

3. Quality counts

Potential homebuyers have more sophisticated tastes than ever. That's why spending a little extra on good design, quality materials and careful craftsmanship can garner big rewards when it comes time to sell.

4. Meet expectations

What buyers want varies from area to area and from one price range to the next. Do some comparison shopping to see what your competition will be like should you decide to sell. And talk to a real-estate agent who knows your neighborhood.

5. Major systems and structures

A buyer wants to be able to walk in and say, 'I could move right in' major system and structure issues kill potential deals in high-end neighborhoods. Have an inspection done and fix the major things.

A roof that needs to be replaced could knock 15% off the value, a plumbing of the showers and water pipes could plant doubts of the anticipated sale price, and an electrical-system problem could knock off more on the value of your home.

6. Swimming pool

Depending on your market, a swimming pool or other water feature may boost or lower your home's value — and its appeal.
If you live in a hot climate where many homes have a pool, it's definitely an expected feature that will add value.

In regions where pools aren't common, though, buyers may not want the hassle of maintaining a pool they didn't want in the first place. Those buyers may not consider buying your home, particularly if they have young children and are concerned about safety.

7. Garage

A garage definitely adds value to a home, and the key is to have the right-size garage for the home and the neighborhood.
If I have a one-car garage in a 1,200-square-foot home in a starter neighborhood, there's a big premium for that, If you have a one-car garage in a fifty-million-shilling home, that's a functional problem.

8. Clotheslines

Modern homeowners don't like people's underwear in public. It's just unsightly. Placing clotheslines hidden from public view gives the home a neat look

These are but just a few tips to consider before spending hard earned money to develop your home or houses for sale, remember you don't want someone learning on your project.

If you're selling your house, a good real-estate agent will help you figure out the tricky world of setting the right price, market the home professionally, qualifying the buyers and expertly negotiating and finalizing the deal. So with all the property agents available in the market, how do you make the choice on whom to entrust with this great task?

1. Round up good prospects

To identify prospective agents, you can ask for referrals from neighbours or friends or use the search tools on the internet. Try to limit your search to agents with credentials that match your needs. For example, you can search for agents who specialize in the sale of single-family houses, apartments and luxury or resort homes, as well as furnished properties intended for long term tenancy. You want someone who will work assertively on your behalf but won't come on too aggressively, like a hawker or a used-car salesman. That will turn off the buyers too.

2. Ask tough questions

You want an agent who is "intimately and passionately" familiar with your neighbourhood. However, if a prospective agent has little constructive input about price and condition for you, be curious: Do they want to help you sell your house or do they just want to put a sign in your yard to bring in buyers?
Each agent you interview should offer a comparative market analysis (a comparison of recent and pending sales of homes similar to yours) and know enough about the neighbourhood and recent sales to explain why you should list your home for more or less than the neighbour down the street who sold last season. Don't fall for the agent who quickly promises the quickest sale for the highest price.

3. Research how long the agent has been in business

You can often find out how long the agent has been selling real estate from their online presence and listings. Or, you can just ask the agent. How long they have been in business is a good indicator that they're not learning on you.
Ultimately, what you're looking for is someone who is actively engaged in a particular area and price range. You'll want to know what knowledge of those two factors they can demonstrate and "what kind of market presence they have" as the agents past success is a good predictor of how successful they will be in assisting you selling your home.

4. Make sure your agent has backup

It's important for an agent to have at least one assistant; many agents have a team of specialists to help them. Advertising a home requires feeding and nurturing, collecting quantifiable analytics and forwarding the info to sellers. At the same time, you don't want to communicate through the assistants all the time; you want an agent with whom you can talk directly. To ease your inevitable anxiety, find out how frequently you'll receive updates from the agent.

5. Enjoy the Process

Granted this could be difficult considering the amount of money at stake, but a good real estate agent is here to ease your burdens. Leave all the heavy lifting up to them.
As one of our core services, we at Dream Properties will do the best we can to make the sales process as painless as possible in as short a time as possible. Make sure to visit our Contact Page to find out how to reach us.
Happy Selling!

Tuesday 11, 2013, The establishment of Konza City is one of the key flagships projects of Vision 2030 which will position Kenya as the regions ICT hub and also through the housing of International Investors in setting up of shops and other amenities.

The City has been allocated 1.3 Billion this year is to begin the construction of the 1st phase which will be launched by President Uhuru before later this year.

In a bid to speed up the construction and development of Konza Techno City, the government has formed a Consultative Community Forum to engage area locals and neighboring communities on the benefits of the multi-billion project will have once completed.

Speaking at the Forum recently to Mawasiliano, Information, Communication and Technology (ICT) Cabinet Secretary, Dr. Fred Matiang’i said the meeting with the leadership of Makueni, Machakos and Kajiado Counties was to collaborate and  oversee successful completion of the metropolis.

Matiang’i emphasized the government interest in creating a framework for constant engagement between the County governments and the National government, so that resources are pumped to develop the technology of Konza City.

“County governments are looking after the environs of the city and also looking into ways of taking care of the 10Km buffer zone around Konza City,” said Dr. Matiang’i.

The Cabinet Secretary stated that they will be having quarterly consultative meetings with the County governments so that all aspects of development include the local community.

Speaking during the same event, the Governor of Kajiado County, David Nkedianye promised that they will work with the local people to make sure that they partake of the benefits that grow from the city and he was committed to work closely with his colleagues, to make sure that the great idea of Konza City, comes into reality while it benefits the people of Kenya.

Also present at the forum was the Governor of Machakos County, Dr. Alfred Mutua who said that Konza City was a dream which has been a long time coming and they are going to support the National government.

Mutua said they fully support the consultative agenda which Dr. Matiang’i had brought forth in the community and the leaders of the 3 communities will be involved as the project is being ushered in.

The governor also warned against bad politics that may interfere with the development of the project.

“We don’t want bad politics to slow down this project and we are not going to allow people with vested interests to undermine the construction of Konza. The reason Africa languishes in poverty is due to more time spent politicking and fighting than actually supporting development,” he concluded.

The Governor of Makueni County, Prof. Kivutha Kibwana who was also the host of the event said that despite the fact that Konza City is located in Makueni County, Machakos and Kajiado are neighbours, therefore need to emphasis that it is both a National and International Project.

Kibwana admitted that they are very happy that during Madaraka day President Uhuru mentioned his interest in Konza City and also Dr. Matiang’i had said the ground was ready for construction of the 1st Phase which is to happen before Christmas.

He promised to work together with his colleagues and the Cabinet Secretary for the project to work effectively.

“We shall collaborate with Dr. Matiang’i in the consultations as he has mentioned because it is critical in making such a big project,” said the governor.

Prof. Kibwana further said that they have asked the Cabinet Secretary to give them a capacity building for Civic education to assist local people especially those from Makueni County to understand the big idea.

Present in the event was ICT PS, Dr. Bitange Ndemo, Chairperson Konza Board, John Ngumi, Director General Vision 2030, Mugo Kibati and CEO KOTDA, Catherine Adeya among others.

Article from Konza City

In Summary

  • Developers of mortgage financed houses who rent out complete units are incurring losses when they factor in mortgage repayments.
  • The Mortgage Company said rental yields had remained flat at 6.22 per cent, making mortgage financed properties record a sixth consecutive quarter as a loss making asset.

High mortgage costs have raised re-payment rates on house loans to double the rental earnings on property, a survey by real estate firm The Mortgage Company (TMC), has showed.

tmc mortgage report


Developers of mortgage financed houses who rent out complete units are therefore incurring losses when they factor in mortgage repayments, the TMC report released Wednesday concluded.

“Rents and mortgage payments on

Many are waiting with bated breath to see who the next president will be and what positive changes they will implement to transform the future of Kenya and consequently the lives of the individuals and their families.

The big question for the real estate investors is “does it matter who takes the presidency?” The unseasoned real estate investors are the ones who zero in on making good deals and speculation. The seasoned real estate investors look for opportunity even in troubled economies like ours, as Warren Buffet put it ‘be fearful when others are greedy and greedy when others are fearful’.

Should investors back off or wait?

The seasoned real estate investor looks at the pictures from different angle. Just like the face/optical illusion the real estate

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