Property investments along coastal cities such as Mombasa, Malindi and Lamu yield substantial returns on investment. The real estate market in these cities is on an upward trend with property appreciation rates and growth rates steadily increasing. The report shows that in 2012, Kenyan coastal cities recorded the highest growth globally with a 20% increase in growth, surpassing internationally popular coastal cities such as Miami.
The process of buying property in the coastal city of Mombasa is similar to buying property elsewhere in Kenya. However, buying property in Mombasa is a tricky affair given the fact that most properties in the city are untitled.
It is against this backdrop that the majority of property transactions are conducted either using master titles or under gentleman agreements, which are often tainted by fraud, fraud and double buying and selling of properties, leaving most properties with endless court cases.
Steps to Guide the Purchase of Maisonette in Mombasa
It is important for you as a potential buyer to purchase a cottage with an individual title deed in addition to relying on a man’s agreement to authenticate your purchase and ownership.
1.) Contracting a real estate agent (5.51 percent commission).
- Although the same commissions are charged here by real estate agents as in other parts of Kenya, you are likely to dig deeper to pay additional search and view fees which cost around Ksh3,500 and Ksh1,500 respectively.
- Real estate agents are essential in finding a suitable cottage that meets your needs and expectations. They have considerable knowledge of the important aspects of a property, such as area safety, property ownership and the cost of the various cottages available for sale.
- Agents can assist through freight-in (providing internal legal services) and they can help connect you with the appropriate mortgage lender, to finance your purchase.
- Agent fees are paid at the time the sales signature is created.
2.) Hire a real-state attorney (rate 1.5%).
- Buying massionate in Mombasa should be facilitated by an attorney to assist in property acquisition.
- Once you have identified a suitable cottage and you have met with the seller and agreed to a transaction, your attorney will first conduct a tenure check at the land registry office located in the city of Mombasa for a fee of Ksh500 to make sure the massionate is registered.
3.) Pay deposit (10 – 30%)
If the property is registered, the attorney will draft a conditional initial contract signed and executed by both parties, in which you must pay a refundable deposit of 10-30% of the purchase price.
*Please ensure that both parties agree on how the property will be financed
4.) Transaction Period 90 Days
Once the deposit is paid, the transaction process begins which takes about 90 days after the parties have signed the initial contract. In this period:
- Vendors must find all necessary permits from Mombasa city council, such as rates and land lease permit certificates (Ksh7,500) and transfer approvals to ensure all local levies and utility bills are cleared prior to property transfer.
- Your attorney must then prepare a transfer draft at a flat rate of 4% at the Mombasa Lands office and obtain stamp duty on the same.
- Ministry of Land officials will then inspect and verify the huts while making sure the selling price matches the actual value.
- Your attorney then completes the property transfer registration
5.) Close Deal
After registering for a property transfer, you can then settle the balance of payments with the seller and, 30 days later, you can settle any pending legal fees and taxes.
Note: For those who are outside Kenya, they can use an attorney of their choice to purchase a cottage in Mombasa through a Power of Attorney.