Firms Adopt New Strategies to Woo Reluctant Home Buyers

Sales of newly built houses have been on a downward trend over the past couple of months and the culprits are clear. Homebuyers are increasingly unable to afford even the cheapest homes in urban centres.

Rising home prices, combined with high mortgage rates and low access to credit, are quickly taking away prospective homeowners’ purchasing power – leading to a weakening of the previously fast-growing sector.

To counter the trend, property developers are adopting unconventional tactics to lure the now elusive home buyers.

One such tactic is a rent-to-own home solution that will enable individuals to acquire homes without taking conventional bank loans.

Dubbed Home Ownership Made Easy (HOME), the solution fronted by real estate firm Paradigim Projects in partnership with Genghis Capital will enable buyers to obtain a long-term purchasing facility from the developer, with monthly repayments that are equal to prevailing rental rates in the target areas.

“Majority of people seeking home ownership do not have enough money to make an outright purchase or the down payment required which are steep.

“HOME is a solution that addresses the inter-dependency between developers, investors and buyers allowing more people affordable home ownership,” Genghis Capital chief executive Geoffrey Gangla said last month.

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According to Paradigm Projects director Austin Ogada, the homeownership plan will make it easier for developers to attract equity and debt capital for funding their projects.

“HOME will allow long-term investors to fully underwrite a real estate project thereby significantly de-risking the project for the sake of the equity and debt investors as well as providing an alternative financing platform for the eventual home buyers,” Mr Ogada said.

The housing scheme, which takes off in July, will at the start target Ngong Road, Kikuyu, Uthiru and Dagoretti.

Urithi Cooperative Society has also embraced the rent-to-own home ownership model.

The society has developed a low-cost housing scheme in Joska, Nairobi, where homebuyers can buy a two-bedroom apartment for Sh1.6 million payable on a rent-to-own basis.

“We realised that most Kenyans dream of owning a home and that is why we came up with an affordable scheme. With a minimum deposit of Sh200,000 and the monthly payments of the balance for four years, this dream will come true,” Urithi CEO Kelvin Majau said.

The rent-to-own model is aimed at simplifying home ownership at a time when Kenya commercial banks are unwilling to lend to individuals owing to interest rate capping.

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