This archive report was first published on 21 July 2019.
Hidden Costs of Buying Real Estate ¶
When purchasing a property, it's easy to get caught up in the excitement of finding the perfect home. However, it's crucial to consider the transaction costs beyond the property price. These costs can include legal fees, real estate broker fees, lender charges, and more.
According to the Advocates Remuneration Act, the minimum amount payable by law for legal fees is Sh35,000, which is approximately 1-2 percent of the purchase price.
Engaging a real estate broker can also incur additional costs, with fees ranging from 0.15 to 0.25 percent of the property value. These fees cover the cost of collecting a buyer's documents, running a credit check, and verifying the title of the property.
Additionally, lenders charge processing fees, which can range from 0.15 to 0.25 percent of the property value. These fees cover the cost of loan disbursement and verifying the title of the property.
Other costs to consider include search costs for the land, which can range from Sh500 to Sh5,000, depending on the type of search. Stamp duty is also levied on land transactions, with rates ranging from two to four percent of the property value.
Finally, capital gains tax should be factored in, with rates ranging from five percent of the value of the net gain. Payment can be made in instalments, in advance, or at the end of the accounting period.
Factoring in all these costs will help you plan your property transactions better for a seamless transition to your new home.
— GITONGA MURIITHI, Head of Sales and Marketing, Centum Real Estate
