KENYA (Commonwealth Union)_Kenyans continue to lose multi-million dollar homes and other property to auctioneers, despite the country’s difficult economic conditions.
Several auction houses advertised residential residences for sale in Nairobi and its vicinity in a series of advertisements published in local dailies on Monday, December 5.
Seven pages of auctioneers soliciting bids for four-bedroom maisonettes and other residential properties in Lang’ata, South C, Kiambu, Juja, Kitengela, and Ruiru appeared in the Daily Nation.
Interested buyers will only have to pay a fraction of the price that the original owners paid to secure the residences.
“At the drop of the hammer, a 25% deposit must be paid in the form of a banker’s cheque. The remaining sum is due in 90 days “One of the advertisements was read in part.
Landlords who own residential plots are among those who have lost money on their real estate ventures.
“The nearest access road is Murram, and public and social amenities are easily accessible in the surrounding area. Ksh50,000 is the estimated monthly income “Another advertisement was read in part.
The majority of the properties were put up for auction in order to recoup money from outstanding loans and mortgages.
Some pieces of land in all regions are larger than 10 hectares. To be eligible to bid, interested parties were advised to deposit between Ksh50,000 and Ksh1,000,000 in bankers cheques.
“At the fall of the hammer or the closing of business on the auction day, 25% of the purchase price must be paid, otherwise the auction deposit will be forfeited.”
“Balance to be paid in either 60 or 90 days,” auctioneers Keysian Auctioneers, Phillips International Auctioneers, and Garam Investments stated in their notifications. Kenya’s mortgage market, on the other hand, has been expanding.
According to the Central Bank of Kenya, housing loans have increased more than tenfold since 2006, from 1,278 loans valued at Ksh19m to 24,458 loans valued at Ksh203.3bn in recent years (CBK).
Mortgage defaults, on the other hand, increased by 48% to Ksh70.5 billion in the year to March 2021, because to difficult living conditions and the Covid-19 pandemic.
In the three months to March 2021, unpaid mortgages climbed by Ksh9.1 billion, or 14.8%. Banks that had previously slowed down on seizures accelerated debt recovery, resulting in an increase in auctions.
The auctions are intended to cushion banks from loans, since the latest statistics from the Central Bank of Kenya (CBK) banking sector supervision report shows that the 14 microfinance banks’ losses increased by 561 percent, from Ksh339 million in 2019 to Ksh2.2 billion in December 2020.
“Microfinance banks were exposed to the Covid-19 outbreak, which impacted SMEs and households, their specialty markets.”
“Total net assets fell by 1.5 percent to Ksh75.1 billion in December 2020, primarily due to loans and advances,” CBK reported.
Aside from residential properties, agricultural farms, automobiles, manufacturing, construction, and farm machinery were also available for purchase.
The number of homes for sale increased in 2022, as did the number of individuals and businesses defaulting on debts.
In an interview with Kenyans.co.ke, economist Professor XN Iraki said that the increase in property auctions was a symptom of a decreasing economy not only in Kenya but around the world.
He agreed that global issues such as the Coronavirus outbreak and the Ukrainian-Russian war had an impact on the number of defaults.
“Most people took out loans using their homes and companies as collateral and were unable to service them when their jobs were destroyed during the pandemic,” Iraki explained.
Kenyans, he continued, can avoid this by only taking out loans when absolutely essential and investing in diversified portfolios when taking out business loans.
“Most Kenyans are unaware that they can insure loans so that if they default on any credit, the insurance will cover the loss. The government might potentially guarantee the loans “Iraki elaborated.
The Central Bank of Kenya (CBK) increased the minimum lending rate, despite the fact that most Kenyans earn the same or lower income.
Inflation is another problem, with the Kenya National Bureau of Statistics (KNBS) reporting 9.5 percent inflation in November, up 3.7 percent from the same period in 2021.
