Urithi bets on budget model with Sh1.6m home

An artist’s impression of Urithi Housing Co-operative’s two-bedroom Osten Terrace Gardens apartments.

Urithi Housing Co-operative Society has launched Sh1.6 million two-bedroom apartments along Kangundo Road, Machakos County.

The co-operative, which is set on making in-roads in the low-cost housing segment, said it has come up with a new model where buyers co-own the property right from the start. This, it said, has allowed it to bring down costs by between 40 per cent and 60 per cent.

“Most developers go to the bank to get money to put up the houses, and then they have to factor in interest and their margin on pricing. But with our concept, we cut out these costs and allow home owners to be part of the development, and this is why we are able to deliver a house at Sh1.6 million,” Urithi Housing Co-operative Chairman Samuel Maina said in an interview.

The firm said it is giving buyers the flexibility they need to buy the home with monthly repayments closer to what they would be paying in rent.

The Osten Terrace Gardens two-bedroom apartment project is located in Joska, which is about 13 kilometres from the Eastern Bypass along Kangundo Road. The houses are 600 metres from the tarmac at Joska.

The project sits on a five-acre property and comprises three-storey apartments.

There are four different plans for non-cash purchasers to pick from.

In the one year plan, after a deposit of between Sh200,000 and Sh1 million, monthly repayments range between Sh50,000 and Sh120,000.

For the two-year plan, monthly deposits drop to as low as Sh30,000 depending on the deposit made, while for three years, one can make monthly repayments as low as Sh21,000.

In the four-year plan, monthly deposits drop to Sh16,000, and as in the other plans, deposits range between Sh200,000 and Sh1 million.

Buyers get their homes allocated to them immediately or after a maximum period of 14 months, depending on the payment plan selected.

If the model is successful, the firm plans to replicate it in other parts of the country in what may just bring to reality millions of Kenyans’ home ownership dreams.

Mr Maina said Urithi is counting on the apartments’ location, which is about a 30-minute drive from the Jomo Kenyatta International Airport, to attract residents from Nairobi.

It will be selling about 400 units, which will see it qualify for the new incentives introduced by the Government to attract players into the low-cost housing segment.

Parliament recently handed developers a major incentive after it reduced the number of units that qualify for lower taxes to 400, from the 1,000 that had earlier been proposed by Treasury Cabinet Secretary Henry Rotich.

Through an amendment to the Finance Bill, home developers will now pay 15 per cent in income taxes down from 20 per cent.

The latest Central Bank report on the banking industry shows the average mortgage loan size increased from Sh7.5 million in 2014 to Sh8.3 million last year due to higher property prices.

Interest rates also shot up from an average of 15.8 per cent in 2014 to 17.1 per cent last year, with the lowest interest rate for a mortgage at 11.9 per cent at the end of 2015.

The number of mortgage loans in the market is currently 24,458.

“This is one of the most competitive projects on price we have done around Nairobi,” Maina said, adding that each apartment block will house 12 housing units. Four blocks will make up a court.

A plot at Joska costs about Sh800,000, with comparative houses going for about Sh3.5 million.

The co-operative has set four years as the maximum repayment period for its houses, saying this is “enough for a buyer to mobilise savings or borrow money from their Saccos and so on”.

But it is the early buyers who will enjoy the Sh1.6 million price. Those who choose the longest repayment period at the lowest deposit of Sh200,000 will eventually pay just over Sh2 million for their home.

Urithi joins a growing list of investors that are going for the lower segment of the market. These include Jamii Bora Makao, which is developing 2,000 low-cost units in eight locations, and Kenya Projects, which has made a Sh4 billion commitment to build affordable houses in Mombasa.

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