By Allan Olingo
In 2002, Lucy Mwendwa Ringera was looking for a house to buy in Nairobi. An employee of an oil company, she thought she had saved enough money, but to her utter dismay, the prices were exorbitant.
It was then that Lucy decided to approach her boss with an idea of pooling their resources together in order to buy land and then build houses as a team.
"He thought it was a brilliant idea and we decided to sell it to other staff members," she says. Like her boss, they were equally enthusiastic.
Through this initiative they were able to buy land and build decent housing units for each of the members who bought the idea. They then decided to pursue the concept as a business venture in order to help others get decent and affordable housing at places of their choice.
This marked the birth of Tofina’s housing concept, which was registered in 2002 as a housing co-operative known as Tofina Rom Builders in which she is a director.
"The aim was to enable members acquire quality, affordable houses within the upmarket areas, which otherwise would have remained a dream to many," she says.
Tripled value
Members buy land and build houses at a cost plus the supervision fee, which eventually makes the houses affordable. Here the middleman’s margin as well as the cost of materials, which is normally pushed to the consumer, is shelved.
"One shares the cost of building the houses, including payment of the land. If several shareholders go into default, the other shareholders may have to make up the difference or the defaulter can sell his/her share to another, which most of the time is at a higher cost," notes Lucy.
"We feel proud that we have conceptualised an idea which in turn has helped many families." {Lucy Mwendwa, |
"The value of the first project on completion was three times the money each member spent in terms of land purchase and construction cost," she says.
Formed to co-ordinate shelter issues through the co-operative model by providing financial and technical service, housing co-operatives are fast becoming the latest craze amongst home seekers.
Professionals are forming groupings in order to cushion each other so as to achieve the common dream of owning a home at their place of choice, while others are using this to make huge financial profits.
Most real estate co-operatives have a leadership committee with good organisational and planning skills through executive committees. The leadership is normally made up of directors and elected representatives of the projects who basically represent the interests of others. The board of directors usually runs its projects with a little more operational clout. They also tend to control sub-leasing and prospective resale candidates.
"We are open to members’ scrutiny at all stages. The sub-division of the houses is done on a first pay first served basis and once a project is completed, each member is given a lease, which is an acceptable legal title from the company for the unit(s) held," Lucy notes.
Financial gains
Tofina Rom Builders have since put up many other projects for its members.
"Our Riara Road apartments, which are three bed-roomed units with a detached servant’s quarter, all en-suite, was going at a cost of Sh8.4 million. The Mombasa Holiday Homes are two bed-roomed with a studio costing Sh5.2 million; the Karen Country Homes approximately 450-500 square metres, standing on a half acre plot in a gated community and costing Sh22 million and the Ngong Town apartments, which are three bed-roomed costing Sh2.8 million," she notes.
Habakuk Mboya managed to secure a four bed-roomed all en-suite townhouse on Amboseli Drive in Nairobi’s Lavington at a cost of Sh8.5 million. A member of Tofina, he is currently involved in many housing projects and expects to reap great financial gains.
"I have injected finances in various projects in Lavington at Hathiru Road, Amboseli Drive, Chalby Drive, Othaya Road, Ngong Town, a Mombasa beach house and Riara Road," he says.
Mboya hopes to make huge profits from selling the units.
"I will dispose them off at current market rates and rake in triple what I used in construction," he says.
Apart from Tofina Rom Builders, other housing co-operatives include: Balozi Housing Co-operative Sacco, the Kenya Medical Association Housing Cooperative and the National Cooperative Housing Union (Nachu) amongst others.
Shem Gichuki, a trainer at Nachu states that they have endeavoured to facilitate accessibility of decent and affordable shelter by exploring alternatives in house construction, appropriate building materials and finance systems that are appropriate to the members and potential clients within the country and the Diaspora.
Established in 1979 under the Cooperative Societies Act (Cap 490), National Cooperative Housing Union’s basic role is to co-ordinate shelter issues through the cooperative model by providing financial and technical service.
"With a mission to contribute to improved shelter and quality of life for modest and low-income communities through provision of access to capacity development, technical services and financial solutions, we have envisioned to be the leader in facilitating affordable and integrated shelter solutions in Africa," notes Gichuki.
Financing any real estate project is one real challenge for Kenyan households, especially with the high interest rates from banks and tough conditions from mortgage institutions.
However, the structures within the real estate co-operatives allow members to source for funds with minimum pressure.
Tailor made services
According to Lucy, the greatest challenge is that housing co-operatives are not yet seen as a distinct economic and integral component of the socio-economic system of Kenya and as an effective and potential instrument of socio-economic development.
Houses under construction. This is one of the various projects by Tofina Rom Builders. |
Says Gichuki: "As a co-operative, we offer not just financing but other tailor made services to our members to ensure they achieve their dream of owning decent homes. Therefore, to meet the shelter needs, Nachu provides four main services; community mobilisation, training, lobbying and advocacy, financial services, technical services and estate management."
Anyone can join the co-operatives as all they need is to form a group, register it with the Ministry of Co-operatives and join Nachu.
"Once you have saved with us for three months, we will be able to offer you a housing loan facility at a lower cost compared to other financial service institutions," he adds.
"Nachu conducts a credit appraisal once a co-operative or an individual applies for a loan. We then educate the co-operative members on loan terms and conditions, including recovery procedures. Individual borrowers must provide either land titles or a letter of allotment issued by the municipal council, with a letter from the council indicating they will not sell the land before consulting," he notes.
Co-operatives remain the most effective vehicle for enabling a majority of Kenyans to own homes, but with most co-operatives having idle but prime land, they still lack adequate resources to invest in housing projects for their members. This is where the ‘Good Home Mortgage’ for Saccos — a product of the Co-operative Bank of Kenya, offers the answer to this need.
Competitive interest rates
One of the benefits that the bank has extended to these saccos is management through the services of a dedicated relationship manager, who ensures all their needs are addressed appropriately.
Others include competitive interest rates, good faith estimates, which is a document provided by the bank to the sacco showing an estimate of all fees and costs associated with mortgage loans. It informs customers on the various steps and expected costs of a mortgage to ensure clients don’t get any surprises as they service their mortgages.
These saccos are thriving and getting popular among Kenyans because they allow members to decide on all aspects of the project, including design, architects and engineers.
Regular meetings between the executive directors in consultation with the facilitating committee are held regularly, keeping members informed of the day-to-day matters in their respective projects.
"Money required urgently is for the purchase of land. After land is purchased, members can enjoy some breathing space to source for construction funds while approvals are sought from the relevant authorities such as City Council and Nema," states Lucy.
"Our members agree on the construction timetable and payment remittance installation frequency. Depending on the nature and size of the project, the normal period is between 12 and 18 calendar months," she adds.
"The greatest joy of the housing co-operative is the unity it brings. We feel proud that we have conceptualised an idea, which in turn has helped many families secure affordable yet elegant housing," she concludes.
