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Kenya’s Real Estate Industry Goes Hi-tech With Blockchain

Land Layby Kenya Ltd, a Kenyan leading real estate and fintech company, operating in 4 other countries is set to launch the minimal viable product (MVP) for Africa’s first multinational Blockchain powered land registry early 2018.

The platform, which shall be accessed using a special digital utility key called the Harambee token, will transform the way we buy and sell real estate by doing away with the hidden costs, unnecessary intermediaries, and reduce transaction time significantly.

It will enhance data security and eliminate manual errors and duplication of verification processes.

Generally, the Blockchain contains a certain and verifiable record of every transaction ever made, which mitigates the risk of double spending, fraud, abuse, and manipulation of transactions.

The crypto economics built into the Harambee Token provide incentives for the participants to continue validating blocks, reducing the possibility of external influencers to modify previously recorded transaction records.

Land Layby Holdings hopes to permanently address the trust gap by disclosing land and land options to the public, but with special privacy requirements.

The initial role of the platform will be to provide a mirror reflection of the Government Land Registry systems.  Cryptocurrencies have made a strong impact on payments, remittances, and foreign exchange.

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How You Can Easily Own a Home Using SACCO (Co-operative Societies)

Living in a three-bedroom brick house with a compound where she practises small-scale farming is a dream MaryLouisa Wairimu had never thought possible. The story of the 71-year-old woman, who sells headscarves, khangas and water in the Kinyago Slum in Nairobi is one of victory over desperation and despair.

Between 1968 and 1985, she lived with her family in the Kinyago and City Cotton slums. They would put up temporary shelter using plastic bags and cartons for the night, and pull them down in the morning to avoid harassment by City Council askaris.

“We did not have the money to buy land or rent even the simplest houses, so we were exposed to the vagaries of  weather,” says Ms Wairimu.

In 1985, the family moved to a mud house in Eastleigh Section Three, Nairobi. Later that year, when a foreigner who had been occupying seven acres of land in Biafra in the neighbourhood left the country, Ms Wairimu and her neighbours visited the Land office to find out about its ownership. They discovered  that it was not registered in anyone’s name and, with the help of their MP, had it registered in their names two months later. The MP oversaw its subdivision among the families.

But they still had no money to build decent houses. Luckily, a Catholic priest offered them some iron sheets, wood and nails, but they had to buy the doors, windows and pay the builders.

“It was a blessing to us as all inconveniences of being homeless would end. Every family built two rooms, one to occupy and the other to rent,” says Ms Wairimu.

In the meantime, she  and her neighbours had formed an association known as Undugu Society. It was through this association that they met a representative of the National Co-operative Housing Union (Nachu), who told them that even with their little money, they could own decent houses.

Seventeen  members of Undugu Society then formed Rehema Housing Society and affiliated themselves to Nachu, the  housing co-operatives’ umbrella body that mobilises finances to help low-income earners own homes.

In 2000, the group bought 2.5 acres of land on Kangundo road using a loan from Nachu. Nachu also helped them build two-room corrugated iron sheet houses as they waited to build their permanent houses. The land was subdivided into 40x90ft plots, each costing Sh64,000. The loan was to be repaid in instalments of Sh1,900 or Sh2,000, but those who could afford it paid more.

“Every member was allowed a comfortable period to repay the amount,” Ms Wairiumu says, adding that some completed the repayment in six months while others took longer.

To build a permanent, three-bedroom master en suite house, she took a Sh1.5 million loan, which was five times her savings.

The house, which was built in 2013, has a sizable kitchen, a big living room, a toilet and a bathroom, with another one outside.”

Ms Wairimu finished repaying the loan in May this year and is now the proud owner of a debt-free house.

“This is a dream I never thought possible,” says the mother of four and grandmother of eight.

Hers is not just a story of determination and resilience, but also that of the power of housing cooperatives in helping the poor own homes.

Developers have concentrated on the high-end market segment where returns are high, ignoring low-income earners. But housing cooperatives offer this group a ray of hope.

Indeed, the United Nations acknowledges housing cooperatives as a flexible and adoptable means of providing shelter.

With housing cooperatives in more than 60 countries, their contribution to the housing sector is enormous. For instance, 27 million Europeans live in houses built by co-ops. And housing co-operatives in Sweden and Germany, contribute 22 per cent and eight per cent of the housing stock respectively.

There were 9.2 million households in Kenya in 2014, 40 per cent  of which were l in urban areas. The annual rural-urban migration currently stands at 4.4 per cent, or about 500,000 people, every year.

It is projected that by 2030, half of  the country’s population will be urban-based,  up from 32 per cent in 2009.

A recent World Bank report shows that private real estate developers in the country built 15,000 units in 2015, only two per cent of which were for low-income earners.

“With the average mortgage loan at Sh8 million, most Kenyan households cannot afford housing through this means. Co-operatives are one of the most viable ways of owning a house,” Nachu national Chairman Francis Kamande noted during the union’s AGM last month, adding that co-operatives deliver 90 per cent of housing in Kenya.

In 2015, more than 100,000 Kenyans took housing loans from co-operatives, which they will repay over periods of between three and seven years.

Formed in 1979, Nachu began operations in 1987, and has provided decent housing to the low- and modest-income households in many parts of the country.

In the last three years, the union has built more than 1,600 houses targeting low-income earners. They cost between Sh950,000 and Sh1.8 million. It plans to deliver more than 2,500 affordable houses annually in the next two years.

Nachu uses the incremental building method to build 100 and 200 units that take advantage of economies of scale, helping reduce associated costs such as infrastructure.

And the benefits cannot be gainsaid. “Were it not for a housing cooperative, I would still be living in deplorable conditions in the slums,” says Ms Wairimu.

Source | BiznaKenya

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Kajiado Governor Lenku Bans Subdivision of Rural Land into ‘Uneconomic’ Units

Hundreds of people may find themselves with worthless titles to pieces of land in Kajiado over the advertisement of “fake” plots for sale in the county, Governor Joseph Ole Lenku has warned.

Mr Lenku, who made the statement over the weekend, also indicated that the county will not be approving the subdivision of any rural land into “uneconomical” pieces.

“Any hawking of quarter-acre pieces of land in the heart of Kajiado is fake and will not be tolerated and that is the official position of the Kajiado County Government,” said Mr Lenku.

By this edict, Mr Ole Lenku will find himself on a collision course with land-buying companies that buy large pieces of land and subdivide it into small portions of up to an eighth and later sell it unsuspecting persons.

Most affected is land in Kajiado West, some parts of Kajiado East and Central.

The County Executive in charge of land, Mr Hamilton Parseina, gave the example of a group ranch in Kajiado West, which was subdivided and members acquired title deeds.

“Other areas in Kajiado West include, Oltinga, Ilnaroj and Saikeri,” he explained.

“In Kajiado East, we have land in Kisaju, Isinya, Mashuru and Kenyawa, while in Kajiado Central we have Matapatato and Ildamat.”

He warned people who are planning to buy land in these areas to do due diligence before forking out their hard-earned money.

“We are not going to do any approvals for whatever kind of development in these areas as it is illegal,” added Mr Parseina.

Welcomes investors

Mr Ole Lenku, however, maintained that the county welcomes investors but that land demarcation plans should be respected.

“We want to make it clear that Kajiado is an investment-friendly county,” he explained.

“We have land for industries, housing, ranching and wildlife. It should strictly be used for what it was intended for. If you find yourself in an area designated for wildlife, do not attempt to make it a human settlement.”

He said that unscrupulous businessmen have colluded with crooked land officials to short-circuit the system.

“Stand warned that if you are trying to split land beyond what the county has zoned for, know that it is an exercise in futility. If you bribed your way to get, we shall right it,” said the governor.

Mr Ole Lenku vowed to preserve the Maasai pastoral way of life.

“We want to also recognise that Kajiado is largely a pastoralist county other than for the designated areas.

“Uneconomic” units

Mr Parseina told the Nation that subdivision of land into “uneconomical units” is unlawful and that the county government has not been involved.

“Most of the land being subdivided is listed as agricultural land. What they are doing is illegal,” he said on phone.

The National Land Commission has expressed support over the move. NLC vice-chair Abigael Mbagaya said the Commission had received hundreds of complaints about plots that are 200 kilometres away from their advertised locations.

“The adverts are misleading. We urge investors to do due diligence with the county government.

Most of the small plots being hawked are unsustainable,” said Mrs Mbagaya

Source | Business Daily

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Tax Alert: Real Estate Sector

The Kenya Revenue Authority published a notice on 4 October 2017 in the dailies requiring all bottled water, soda in polyethylene terephthalate (PET), energy drinks, other non-alcoholic beverages, food supplements and cosmetics to have an excise stamp. This requirement will apply to both manufactured and imported products.

In light of this, we have prepared a tax alert for your general knowledge on the impact of this circular in order to keep you well-versed and compliant with the recent tax changes in Kenya.

2017G_06013-171Gbl_Indirect_Kenya – Excise stamps on non-alcoholic beverages (003)