Building Dreams, Battling Costs: Navigating Kenya’s Construction Conundrum  
February 7, 2024
Kenya's construction industry brims with promise, yet grapples with soaring costs hindering progress. Explore the factors fueling this conundrum, from volatile raw material prices to cumbersome land acquisition processes. Learn how streamlined regulations, incentivized eco-friendly practices, and pu

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Welcome to the latest issue of CM Property Digest (CMPD), your trusted source for legal and industry insights into the dynamic East African property market.

#AwarenessWednesday

Wednesday, February 7th, 2024
Introduction  The Kenyan construction industry pulsates with the promise of development. Yet, this dynamism is shadowed by a persistent challenge: soaring construction costs. This complex issue cripples not only project viability but also hinders the nation's progress towards affordable housing and sustainable infrastructure. This article delves into the factors fuelling these inflated costs, their impact on Kenya’s critical housing development goals, and potential solutions for navigating a path towards a more cost-effective and robust construction future.  What are the contributing factors to the high construction costs? To effectively address this challenge, it is crucial to deconstruct the key factors contributing to these elevated costs and their multifaceted implications. Economic factors such as GDP, inflation, and interest rates significantly influence investment in the construction industry. Political factors, particularly election cycles and government corruption, also play a role in shaping investor decisions. Strict environmental regulations are identified as impacting construction investment.  1. Volatile Raw Material Prices: Cement, steel, and timber, the very lifeblood of construction, are susceptible to global market fluctuations and local logistical challenges. This volatility, exemplified by the recent 20% increase in cement prices due to supply chain disruptions, directly impacts project budgets, forcing developers to make difficult trade-offs between quality and affordability. 2. Inadequate Infrastructure Networks: Kenya's infrastructure landscape presents a significant bottleneck, acting as a tollbooth on the path to progress. Poor transportation networks, poor urban planning and unreliable logistics infrastructure choke the delivery of materials, adding substantial time and cost burdens to construction projects. The Kenya Power and Lighting Company (KPLC) plays a pivotal role in the nation's construction industry, but its impact on project costs is multifaceted and nuanced. While reliable electricity access can undeniably enhance efficiency and unlock cost-saving opportunities, KPLC connections can also contribute to inflated construction expenses. Understanding both sides of this equation... Continue Reading
Tuesday, January 30th, 2024
In the sphere of Kenyan real estate, understanding the multifaceted process of obtaining building permits and the approval of building plans is crucial for any construction project. This newsletter aims to demystify the steps involved and highlight the importance of streamlining these processes for a more efficient property sector.  Understanding the Process Obtaining a building permit in Kenya involves several key steps, each critical for ensuring compliance with national standards and regulations. The journey begins with obtaining a survey plan from a registered surveyor. This document, delineating your land boundaries, is foundational for the subsequent stages.  Following this, you must obtain a project report from an environmental expert, known as an Environmental Impact Assessment (EIA) Expert. This report, crucial for environmental clearance, must be approved by the National Environmental Management Authority (NEMA), reflecting adherence to environmental guidelines.  Subsequent stages involve the submission of architectural and structural designs to local government bodies, including the National Construction Authority (NCA) and the county's planning department. These entities evaluate the plans to ensure they adhere to the Building Code of Kenya, the Physical Planning Act, as well as local zoning regulations and building by-laws specific to the area. Additionally, the building designs undergo scrutiny by the county's departments of Public Health, Fire, Energy, Roads and Public Works, along with Water and Sanitation. Approval from all these departments is mandatory before one can receive formal permission to begin construction. The plans must conform to certain safety and design criteria. Once they pass these checks, they receive an official stamp, indicating local governmental approval.  The project must then be registered with the NCA, ensuring that all aspects of the construction are within the legal framework. The legal mandate for the Nairobi City County Government to require registration of building projects is derived from Kenyan national laws,... Continue Reading
Wednesday, January 24th, 2024
Introduction Imagine returning home after a long day, seeking the comfort and tranquillity of your abode. Instead of finding peace and quiet, you are met with the incessant barking of a neighbour's dog or the reverberating bass of late-night parties. While occasional noise is an inevitable part of living in multi-family dwellings, tenants have a fundamental right to quiet enjoyment of their rental units.   What is Quiet Enjoyment? Quiet enjoyment stands as a foundational legal principle, safeguarding tenants' entitlement to reside in their leased spaces without unwarranted interference in their use and possession of the property. This right encompasses the privilege of living undisturbed, enjoying peace, privacy, and comfort, and remaining free from excessive noise, disturbances, or intrusive actions.   Critical components of quiet enjoyment include the freedom from unreasonable noise, and shielding tenants from disruptive sounds originating from neighbours, external sources, or the activities of the landlord. Additionally, the principle underscores the importance of preventing unwarranted intrusions, asserting that landlords should not access tenants' premises without proper notice or consent, except in emergencies. Moreover, tenants possess the right to the peaceful use of the property, utilizing it for its intended purpose without undue interference. They are also entitled to respite from disruptive activities, such as construction work or renovations, that could significantly disrupt their living environment.   In cases where the covenant of quiet enjoyment is breached by the actions of a landlord or other tenants, tenants may pursue legal remedies. This could involve seeking injunctions through court orders to prevent ongoing or future disturbances, claiming damages to compensate for financial losses or inconvenience caused by the breach, or requesting rent abatement if the breach has substantially impacted their use and enjoyment of the property.   Unreasonable Noise and available remedies Unreasonable noise, within the context of quiet enjoyment, refers to any... Continue Reading
Wednesday, January 17th, 2024
 Introduction:  Making informed decisions aligned with your financial goals involves a comprehensive understanding of the distinctions between mortgages and personal loans. This exploration aims to shed light on these differences, aiding you in choosing the most suitable option for your property investment.  Understanding Mortgages and Personal Loans: Mortgages, referred to as legal charges under Kenyan law, are tailor-made for property purchases. Secured against the property, they offer lower interest rates (averaging 13-16%) and extended repayment terms (typically 15-30 years). These substantial loans, often covering the entire purchase price, are governed by a robust legal framework outlined in the Land Act and the Constitution. This framework safeguards both borrowers and lenders, establishing rights and obligations, including the borrower's right to redeem their property and the lender's right to enforce the charge in case of default. The foreclosure process, involving court proceedings, ensures due process and balances creditor protection with homeowner rights. While interest rates may fluctuate based on economic conditions, borrowers are shielded from unfair lending practices by the Central Bank of Kenya and other regulatory bodies. Additionally, tax implications like stamp duty and potential capital gains must be considered.   Personal loans, governed by the Banking Act and Central Bank guidelines, offer a versatile approach. Unlike mortgages, they are unsecured, meaning your property is not directly at risk if you default. However, this freedom comes with higher interest rates (averaging 18-25%) and shorter repayment terms (1-7 years). These smaller loans, generally designed for personal use or minor expenses, provide flexibility regarding the property's condition, unlike mortgages that often have stricter eligibility requirements. However, be aware of the higher overall costs due to the shorter terms and steeper interest rates.    Why Choose a Personal Loan Over a Mortgage? While unconventional, personal loans present advantages such as a quicker and less complex... Continue Reading

Featured Articles

Building Dreams, Battling Costs: Navigating Kenya’s Construction Conundrum  

Kenya's construction industry brims with promise, yet grapples with soaring costs hindering progress. Explore the factors fueling this conundrum, from volatile raw material prices to cumbersome land acquisition processes. Learn how streamlined regulations, incentivized eco-friendly practices, and public-private partnerships offer a path toward affordable, sustainable development.
Continue reading

Breath of Relief for Mombasa Residents as New State-of-the-art Sewage Treatment Plant in the Works

GulfCap Real Estate are developers of the KES 6 billion Buxton Point project creating a community with affordable housing. They have commissioned a new state-of-the-art sewage treatment plant worth KES 100 million set to have a capacity of 1000 cubic meters which will be ready early this year.
Continue reading

Building Dreams, Battling Costs: Navigating Kenya’s Construction Conundrum

The Kenyan construction industry pulsates with the promise of development. Yet, this dynamism is shadowed by a persistent challenge: soaring construction costs.
Continue reading

Registering Your Sectional Development in Kenya

The ever-evolving Kenyan real estate landscape has been profoundly reshaped by the Sectional Properties Act 2020. This landmark legislation revolutionized the registration and management of sectional developments.
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The Roadmap to Building Plans and Permits in Kenya: Your Simplified Guide 

Embark on a simplified journey through Kenya's building permit maze. From survey plans to site inspections, our guide demystifies the complex approval process. Uncover the challenges and the need for streamlining, highlighting the pivotal roles of stakeholders. Join us in shaping a future where legal compliance, safety, and sustainability define Kenya's thriving property sector.
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Your Home, Your Sanctuary: Understanding Tenants’ Rights to Quiet Enjoyment 

Your sanctuary deserves serenity! Uncover the legal cornerstone of quiet enjoyment, empowering tenants to live undisturbed in their rental havens. From defining the concept to tackling unreasonable noise, this article guides you through avenues to protect your peace. Assert your rights, initiate open communication, document disturbances, and explore legal remedies if needed. Dive into the delicate balance between tenant rights and landlord responsibilities for a harmonious and tranquil home.
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Charting the Course to Property Ownership: Mortgages vs. Personal Loans 

Unlock the secrets of property financing in Kenya as we delve into the distinctions between mortgages and personal loans. Discover the advantages and trade-offs, from the security of property-backed mortgages with lower interest rates to the flexibility of unsecured personal loans. Whether you're eyeing a dream home or considering a fixer-upper, understanding the legal, financial, and practical aspects empowers you to navigate the diverse landscape of property investment. Your financial journey begins here – informed, confident, and tailored to your unique circumstances.
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Solar Power Lighting the Way for Sustainable Kenyan Construction

Discover how solar power is revolutionizing Kenya's construction industry, offering sustainable solutions and economic benefits. From innovative design practices to government incentives, explore the key elements shaping a greener future for construction in Kenya.
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