NAIROBI (Xinhua) --
Some three years ago, Joseph Mutua’s employer, a
Kenyan government agency, offered its employees a chance to buy
The deal was so good
that Mutua could not leave it despite owning another home on the
outskirts of the capital Nairobi, where he lives.
“I shopped around
for a house in suburbs that neighbor Nairobi. Got one, a
three-bedroom bungalow at 65,000 U.S. dollars, which I bought,”
he recounted on Wednesday.
Since he had another
home, he chose to rent the house located in Kitengela, south of
His plan was that he
would use the rent to top up on his monthly installments so that
he repays the loan faster than the scheduled 13 years.
Mutua, however, is
now grappling with the reality that he may not complete repaying
the loan faster as he had hoped as tenants become hard to come
“In the about three
years I have owned the house, it has been occupied for only 11
months. This year someone stayed in for only two months and is
now vacant,” he said.
accounting manager blames his predicament to increased
construction of apartments in the suburb.
“At least three
blocks of five-story apartments have been constructed in the
neighborhood. And they are charging 220 dollars for a
three-bedroom flat a month. Myself I charge 250 dollars, which I
still consider low considering the size of my house,” he noted.
His plight is shared
by tens of other Kenyans who bought houses especially in suburbs
bordering Nairobi on mortgage to rent.
construction of apartments in the suburbs has not only seen rent
stagnate but has also led to a glut, with many houses remaining
“I bought an
apartment in Ruai. I have not raised rent for the last four
years to avoid the house staying vacant,” said banker Samson
He has five years to
complete his mortgage payment, but with low rent, he cannot
“They say we have a
housing shortage but why are these houses remaining unoccupied?”
posed Atesa, who charges 150 dollars for the flat, lesser than
his anticipated 200 dollars.
The turn of events
in Kenya’s housing sector is one of the reasons bad home loans
are on the rise.
With the erratic
rental market, mortgage holders are finding it harder to
effectively repay their loans due to low income or no income at
all in case houses remain vacant.
The worst bit are
home-loan holders who lose jobs and want to rely on rent from
his property to pay for the house.
Latest Central Bank
of Kenya data indicated Wednesday that there were 26,187
mortgage loans in the market as at December 2017 up from 24,059
in December 2016, an increase of 2,128 loan accounts or 8.8
outstanding value of non-performing mortgages increased from 220
million U.S. dollars in December 2016 to 273 million dollars in
“The average loan
maturity was 12 years with minimum of five and a maximum of 25
years in 2017,” said the bank, adding the total mortgage loan
portfolio rose from 2.1 billion dollars in 2016 to 2.23 billion
dollars in 2017, an indication that more people took home loans.
Henry Wandera, an
economics lecturer in Nairobi, noted the glut in the market does
not only hit mortgage holders but also those who took ordinary
loans from banks and Saccos to build houses.
“It is the nature of
business that when supply increases prices go down. It’s
unfortunate its affecting home owners negatively because
unoccupied houses or low rent may mean one losing their homes to
the lender,” he said, noting those who buy to live in are faring
better. But he was hopeful the market would correct itself.
According to the
Kenya Bankers Association hosing index, property prices across
Kenya are equally slowing down following glut as market corrects