The
November 2016
Featuring Properties from Tanzania & Kenya
www.darproperty.net
East Africa’s Ultimate Property Guide
FREE COPY
Issue No 52| ISSN 1821-7753
The Darproperty - November 2016 | 1 The Darproperty - August 2015 | 1
IMG
Arusha / Olasiti 2 b/r – All inclusive $ 1,100 per month
IMG
Dar / Oysterbay 3 b/r – Fully furnished $ 4,000 per month
IMG
Pangani / Sange App. 6 acres - Beach front $ 150,000
IMG
Kilwa App. 21,1 acres - Beach front $ Price on request
- Check all our listings on www.tzagents.com
Arusha Anders Wehtje +255 785 984 467 anders.wehtje@tzagents.com
Tanga / Pangani Annabel Burdes +255 784 632 529 annabel.burdes@tzagents.com
Dar es Salaam Suzie Kantai +255 742 074 262 suzie.kantai@tzagents.com
NHC ENVISAGES CHEAPER HOUSES T
HE National Housing Corporation (NHC) in collaboration with the Institution of Engineers Tanzania (IET), plans to conduct a research on reducing the cost of construction to enable the majority of Tanzanians to access decent and affordable houses. In a development, the corporation said it was ready to provide 30 per cent of funding for developing a master plan for the City of Dar es Salaam. “The research to be conducted by IET will enable us to build houses at lower costs since most people are low income earners,” the NHC Director General, Mr Nehemiah Mchechu, said. He urged other players in the Real Estate Industry such as social security schemes and private developers to support the government with funds to carry out the master plan for proper development of the City. 8 | The Darproperty - November2016
Mr Mchechu made the explanation during a presentation at the 28th national conference organized by IET on the role of engineers in the development of affordable housing in the country. The state-owned Real Estate developer has undertaken various affordable housing countrywide which costs between 40m/and 60m/-but calls have been made for the amount to be reduced to accommodate low income earners. Mr Mchechu however has attributed the cost of the housing units to a number of issues such as macro-economic factors, value added tax (Vat) charged on buyers as well as costs of setting up power, water and road infrastructures. “In view of the above we have started discussions with power and water utilities to see how we can arrange for them to set up the facilities at our projects and this will minimize costs,” Mr Mchechu noted.
He added; “The macro-economic fundamentals include the high interest rates and exchange rates which have been adding costs of building materials, most of which are imported.” The DG went on to add that after undertaking low-cost projects in all Regions plans were underway to cover all districts in the next seven years. At the same occasion, Sales Coordinator of BOA Bank, Ms Mwamvua Majeshi, said since the establishment of mortgage facility, loans amounting to 156bn/- have been dished out for the housing sector. She noted though higher interests rates and limited housing units in the markets were among challenges facing the industry. Written by : ALVAR MWAKYUSA
KENYA REAL ESTATE MARKET MAINTAINING INVESTOR INTEREST AND CURRENT PRICES IS THE KEY
In Summary •This being a pre-election year, the real estate sector is likely to experience negative effects, particularly in areas that have been affected by political tensions in the past. •However, it is important to remain calm and monitor global events to keep the industry on an even keel. Last year is one that economists around the world will remember for a long time. It was the year that saw some major political, economic, military and cultural upheavals occur around the world.They included the collapse of oil prices, the rebound of the US dollar, the slowdown of the Chinese economy, the weakening of the Russian economy, the European crisis, the fear of a Brexit and terrorism. These significant incidents, among others,
created a highly volatile environment for all markets.As an emerging market, Kenya was directly affected by these international events. Indeed, the country faced several challenges last year. Among these were the depreciation of the shilling against the dollar and the British pound, inflation that exceeded 8 per cent in December, a Cenral Bank Rate that increased twice in 30 days, thereby significantly increasing the cost of finance, an increase in the number of red loans, the stoppage of operations by two banks. There was also an obvious slowdown in the real estate market, with the house price index gaining a marginal 4.21 per cent increase in the first three quarters of 2015, according to the Kenyan Bank Association House Price Index. The increase in the external debt and the need for money, which pushed the yield of Treasury Bills to more than 23 per cent,
were also among the main phenomena that marked 2015. On the positive side, the real estate sector remained the focus of investment interest. According to the latest data released by the Kenya National Bureau of Statistics, the real estate sector’s year-on-year growth at the end of third quarter of 2015 was 5.4 percent, while the sector’s overall contribution to the gross domestic product remained at 8 per cent. OPENED UP SATELLITE TOWNS The growth in the real estate sector was driven by heavy government investment in infrastructure, which opened up satellite towns such as Ruaka, Mlolongo and Athi River within the Nairobi metropolis. At the same time, the devolved government created investment and
Continues On Page No 16-17
development opportunities in the counties, since it was up to each county to fund local development. Favourable demographic trends, including a growing middle class that is spurring development across all real estate sectors, also contributed to the sector’s growth. The key question is whether the growth of this sector, which is predominantly local — with a small percentage of foreign investors — will be able to maintain a return on investment that will maintain high investor interest and the asking prices in the market sustainable. In the last few years, Kenya has been performing on average better than what experts had predicted at the beginning 2000. The country’s economy has been consistently growing by percentages that other economies cannot even dream of. With an average growth rate above 5 per cent since 2010, the Kenyan economy has been upgraded to a middle-class one. At the same time, many people’s expectations of an even better future is growing too. Between the actual numbers and Kenyans’ expectations, the real estate market has capitalised the most on this positive course. Real estate values have been growing all over the country, with Nairobi and its satellite towns gaining amazing price rises and making big profits for almost everyone involved in the property industry. This remarkable performance was possible because of other factors. 16 | The Darproperty - November2016
First was the prevailing political stability, which created a safe environment for local and foreign investors. Equally important was the fact that the global financial and economic circumstances favoured the growth of the emerging markets. Indeed, large amounts of capital from the big economies have been invested in many emerging markets around the world. PEGGED ON DISCOVERY OF OIL RESERVES The expectations pegged on the discovery of oil reserves in the country boosted the positive attitude among investors, particularly foreign ones, who wanted to capitalise early on possible future economic growth. The fact that the Chinese plan to penetrate and dominate investment in Africa, and especially the sub-Saharan region, is another very important reason for this growth, since huge investments have been funded thanks to Chinese interests. Finally, the stability of the Kenyan shilling in the last few years, coupled with a steady interest rate, played also played a role in the country’s remarkable economic performance. Today, some of the factors that boosted the real estate market and the Kenyan economy are facing challenges. The Chinese economy is shaking and oil prices have been so low
that they do not allow for investment in new oil exploration in the country. Besides, the shilling if facing stability problems. Consequently, this year the sector’s growth will be driven mainly by the fact that an increasing number of people cannot afford housing. The main problem with the local market is lack of affordable housing. Meanwhile, there is a huge offer of highly priced, unaffordable properties around the country. The following are some of the key factors that will play a vital role in the real estate market this year: THE GROWING MIDDLE CLASS The rapidly expanding middle class in the country is searching for affordable, secure and aspirational living that meets their housing needs. With increased congestion close to the city centre, this middle class will have to be housed in the satellite towns on the outskirts of Nairobi, which have benefited from infrastructural upgrades. However, it is important to understand what affordability means with regard to this upcoming “middle class”. This class cannot afford to spend Sh10 million or even Sh5 million, on a house, especially with the current financial policies and the high cost of borrowing. THE HOUSING DEFICIT
According to the National Housing Corporation, there is a housing deficit of more than 200,000 units per annum for the low- to middle-income market. This is the most important fact that should be understood by all: The demand is there, but for affordable housing and office space. Most of the ongoing projects target the higher classes, and prices have gone through the roof. The asking price for a twobedroom apartment in areas like Kilimani in Nairobi is about Sh20 million. Rentals have also followed this artificial trend, which is making the market very complicated as lots of new buildings remain vacant. Supply is targeting the wrong group of potential buyers but not covering the areas where there is real demand. New projects must target the middle class and provide premises that are affordable to the majority of those who have a need. SUSTAINED INVESTMENT IN INFRASTRUCTURE AND URBAN PLANNING Urban centres are growing rapidly due to the high increase in population. Serious urban planning and modern infrastructure is needed. Increased development along key infrastructural nodes, which have been brought about by the development of bypasses such as the ones in Ruaka and Karen, are required all over the country. Nairobi, as well as the rest of the country, needs to get modernised. What is the point of living in the capital, or in any other town, with the nightmare of serious flooding whenever it rains? Then there is the wastage of time on the road due to traffic jams as you make your way to work. The government needs to invest more in infrastructure and proper urban planning. It must make sure that it provides quality services, which will in turn make investors interested in maintaining the current property prices. This will provide better standards of living for the people and prevent the market from collapsing. QUALITY It has been observed in the past few years that even with the remarkable growth of the real estate sector, quality has not always being part of the game. Lowquality constructions can be found all over the country because most of the sales were off plan. Currently, even with developers making
Market Insight
The fact that the Chinese plan to penetrate and dominate investment in Africa, and especially the sub-Saharan region, is another very important reason for this growth huge offers, off-plan sales represent only a fraction of the market. Buyers are not as uninformed as they used to be. Nowadays, anyone looking to buy a house to live in or as an investment will demand high quality. A safe and comfortable construction that will provide them with a good standard of living and not one with lots of problems that will eventually lead to a decrease in the value of the property. Developers need to finally understand that the time to make huge profits by cutting on the quality has gone. FINANCE The high interest rates are detrimental to investment in real estate. Interest is as much a cost to the developer of a project as it is to the end buyer. The increase in the lending rates by commercial banks caused a slowdown in the market as it affected both existing and new loans. If there is anything that will help the market’s growth, it will have to be a drastic change in the country’s financing environment; an easing of interest rates and easier access to finance. Lower interest rates allow more people to qualify to buy a home, meaning more people will be able to buy homes. When more people can afford homes, the number of homes on the market will be reduced (reduction in supply), which will in turn push up costs. Conversely, when interest rates are high, fewer buyers qualify for loans, which means supply outstrips demand. Over supply tends to push prices downwards. DEVOLUTION AND POLITICAL GOODWILL The 47 counties established in 2013 are now fully operational and enjoy considerable independence from the central government,
which can make the difference in the sector’s growth. Devolution is assisting real estate development as it is placing the onus on county governments to improve the real estate landscape, which has led to reduced bureaucracy and investment in infrastructure. POLITICAL STABILITY Elections always affect markets, not only in Kenya, but practically in every country in the world. Expectations and fears about a possible change of government creates insecurity, resulting in a volatile environment. As a result, next year’s general election could lead to a slowdown in certain markets, especially in areas that have been affected by political tensions in the past. Everybody needs to realize that exercising their political right and democracy requires patience, wisdom and avoidance of tension as these could be catastrophic to the country’s growth. This year, the country’s property market will have to overcome a lot of challenges in order to remain strong and profitable. All interested parties should be extremely careful as the global volatility is directly affecting all markets, and especially emerging ones. This year the real estate sector is expected to be quite volatile and challenging. This is the year that the sector has to prove its ability to continue attracting investments. It is the year we expect to be in the middle of a global financial cyclone, so it is advisable to be patient and constantly keep abreast of the market indicators and economic data. Granted, profits can be realized under any circumstances, but it will not be easy. The risk factor has to be seriously considered by all the interested parties. Being “aggressive” this year might not be the best investment strategy; safer strategies are advisable. However, even though we are facing a challenging year, we should remain positive and optimistic. Psychologically, this is very important to investment, so it is important not to panic. Analyse the market and follow what is going on in the news. Remember, sometimes it is better to say no to a deal or market than to say yes blindly. By KONSTANTINOS KIOLEOGLOU The Darproperty - November 2016 | 17 The Darproperty - August 2015 | 17
18 | The Darproperty - November2016
TM
RECYCLING
*
Average Advertising Rental Prices for a 4 (four) Bedroom Property in selected Areas in DSM
LOCATION
PRICE 2015 (USD)
PRICE 2016 (USD)
CHANGE %
Masaki
4400
3200
-27
Oysterbay
4000
3900
-28
Ada Estate
3600
3100
-14
Upanga
2700
1900
-30
Msasani
2400
1800
-25
Kawe
3000
1700
-43
Mikocheni
2600
1950
-25
Mbezi Beach
2100
1500
-29
Kijitonyama
700
668
-5
Sinza
450
400
-11
Average Advertised Sale Prices for a 100 sqm Property in selected Areas in DSM
LOCATION
PRICE 2015 (USD)
PRICE 2016 (USD)
CHANGE %
Masaki
108969
96500
-11
Upanga
90187
86000
-5
Oysterbay
81607
78050
-4
Ada Estate
66866
61300
-8
Msasani
66315
59000
-11
Mikocheni
45217
46000
2
Kawe
32943
33105
0.5
Kijitonyama
32400
35200
9
Mbezi Beach
15121
15200
1
Sinza
11250
11860
5
Did You Know? Only 10% of the Tanzania land is Surveyed 4% of the land lords are also renting Only 20% of the Dar es Salaam residents are home owners E-commerce has saved 12% of rental bills for retailers and boost their sale by 20% posing a great threat to retail space occupancy rates.
series 4
Commercial space CBD Office Space Occupancy rate 2015
2016
Changes
71%
62%
-13%
2015
2.1yrs
2016
Changes
+1%
82% 83%
Average Selling time for House at Market Pricen in TZ 2015
Commercial space - Kurasini, Chang’ombe Warehouse Space Occupancy rate 2015 2016 Changes
Commercial space CBD Retail Space Occupancy rate
93%
81%
Average Mortgage inTZS
2016
2015
2016
Changes
2.8yrs
65m
133m
104%
Mortgage Growth (Total) (in TZS) 2015
250B Typical Home Buyers Age
Percent
2016
Changes
481B
92% Reason to Buy
Purpose
%
20 - 30yrs
5%
To live in
32
30 - 40yrs
42%
Investment
52
40 - 50yrs
36%
Undisclosed
16
Above 50yrs
17%
MAKING THE MARKET MORE TRANSPARENT
-13%
Real Estate
RENT-TO-OWN HOMES: HOW THE PROCESS WORKS. Part One
may be applied to the purchase price at closing. That’s a valuable clause. Consider that if a home has a purchase price of $200,000 and a 7% option consideration, the buyer would need to pay $14,000 up front. That’s a lot less than the $40,000 (the size of the standard 20% down payment) you’d make if purchasing outright. Purchase price: The contact will specify when and how the purchase price of the home will be determined. In some cases, the buyer and seller agree on a purchase price when the contract is signed – often at or higher than the current market value. In other situations, the buyer and seller agree to determine the price when the lease expires, based on market value at that future point in time. Many buyers prefer to “lock in” the purchase price if possible, especially in markets where home prices may be increasing.
I
n a traditional home purchase, an offer is accepted, the buyer and seller meet to exchange funds and settle final costs, and, at the close of the transaction, the property and its title changes hands. Typically, buyers use a mortgage to finance the bulk of the purchase.
typically rents the property for a set amount of time (usually one to three years), after which he or she can purchase the house from the seller. It’s not as simple as paying rent for three years and then buying the house: Certain terms and conditions must be met, in accordance with the contract.
But sometimes there is an alternative way to buy a home: a rent-to-own agreement, also called lease option or lease-to-own. When buyers sign this kind of contract, they agree to rent the home for a set amount of time before exercising an option to purchase the property when or before the lease expires.
How Rent-to-Own Works
Option Money: In a rent-to-own agreement, the potential buyer pays the seller a one-time, usually non-refundable lease option fee called option money, or option consideration. As with stock options, this gives him or her the opportunity to purchase the house in the future. It is important to note that some contracts (lease-option contracts) give the potential buyer the right but not the obligation to purchase when the lease expires. If he or she decides not to purchase the property at the end of the lease, the option simply expires. If the wording is “lease-purchase,” without the word “option,” the buyer could be legally obligated to purchase the property at the end of the lease. Clarifying the wording is one of many reasons buyers should have the contract vetted by a real estate attorney before agreeing to it.
In a rent-to-own agreement, potential buyers gets to move into a house right away. While many countries have their own regulations, and no two rent-to-own contracts are alike, someone in a rent-to-own agreement
The size of the option is negotiable. There’s no standard rate. It typically ranges between 2.5% and 7% (3% is common) of the purchase price. In some (but not all) contracts, all or some of the option money
It’s not a common way to purchase a property, and the selection of rent-to-own properties is tiny compared to the selection of properties available purely for lease or sale. In addition, rent-to-own contracts tend to favor the owner/landlord and can put renters at a disadvantage. Here’s how rent-to-own works, and when it may be a good choice for a potential homeowner.
22 | The Darproperty - November2016
Rent: During the term of the lease, the potential buyer pays the seller a specified amount of rent, usually each month. In many contracts, a percentage of each monthly rent payment, called a rent credit, is applied to the purchase price. For example, assume the contract states that the buyer will pay $1,200 each month for rent, and that 25% of that will be credited to the purchase. If the lease term is three years, the buyer will earn a $10,800 rent credit to apply toward the purchase ($1,200 x 0.25 = $300; $300 x 36 months = $10,800). Factoring in these credits often makes the monthly payments slightly higher than the “going rate” for regular rentals. For the buyer, they act as down payments on the property; for the seller, they act as compensation for having taken the property off the market. Maintenance: Depending on the terms of the contract, the potential buyer may be responsible for maintaining the property and paying for any repairs, property taxes and insurance. Because the seller is ultimately responsible for taxes and insurance (it’s still his or her house, after all), the seller may choose to cover these costs. Even in that case, the buyer still needs a renter’s insurance policy to cover losses to personal property and provide liability coverage if someone is injured while in the home or if the buyer accidentally injures someone. Be sure that maintenance and repair requirements are specified in the contract. Maintaining the property – mowing the lawn, raking the leaves and cleaning out the gutters – is very different from replacing a damaged
roof. Purchasing the property: If the potential buyer decides not to purchase the property (or is unable to secure financing) at the end of the lease term, the option expires. The buyer forfeits any funds paid until that point, including the option money and any rent credit earned. If the buyer cannot purchase the property but has a legal obligation to (as stated in the contract), legal proceedings may be initiated. If the buyer wants to purchase the property, he or she typically applies for financing (i.e., a mortgage) and pays the seller in full. According to the terms of the contract, a certain percentage of the option money and rent paid may be deducted from the purchase price. The transaction is completed at the closing, and the buyer becomes a homeowner.
When Are Rent to Own Homes a Good Idea? A rent-to-own agreement can be an excellent option for people who want a home but who don’t yet qualify for a mortgage or who aren’t quite ready for the commitment of ownership. For example, you might have a bad credit ratings - the bare minimum some lenders will accept – but the circumstances that depleted that ratings are behind you and you’ve been steadily improving it ever since. Maybe your debt-to-income ratio is too high, but not by much, and you have enough room in your budget to make extra payments and reduce your debt significantly over the next couple of years. You might have a good job, or
gotten one with a significantly better salary, but you haven’t been there long enough for a lender to consider it a stable source of income to repay your mortgage over the long run. Similarly, you might be successfully self-employed, but not have a long enough track record to make lenders comfortable. You might have started saving, but you haven’t accumulated enough to meet the usual 20% down payment on a home. If any of these describe your situation, renting to own might be a good idea. You can lock down a property you like now and possibly save yourself a move or two. Then you’ll have some time, typically in two to three years, to improve your credit rating, lengthen your employment history, increase your savings or do anything else you need to make yourself a stronger mortgage applicant. And, if the option money or a percentage of the rent goes toward the purchase price, you also get to start building some equity. To make rent-to-own work, potential buyers need to be confident that they’ll be ready to make the purchase when the lease term expires. Be wary of getting into this if there’s a more than 50/50 chance you’re going to move and not buy. Otherwise, you will have paid the option money – which could be substantial – and also have wasted money on the nonrefundable rent credits for 2 to 36 months, with nothing to show for it at the end. It isn’t likely that you’ll get a landlord/ owner to agree to a refundable rent credit and refundable option fee to give you the flexibility to move. If there’s a good chance would-be buyers
still won’t be able to qualify for a mortgage or secure other financing by the time the lease expires, they should instead continue renting (with a “normal” lease), building credit and saving for a down payment. Then, when they’re ready, they can choose from any home on the market in their price range.
Finding Rent-to-Own Homes Numerous real estate aggregators such as darproperty.co.tz, lamudi.co.tz, propertyfinder.co.tz make it easy – and free – to search for properties to buy or rent. If you’re in the market for a rent-to-own home, however, it can be a bit more challenging to find available properties Another option is to ask sellers if they would consider a rent-to-own agreement. This is especially helpful if you’ve found your dream house, but you just can’t make the finances work out yet. Many sellers are open to such agreements, particularly in areas where homes spend a higher-thanaverage number of days on the market. In these markets, many sellers have already moved into their next homes – perhaps to relocate for a new job – and the longer the old home sits on the market, the harder it is to meet monthly debt obligations for two mortgages. In addition, many homeowners are leery – and rightfully so – about leaving a home vacant, especially for an extended
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REAL ESTATE The ABCs of REAL ESTATE MARKET Face interest rate the percentage interest that is shown on the loan document. Compare with annual percentage rate, effective rate. Example: A mortgage has 6 % face interest rate, $100,000 face value, and 30-year amortization term. If market interest rates are 8%, the market value of the loan is $81,708. Step Loan a type of adjustable – rate mortgage for which the interest rate is adjusted only once during the term of the loan. Therefore rate loan shares some of the features of both fixed –rate and adjustablerate loans. See hybrid mortgage. A typical step loan features a fixed interest rate for the first 7 years of the term. The interest rate is then adjusted according to an index to better match current market interest rates. Some loans also have caps that limit how much the interest rate may be raised. Servicing the act of billing, collecting payment, and filing reports for a mortgage loan; may also include loan analysis, default follow up, and management of tax and insurance escrow accounts. Often performed for a fee by mortgage banker after loans are sold to investors. Example: Gray, a mortgage banker, originates loans and markets them in group to large investors. On each loan originated, Gray receives a monthly fee for servicing, thereby freeing the investors of loan management burdens. The fee is 3/8 of 1% of the loan balance. Secondary mortgage market the mechanisms available to buy and sell mortgage, mainly residential first mortgages. There is no set meeting place for the secondary mortgage market. FNMA and FREDDIE MAC hold auction weekly to buy those mortgages offered at the highest effective rate. Bids are collected from all over the country. Example: The Good Money Mortgage Bankers originated 100 residential first mortgage with a total face value of $5 million. They sell the mortgage in the secondary mortgage market for a $1,000 profit on each. Overage in leases for retail stores, amounts to be paid, based on gross sales, over the base rent. Example: Winfield leases retail space in a shopping centre. The lease call for a base rent of $2,500 per month plus 5% of gross sales over $10,000. The first month. Winfield has sales of $20,000. In addition to the $2,500 base rent, Winfield pays an average of $500 [.05x ($20,000-$10,000) ]. Internal Rate of Return (IRR) the true annual rate of earnings on an investment. Equates the value of cash returns with cash invested. Considers the application of COMPOUND INTEREST factors. Requires a trial – and error method for solution. Example: Abel sells for $200,000 land that he bought 4 years earlier for $100,000. There were no carrying charges or transaction costs. The internal rate of return was about 19%. That is the annual rate at which compound interest must be paid for $100,000 to became $200,000 in 4 years. Example: Baker received $3,000peryear for 5 years on a $10,000 investment. The internalrate of return was about 15%.
period of time. As a result, these sellers may consider a rent-to-own agreement, even if the home is not listed as such. You can also try working with a real estate agent in your desired market. Agents may have listings for rent-to-own homes, or may have inside information about sellers who may consider such agreements.
Renting vs. Owning a Home: Pros and Cons If an owner is having trouble selling, rent-toown provides an alternative to lowering the home’s price, taking the home off the market, or renting the home out long term. Because a selling price is established in the leaseoption contract, the current homeowner knows exactly what to expect if a sale goes through. If the market declines slightly during the lease period, the sale price is already locked in, but the tenant will probably still be interested in buying the property because of the rent credit - the money he or she has already put towards the house. Meanwhile, the owner gets help paying the mortgage, property taxes and insurance. Also the tenants are more likely to take care of a lease-option property because they have the option to purchase it. The main reason why a rent-to-own agreement appeals to buyers is the financial one, of course – no need to come up with a substantial down payment or qualify for a mortgage. The buyer also does not have to worry about immediately coming up with the money for property taxes, private mortgage insurance or homeowners insurance (though they should carry renter’s insurance, as noted above). Furthermore, by signing a contract now, the buyer locks in a purchase price, which means no worrying about rising home prices. (Bear in mind, however, that in a rapidly appreciating real estate market, a savvy owner would probably want to add a clause to the contract allowing for the price of the home to increase, especially if the lease is for several years.) Finally, by living in the home before deciding to purchase it, a buyer has the advantage of a lengthy test drive on the home before jumping into a major financial commitment. And the downside? Since it’s less common, the rent-to-own process isn’t as tightly regulated as the home-buying industry or even the rental industry. While this lack of regulation can be a good thing, in that it gives would-be buyers and property owners more freedom in negotiating the purchase-option part of their contract (the lease agreement and purchase agreement are still subject to all the usual real estate laws), it can also make it easier for unscrupulous owners to take advantage of unsophisticated buyers. Sadly, the rent-toown universe is rife with predatory landlords who have no intention of ever selling their property, and who are just trying to collect 28 | The Darproperty - November2016
above-market rent and eventually make off with your nonrefundable option deposit. An owner could make the contract become void if the buyer is late on one payment or evict the buyer for not doing repairs. In one case, for example, a landlord with hundreds of properties negotiated contracts that permitted evictions for such items – with just three days’ notice. In short, there’s little that’s “standard” in these legally binding contracts, making it especially important that you know exactly what you’re agreeing to. In fact, not all states allow lease options on residential property, so the buyer should ensure that even entering into this sort of agreement is legal. Even if a real estate agent assists with the process, or you hire a real estate attorney to explain (and maybe even negotiate) the contract, if you can’t understand both the legal and financial aspects of rent-to-own, you are not a good candidate.
Understanding Rent-to-Own Contracts Like any contract, your rent-to-own contract needs to state the name of the tenant-buyer (that’s you) and the landlord-seller and be signed and dated by both parties. If anyone besides you will be occupying the property, that person should be named in the rental agreement, too. The contract should also have a legal description of the property: the full address and the house number. Including the house number helps eliminate any potential confusion about the address.
Lease Provisions The lease portion of the contract should include everything you’d normally find in a property rental agreement. Key elements include: • The start and end dates of the lease period, whether that period can be extended and under what conditions • How much the rent is, when it is due, where payment should be made and what payment types the landlord will accept • Fees, if any, for late rent or returned checks • The amount of the security deposit, which should be fully refundable if you move out and haven’t damaged the property • Whether and which types of pets are allowed • Whether smoking is allowed • A description of any parking spaces or other amenities • Whether you can sublet the property, and if so, under what circumstances and term • Which utilities the tenant is responsible for and which the landlord is responsible for • The conditions that can result in eviction, as well as the number of days you have to correct a problem before being evicted A key difference between a regular lease and a rent-to-own lease is that under a
regular lease agreement, the landlord will make and pay for all repairs and handle any routine maintenance. A rentto-own agreement might make the tenant responsible for these items, the idea being that the tenant who intends to buy has a long-term stake in the property and should handle these tasks. Another possibility is that the landlord might not live nearby and it’s more convenient to make the tenant responsible. However, until you actually own the property, you don’t want to be putting money into it that you might never get back. If the landlord won’t agree to handle repairs and maintenance, be wary. At most, you might agree to take on these responsibilities and expenses if they are added to your rent credit (which we’ll discuss in the next section). In other words, if you spend $1,000 to have some worn-out plumbing replaced, the seller will return that $1,000 to you at closing if you buy the place. But the risk to you is lowest if you don’t lay out the cash for these expenses in the first place.
Option Provisions The option provisions might be the most complicated – and double-edged – part of a rent-to-own contract. These are the provisions that can make renting to own the property more favorable to you than just renting – or that can make it easy for the seller to collect extra monies with no intention of ever letting you buy. These provisions should state: • The rent and what portion constitutes the rent credit. • The option deposit (under some agreements, you might pay only an option deposit or only a rent credit, not both. It’s up to you and the seller.) • that you have the exclusive right to purchase the home at the end of the lease period. This means that the seller cannot let anyone else buy the property during the option period (basically, while you’re renting the property). Make sure this period is long enough to give you a chance to correct whatever problems, like poor credit or lack of a down payment, that have made you unable to qualify for a mortgage right now. Eighteen months to two years is often a reasonable timeframe; three years might be even better. The contract should state how many days’ notice you are required to give the seller that you intend to buy, and at what point your option to buy expires. You may want to structure the contract so that you can buy before the end of the lease period if your financial situation improves sooner.
Continues Next Edition or Visit Our Website for the Full article
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FOR RENT $1,200
The Mikocheni House is Located at Plot No. 350 BLOCK HOUSE No. MCK/MCB,783 the House is fit for both residential & offices. Includes: 160.0 Sqm, 2 Room, 3 Bathroooms, Parking +255 713 882 669
SALE TSHS 185m
Plot for sale at Kigamboni Kibada 800 meters from the road, with 3500sqm. with Tittle Deed. NO AGENTS PLEASE 0769 115 502
ON
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House for sale at Masaki peninsular with the 1500 sqm plot size. Price Negotiable 0763 382 231
KIN
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NO PHOTO RENT $1000 RENT $1200
2 Bedrooms and a master Bedroomed house to let in Msasani behind the US Embassy, it’s unfurnished, with a spacious garden, having secured parking for for 5 cars inside. The property is located off Old Bagamoyo Road Price Negociable, +255 673 188 305
SALE 18 acres property for sale at masaki peninsular ideal for investment project. Negotiable Price 0763 382 231
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KIN
SALE 115m Near Flamingo garden, 1145 sqare meter near tarmac road price negotiable. 0718 405 001 / 0692 698 616
SALE TSH 40m Plot for sale at Kibada, 765sqm Block 15 near main road with the title deed 0713 803 069
SALE TSH 45m Tegeta Mivumoni, 1600sqm Plot for sale at Tegeta, Mivumoni. no title deed 0713 803 069
BO KO
PD ET KAW
TEG
MA
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SAK
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RENT $850 Fully Furnished 3 Bedrooms house for rent at Tegeta Namanga about 400 meters from Kibo Complex with Paved Parking and Fitted Spanish Kitchen with Utensils. 0754 612 969/ 0788 612 969
TEG
TEG
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KIB AD A
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Plot size 1985 SQM +255 766 888 333 +255 716 444 888 +255 766 100 100
Apartment for Rent at Mikocheni B. 3 Bedrooms, 2 Bathroom, 1 Car Parking 24hrs Water Supply +255 713 437 722
SALE
KIG
AM
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BEA CH
SALE TSHS 30,000/@sqm For Residential Houses - 20 by 30 square meter plots 3 plots available for sale +255 786 011 755 / 763 011 755
CIT YC
RENT $800 3 bedroom house, 1 self-contained Large compound Parking space Furniture negotiable High ceilings Private garden +255 754 781 240 BO NI
SALE Beach property available for sale in the peninsular. Price Negotiable 0763 382 231
MB
BU N
JU
B
The Tegeta House Has 2 upstairs Bedroom, 1 Bedroom Ground floor, 1 public toilet in dour,Big Space for C ar Park, Garden & Servant Quarter Negotiable 0713882669
EZI
House for Sale in Tegeta Area
SALE TSHS 51,000 /@sqm Bunju B these plots are suitable for development a School, Hotel, Multi-Purpose Hall, 3 Acres +255 786 011 755 / 763 011 755
RENT $ 600
Semi-finished, 2 bedroom apartments in Mbezi behind shamo tower Call: 0658696840
RENT $750 5 bedroom house for rent at Ungindoni Kigamboni with large compound, servant quarter and garage 0685 215 737
RENT Office Space to Let at Azikiwe Street near NMB Bank. +255 788 440 466 / +255 789 865 933
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CLASSIFIEDS
NU NIO TEG ETA U
SALE $177,000.
ON REQUEST
Beach plot for sale near Millennium Hotel 100 meters from the ocean with government offer of 35 years 0754 310 137 / 0713 451 395
SALE TSH 55m
RENT $21
Office space to let on united nation road, ideal location and quite area with free parking. 20.5 USD per sqm inclusive of service charge 0763 382 231
RENT $700
House for Rent Mikocheni B near Academic primary school 3 bedrooms, 2 bathrooms, enough parking, +255 762 210 893 / +255 713 301 172
SALE Tshs 340m
House for sale. The house is 500 meters behind Shamo park at Goigi Bagamoyo road Clean title, 900 sqm, 0715 686 051
SALE $ 1.5m SALE
Plot for sale in Masaki Off-Mwaya road Price: USD 1.5m negotiable Plot size: 1,777sq.m Call: 0658696840
MP
SALE TSHS 800m Big compound with big go-down capable of up to 20 containers, 3 phase electricity, DAWASCO connection, 2 bedroom house fully kitchen, dinning room and 4 bedroom servant quarter 0688 210 891/ 0758 210 891
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RENT $800
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SALE TSHS 400m
CH
3 Bedroom house Sinza kwa Remmy near The Place Fast Food Restaurant 288 SQM (NEGOTIABLE) +255 767 422 258 BEA
HEN
MB
EZI
MIK OC
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Plot for rent Tanga Well fenced more than 30 acres plot at kasela. 0754 324064 0754 529 829
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Fully furnished apartments for rent in Goba, Studio (usd 400) one bedroom (Usd 500), 2 bedroom (usd 1000) Call: 0658696840 IB
SAL E
790 sqm to let, ideal for super maket, bank,clinic. 22 USD per sqm inclusive of service charge 0763 382 231
PLO TS
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RENT
SIN
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RENT $22
RENT $5000
Beautiful 5 bedroom house for rent with Swimming pool, generator and large car parking space 0716 998 864
ZA
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IJI
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MA
MA
SAK
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BEA
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RENT $1500
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MB EZI
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UPA NG A,
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I,
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BEA CH
SALE - GODOWN
Located in Pugu rd junction Industrial area Gerezani DSM Square feet 8000 with clean title deed 0715 686 051
BA GA MO YO
PU GU RO AD -
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simply call 0767 200 202 classifieds@darproperty.net
SALE
2 bedrooms, Packing, Modern kitchen, self contain, master bedroom 0654 062 835, 0755 300 843
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32 | The Darproperty - November2016
Real Estate Agents Directory in Tanzania DAR ES SALAAM
ABLA ESTATE DEVELOPERS & AGENCY CO.LTD Mikocheni Opposite Shoppers Plaza P.O BOX 3810, Dar es Salaam Tel +255 22 2772506 E-mail: ablaestate@bol.co.tz AUSTIN PROPERTIES LIMITED Mwai kibaki rd P.O. Box 19021 DSM +255 715 686 051 anoranthony84@gmail.com CHINESE PROPERTY AGENT TRANSLATOR Msasani Road, Masaki English Chinese Translator Dealing with your chinese client sms 0756 50 11 37 giraffe_007@163.com
GIMCO ESTATE AGENCY LTD Samora Ave, NIC Investment Hse, P.O BOX 8382 Dar es salaam Tel +255 22 2120988 Mob +255-784 900041
MY BEACH Old Bagamoyo Rd. opp Yuasa auto impex P.O BOX 105200. Dar es Salaam Tel; +255 22 2701710 NIKUZE REAL ESTATE AGENCY Morogoro Road P.O Box 10032 Dar Es Salaam Tel: +255 789/754/715/ 363 800 Email: nikuze@nikuze.com www.nikuze.com PHOTO & CO.ESTATE Kahama Road/Msasani peninsula P.O BOX 105121 Dar es Salaam. 0786 962 444 Email; Octavianfocas@yahoo.com. PROPERTY CONSULTANCY & SERVICES LTD 2nd Floor Kevin House - Samora Avenue P.O BOX.7152 - Dar Es Salaam +255 22 2120402, +255 713 690 220 info@pcsltd.co.tz www.pcsltd.co.tz PRESTIGE PROPERTIES Phone: +255-713-764-447/ 0767471293 Tel:+255-22-266-4373 Email:info@prestigeproperties.co.tz www.prestigeproperties.co.tz
GOLDBERG COMPANY LTD Real Estate & Mining Trade P.O. Box 22159 Dar es Salaam Old Bagamoyo Rd, Mikocheni B, 0715 270 517 / 0754 270 517 goldbergtz@gmail.com www. goldbergtz.com NEW DAY PROPERTY AGENCY COMPANY Mwinyijuma Road - Kinondoni, Room no.84, UVCC Complex +255 753 645 434, +255 717 035 552 +255 767 575 758 www.facebook.com/ raymond samson Laizer KEY REAL ESTATE SOLUTIONS Regent Chwaku North Ursino Tel: +255 22 2701674 0715 053 803, 0786 053 803, 0754 28 46 84 mariam@keyrealestatesolutionstz.com www.keyrealestatesolutionstz.com
ARUSHA
TANGANYIKA ESTATE AGENTS Sea Cliff Village (next to Sea Cliff Hotel) Plot 532, Toure Drive +255 742 074 262 info@tzagents.com TRELD COMPANY LTD P.O BOX 7656 Dar es Salaam Location Msasani Peninsular off toure drive +255 732 222 888, +255 716 777 999 treldestates@yahoo.com www.treld.co.tz
ARUSHA AWESOME HOMES AND PROPERTIES.
Shanti House, Plot 58 Block E Sokoine Road P. O. Box 249 Arusha, Tanzania. info@arushahomes.com www.arushahomes.com +255 754 337 899 / +255 786 337 899 HOMES & PROPERTY AGENCIES LTD Land Surveyors & Property Managers P. O.Box 10079 Arusha Boma Rd. Arusha 0787 805566 hopraltd@gmail.com TANGANYIKA ESTATE AGENTS
Shoprite Complex, +255 785 984 467 info@tzagents.com ZIPO HOMES
Rivergardens Business Park, Rm 4 P.O Box 20 Usa River, Arusha +255 787 474 580/+ 255 754 320 513 info@zipohomes.com www.zipohomes.com
MWANZA MWANZAESTATE Mwanzaestate.com +255 714 245 779 kisolimorris@hotmail.com
ZANZIBAR Zanzibar - properties.com Tel: +255 774 44 19 07 Hotel Marine - Malindi Zanzibar
+255 756 960 960, +255 714 444 250, +255 752 444 606. ARUSHA +255 653 005 530, MWANZA +255 653 005 535, INFO@TZREALESTATE.CO.TZ TZREALESTATE.CO.TZ
36 The DarProperty August 2014
ENHANCE YOUR VISIBILTY & CREDIBILITY GET LISTED HERE WITH YOUR LOGO Tshs. 48,500/= Monthly / Tshs. 500,000/= Annually +255 784 23 89 62, 0688 75 18 68 | sales@darproperty.net
Real Estate Agents Directory in Kenya AXIS REAL ESTATE 0727 572836 0713 908 406 kv@kenyavaluers.com www.kenyavaluers.com 48209 Nairobi Kenya
HASS CONSULT LTD ABC Place, 1st Floor, P.O. Box 14090, Nairobi Tel: +254 20 4446914 www.hassconsult.co.ke
ARK CONSULTANTS LTD No. 16 Nas Apartments, Milimani Road P.O. Box 42093, 00100 Tel: +254 20 2726870 www.arkconsultantsltd.com
KARENGATA PROPERTY MANAGERS Head office: No.47 Marula lane, Karen P.O BOX 1552, Karen. 00502,Nairobi. 0733613744 / 0735099932
PROFESSIONAL PROPERTY MANAGEMANT LETTING & SALES 0708 848481 0733 785698 160662 Nairobi Kenya
KENYA VALUERS AND ESTATE AGENTS LTD 3rd Floor, Museum Hill Centre, P.O. Box 48209, Nairobi Tel: +254 20 3745697/512 www.kenyavaluers.com
SEMA ESTATE AGENTS Springette Office park, Block H2, Lower Kabete Road. Tel 020 2017940 / 0725 545527 seamus@semaestateagents.com semaestateagents.com
CORAL PROPERTY INTERNATIONAL LTD +254 735 801077 info@coralpi.com www.coralpi.com
DUNHILL CONSULTING LTD Hevea Court, Block A3, No.15, Eldama Ravine Road, Westlands Tel: +254 786 386 445 www.dunhillconsulting.com
FINANCIAL AND PROPERTY CONSULTANTS LTD Arbor House, Arboretum Drive P.O.Box 14459-00800 Nairobi Tel: +254 722 524383 www.fapl.com
KNIGHT FRANK Lion place, Waiyaki way Tel +254 20 4239000 / 0733 603260 info@ke.knightfrank.com
PENTA KENYA LTD Tropical lane off Wood Avenue P.O Box 101493 00101, Nairobi Tel 0731471872 / 0711 615782 info@pentakenyaltd.co.ke
PROLAND REALTORS LTD 6th Floor, Maendeleo House, Monrovia Street P.O Box 29509-00100 Nairobi Tel: +254 720 353437 www.prolandrealtors.co.ke
COMING SOON RWANDA REAL ESTATE AGENCY DIRECTORY
HALIFAX ESTATE AGENCY LTD Crossway Road, Westlands Tel: 3741269/3740306 info@halifaxestate.com www.halifaxestate.com ENHANCE YOUR VISIBILTY & CREDIBILITY GET LISTED HERE WITH YOUR LOGO Kshs. 2,500/= Monthly / Kshs. 25,000/= Annually The Darproperty - November 2016 +255 784 23 89 62, +254 720 35 34 37 | sales@darproperty.net
| 37 The Darproperty - August 2015 | 37
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PATRON PAGE NO AL-NOOR TOWER..................................................1&9 AZIZ..............................................................................10 BLUE SKY MANUFACTURES ......................................15 BOA..................................................................................1 CRDB.................................................................................5 CURTAIN WORLD........................................................33 DAR CERAMICA CENTRE..............................................4 ECO BOXI.....................................................................19 HAMIDU CITY PARK.....................................................2 HOME POINT...............................................................40
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JAMII FORUM..............................................................14
Regulatory & Legal Advisors
JENGA JENGA.............................................................35
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MAKURUNGE ESTATE.................................................39 MARINA TOWER..................................................26&27 MASUMIN.....................................................................11 RAS LAMINATE FLOORS...............................................3 REEF APARTMENT...........................................................6 SHANGHAI MITSUBISHI ELEVATORS......................13 SIMBA CEMENT..............................................................1 TAFSUS..........................................................................33 TANGANYIKA REAL ESTATE........................................7 TBS..................................................................................29 TWIGA CEMENT.............................................................1
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