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My struggle to save my family home

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In 2015, 33-year-old James Kimani was living the life many Kenyans aspire to. A fresh graduate from campus, Kimani had just landed a new job with a reputable commercial bank and moved in with his wife who was expecting their first child.

The couple took the next logical step that many young Kenyans starting out on their careers give priority. He bought a house, taking advantage of the bank’s staff interest rates.The plan was to rent out the apartment, located in one of the city’s gated estates, and use the income to make repayments on the Sh5.5 million mortgage.

Two years later, however, Kimani’s world turned upside down when he was laid off by the bank. And now that he was no longer an employee, the interest rates on the mortgage spiked from the preferential three per cent to market rates.

This meant that to clear his mortgage, his monthly repayments would have to triple within the same repayment period, at the end of which he would have had to part with more than Sh21 million for the house instead of Sh6.8 million.Despite a grace period of more than a year where he tried to land another job and resume repayments, the bank auctioned the house and listed him with credit reference bureau.

Kimani is just one of many Kenyans who are losing their hard earned money on the back of a depressed property market that is at the beginning of a self-correction, which is wiping out billions of shillings from once-lucrative investments.According to the latest Kenya Bankers Association (KBA) property index, banks continue to struggle under the weight of the piling non-performing loans.

Central Bank of Kenya (CBK) also says the number of people that are unable to service their mortgages has been on the rise.In its latest bank supervision report, CBK said default on mortgages increased 41 per cent in the year to December 2018 to Sh38.1 billion from Sh27.3 billion in 2017.

The rate of default on mortgages is much higher when compared to other bank loans, which stood at 12.3 per cent in 2018.A mortgage officer working with a local commercial bank, who declined to be mentioned for fear of reprisal, said banks were under pressure to cut on the high non-performing loans.

“In the past, many banks were not as diligent in provisioning for mortgages as they are on personal loans,” he said. “Recently the regulator has been cracking the whip because the default rate on mortgages and property loans has been rising.”

Since mortgage loans are secured against the value of the property, banks often revert to selling off property whose owners have defaulted on payments.

The sky-rocketing property prices recorded over the past decade also meant banks were sure to regain their money with interest when they auctioned a defaulters property. They also got to keep all the installments paid up until the default date.

However, over the past two years, Kenya’s real estate market has been on a slump, with an oversupply of both residential and commercial property eroding earnings for developers and financiers.“The sustained decline coincides with the rising distressed properties overhang,” said KBA when releasing the property index on Monday.

“This has further shaped market expectations and sentiments in a manner that buyers are unwilling or unable to pay the current asking prices and thus vendors are dropping their prices.”

This means the auctions being advertised each week are finding it harder to get buyers and even when they do, banks are no longer guaranteed to recover their full investments.Linda Mokeira, a property consultant, said banks now need to wake up to the reality that they have to put on kids’ gloves to deal with defaulting customers.

“Banks may need to have a more human face in dealing with their customers and probably look at inducing them with interest rebates in case of job losses or loss of income,” she said.“They can work on an arrangement where the borrower can pay off the outstanding principal through installments. This will give a win-win situation that the bank will be able to recoup its principal amount while the borrower gets their property.

”When the threats have failed to work, with the auctions themselves not being close to resounding success in terms of recovering their money, the lenders have resorted to cajoling their customers to pay.HF Group, one of the largest mortgage lenders in the country, said it had been employing different tactics that ranged from assisting its customers with marketing of their property to jointly taking houses to auctions, which it said was a last resort.Chief Executive Robert Kibaara said the bank was alive to the hard economic times that have battered Kenyans and it had opted to work with its customers in a bid to find a way out.“We live in Kenya and understand the market is difficult. We understand that the customer is willing to repay the loan, but the circumstances might make it difficult,” he told Home & Away.

He said different tactics that HF Group had employed were aimed at ensuring a solution that worked   for a defaulting customer as well as the bank, enabled it to recover Sh3 billion in 2019, which had been classified as non-performing loans the previous year.“It is always easier to work with someone. We just sit down around a table and agree the best route out of this. There are quite a number of people in distress, but we tend to go for auctions as the last resort,” Mr Kibaara said.“We have been very successful. Just to paint a picture, last year, from our non-performing loans, we were able to collect Sh3 billion largely from these alternative ways of solving the problem.

”As at December 2018, HFC – HF Group’s banking arm – reported Sh5 billion as mortgage non-performing loans, in a year when the banking industry was hit by high rates of defaults, according to CBK data.Other than assisting distressed clients with marketing, Kibaara said the bank has been restructuring loans to enable customers keep up with payments.

“Where the customer’s flows are slow, we rework the loan in terms of repayments to fit the customer’s current flows. We work with customers jointly to market their properties, for instance where a customer is selling, we take up the marketing as we have a strong selling arm… we are able to do good marketing and get discounts especially when we have volume,” he said.

“We also work together to sell the property even in an auction. We decide to take the property jointly to auction in a collaborative way. When we sell, you get your money and pay the bank back.”

BY Home & Away


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Business

KQ resumes direct flights to New York

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The national carrier Kenya Airways (KQ) resumed its direct flights between Nairobi and New York on Sunday.

In a tweet, KQ announced the move and topped it up with an offer to passengers who book their flights before December 10 that they will enjoy discounted prices.

Welcome back to the Big Apple! Today we resume our service between Nairobi and New York, and we can’t wait to welcome you on board. Book your ticket via https://t.co/hitS3Whxtp before December 10th to enjoy discounted rates ✈️🌎 *Disclaimer – video from our pre-COVID archives pic.twitter.com/1kET4h0kRK

— Kenya Airways (@KenyaAirways) November 29, 2020

“Welcome back to the Big Apple! Today we resume our service between Nairobi and New York, and we can’t wait to welcome you on board,” the airline said.

The national carrier last operated the passenger flights using the Nairobi-New York route in April after disruptions caused by the Covid-19 pandemic.

KQ resumed international flights in August after suspending all its operations in March following the government’s directives after the firsts case of Covid-19 was confirmed in Kenya.

On Saturday, October 31, KQ announced that it had postponed New York flights’ resumption.

Through a notice, the airline said the decision to postpone the flights was informed by the increased cancellation of flight bookings to New York.

“We regret to announce that due to increased cancellations of flight bookings to New York City, we have pushed back the resumption of our service to this destination to November 29. We sincerely apologise for the inconvenience caused,” read the statement then.

Kenya Airways inaugurated direct flights to the US in October 2018, cutting the journey to the US by 15 hours and by October 2019 KQ had flown at least 105,084 passengers after completing 594 flights to and from New York.

by NN


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Bodaboda chama grows into a multi-million shilling housing cooperative

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A journey of a thousand many miles starts with a single step. A Nakuru-based bodaboda operator’s self-help group proved this in its growth. Driven by the ambition to have something to take home once they couldn’t ride any more, ten bodaboda operators from Barut, Nakuru West in 2015 formed Kianjahi Group, pooling a minimum savings of Sh100 per week per person.

“Being a bodaboda operator is a risky job and has serious effect on one’s health especially if you don’t dress properly for the cold. After attending a seminar in Machakos we decided to start making savings,” said Benson Sigei, the group chairperson.

The group grew as more members joined in 2016. After evaluating their progress, the members increased their weekly savings to Sh200 and eventually to Sh1,000.

“Before the year ended we were nearly 100 members. Our savings were growing and we had to come up with plans which some members considered as too ambitious and pulled out,” says Sigei. With savings of nearly Sh2 million, they bought a 1.6-acre piece of land which was previously a sand quarry.

“It cost us Sh2.1 million in buying the land and rehabilitating it to usable standards. We embarked on making savings for constructing houses which would be of similar design,” he said.

To make this possible they converted the group into Kianjahi Housing Cooperative Society Limited and introduced Sh15,100 registration fee and minimum share capital of Sh60,000 payable in Sh500 weekly instalments.

AmpThe group started the construction of two-bedroom houses in a gated community model.

“Every member now contributes a minimum of Sh1,500 for savings every week. Those yet to clear their share capital make an additional payment of Sh500. This amount does not exert great pressure on the riders since the majority make nearly KShs1,000 per day.

The group then started the construction of two-bedroom houses in a gated community model where four houses sit on every 50 by 100 feet plot. The cooperative completed the construction of the first 50 units majority of which have already been occupied.

“We took a Sh15 million loan and in addition to our savings we bought an additional acre of land at Sh2.1 million. In the first phase, we have constructed 52 housing units. 35 members have already moved in,” said the vice-chairman.

The cooperative has bought a third parcel of land on which they intend to set up houses for all members. Members who moved in during the first phase like pay Sh2,000 per month. Sh200 goes to savings and Sh1,800 going towards offsetting the cost of construction. The payment for the houses is spread over seven years.

by Standardmedia.co.ke


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Enough is Enough: Kenyan man in US relocates to motherland to become a farmer

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In a bold move and which took great courage, a former Kenyan Diaspora man Kunga Kihokia who was born and raised in Miami Florida has moved back to Kenya, bought a 20 acres piece of land and established an organic farm in Murang’a.

Initially, Kunga had planned to be in Kenya for three weeks 5 years ago but after what he says was the realization of the problems affecting Kenyans because of western lifestyle which he himself was struggling with, he felt strongly to start an organic farm to address those problems.

Kunga has built a water tower to use gravity that allows the water to get pumped and distributed  through  irrigation into the field. Everything in the farm is powered by solar energy and he has dug a borehole that supplies enough water for the farm. Watch the video, be inspired  and enjoy.

Source: Diasporamessenger.com


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