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Homeownership Option 4: Off-Plan Properties - All You Need to Know
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Homeownership Option 4: Off-Plan Properties - All You Need to Know

Homeownership is an ultimate financial goal for most people. But it can be a very stressful process that requires much more than comparing prices. Fully understanding the process of home ownership, the options available and what it will take will help reduce stress, and anxiety and save you hard cash. 

One of the first major decisions you must make when exploring homeownership is the route to take. With many options available, understanding each route's ins and outs will help you make an informed decision. 

This article will look at off-plan properties in the fourth edition of our six-part series exploring common homeownership paths in Kenya. It will cover everything from what they're, how to own a home through this process, the pros and cons of this route, and the pitfalls to avoid. 

Read Also: 9 Ways for Owning a Home In Kenya

What are Off-Plan Properties? 

Off-plan properties are properties available for purchase before the construction of a house has been started or completed. Buying a property off the plan involves signing a contract to buy a home yet to be built or ready for occupancy. 

Before signing a contract, the developer will show you building plans, designs, renders, permits, and documentation, and if construction has begun, they'll show you the current progress. They will also communicate the project's timeline and available payment terms. 

After reaching an agreement, you will be required to pay a 10-20% deposit with the balance to be paid in the course of construction or when construction is done and the house is ready for occupancy. Although rare, some developers will require you to pay the whole amount once an application is approved.

Off-plan properties are sold by real estate developers, housing cooperatives, financial institutions and societies, and the government through the Affordable Housing Programme. 

How to Purchase an Off-Plan Property 

Off-plan properties have become a preferred homeownership path for many Kenyans over the past decade, with demand high as ever. This route offers one attractive benefit over the others: early investors can get the property for lower prices. 

To attract investors, developers often price the houses below market value. But it is also this phenomenon that attracts scammers to the industry. To protect yourself, you need to have a picture of how the process works and the steps to follow. 

Step 1: Finding Off-plan Properties 

As off-plan properties became more common among Kenyan homebuyers, finding them has become relatively easy. You can browse online listings, read property magazines and publications or find a reputable real estate agent to guide you. 

With many options available, your choice will be determined by your budget. Location, size, project timeline, number of investors, demand, and other factors will dictate how much you'll spend. For instance, a project in a middle-income estate due in five years may be typically cheaper than a project in a posh residence due in two years. 

Step 2: Get your Funds Ready

Once you have found a property you can afford, the next step is getting the money to buy the house. You will need to pay the developer a deposit of 10-20%, and as per your agreement, you'll either pay the remaining money in installments as construction progresses or on completion. Some development might require you to pay 100% of the money before the project starts. 

Off-plan properties allow for both cash buying and mortgages. It will all depend on the option that suits you the most. If you buy through a mortgage, your contract will decide when you should apply for it. You should apply for a mortgage towards the end of construction completion if you are relying on this financing option. Mortgage offers tend to expire after a few months, while construction normally takes more than a year. 

If you are buying in cash and haven't saved enough to complete the purchase, you can invest your money in vehicles that generate enough income to cover the monthly payments. You can also decide to sell some of your assets, liquidate your investments, borrow from your pension or get personal loans from your SACCO. 

Read Also: Homeownership Option 1: Buying a Ready House

Step 3: Perform Due Diligence 

The off-plan properties industry is crammed with scammers and ghost developers. Every year, people lose money on projects that are cancelled, abandoned, built to low standards, or prices hiked after completion. 

To protect yourself and ensure you don't lose money, here is what you ought to do before you pay a deposit or any reservation fees.

  • Research the developer, look at previous properties and work with only reputable organisations. Ensure they're properly licensed and regulated. 
  • Perform independent property valuation to ensure you are not paying above market value. 
  • Visit the construction location to ensure it's serene and meets your needs, has essential amenities like hospitals, schools, etc., and is accessible. After construction begins, visit the site once in a while to keep up with the progress.
  • Find a way to get in touch with other investors in the project, as this will help you tell if the developer was able to attract additional buyers. 
  • Hire a real estate lawyer to help you through the legal process and help you understand the contract. Most developers will have terms that favour them and can put you at financial risk should any problem arise in the construction period.
  • Look at how the developer plans to finance the construction. You might want to steer clear of developers who use client deposits to fund construction. 
  • Perform a title search on the land the property will stand to ensure the developers are the rightful owners. 
  • Ask if they have an exit strategy, what happens if you want out, the inconvenience costs you'll be charged, and if you're allowed to resell the property before construction is completed. 

Step 4: Closing on the Property 

Once the project is completed and you have made all the necessary payments, you can start the closing process. It will include transferring the property to your name, paying stamp duty, and moving in. 

Before you start the closing process, you should contact your County government to perform an inspection. Considering that some developers can construct houses not suitable for occupancy, this is a vital step you can't afford to ignore. Only pay for the home and move in after it has been cleared and an occupation certificate offered to you. 

Affordable Housing Programme (Boma Yangu) 

Affordable Housing Programme (AHP) is an initiative by the Government of Kenya that offers Kenyans a simple route to homeownership. The initiative works the same way as off-plan properties, with only slight differences. 

The process works in three simple steps. Firstly, you must register your interest by submitting personal details and housing preferences on the Boma Yangu Portal. Your submission will be queued and verified by the government, which will approve or reject your registration. 

Upon registration, you will be given a unique number and can start contributing to the housing fund. There are two ways to contribute: voluntary uncapped monthly or joint contributions in which you and your spouse contribute towards one house. 

The final step is house allocation. The government promises a fair and transparent allocation process. Factors such as family status, demand, and time of registration will be considered when allocating you a home. If you are locked out during this stage, you will be prioritised in the subsequent allocations. 

Two advantages AHP has over other off-plan properties are: You are exempted from paying the 2-4% stamp duty, and once you are allocated a house, you are enrolled in a tenant purchase scheme. You will pay monthly rent for up to 25 years with the money paying off your home. 

Should you Take the Off-plan Properties Path? 

Before you decide if this is your homeownership route, you should learn of the advantages they have and the risk they can pose to you. Only then can you come to an informed conclusion. 

Advantages of Off-plan Homes 

1. They're cheaper than the other homeownership routes as you buy property below market value, allowing you to create equity faster. 

2. You get more time to save and invest because payment is not due until project completion in most cases. 

3. Saves time as you are not involved in the day-to-day construction. This can free up your time to focus on your career and family. 

4. Location advantage as most off-plan properties are only available in urban areas with access to all social amenities. 

5. High-quality construction and end products as reputable developers will only work with the best constructors in the market. 

6. Affordable payment plans as you don't factor in interest if you can avoid mortgages and other loans. 

Disadvantages of Off-plan Homes 

1. Uncertainties - The developer might not deliver in time, build a house that's not up to standard, or worse, disappear with your money. 

2. It can be hard to secure a mortgage for off-plan properties as most lenders prefer ready-made homes. 

3. You don't get the luxury to customise your home as you will rely on the design put forward by the developer. 

4. Delays are rampant, and construction typically takes 2-5 years to complete.

Differentiating a Legit Developer from an Imposter

With many fake developers in the market, how do you protect yourself? Look out for these four things before you settle on one.

Experience: What is the developer's track record? For a first-time homebuyer, you should consider avoiding new firms. You should work with companies that have been in the business for a while and have several completed projects in their portfolio. They should also have a solid online and offline presence. 

Payment Term: Different developers will have different payment terms. When buying a home through off-plan properties, you should ensure the payment terms you choose suit you and don't expose you to many risks. The price you agree on should also be fixed. Some companies will hike prices mid-construction, which can affect your budget. Legit developers will typically offer you friendly payment terms. 

Project Viability: Legit developers will have extensive research to show the project's viability, and external bodies will audit the report. They'll give you this report as part of their marketing strategy. You should study the research to understand how well your investment will perform. Your real estate lawyer should help you through this stage. 

Honesty: With many imposters in the industry, legit developers strive to be transparent and upfront as much as possible. They will give you enough details, stay in touch throughout the project, give you updates, and most importantly, build a quality house that meets all current construction codes and laws. 

What to Consider Before Diving into Off-plan Properties 

  • Location: Where do you plan to construct your house? With Off-plan properties, your location options will be limited as most firms choose to only focus on urban areas. If you want to build upcountry, you might have trouble finding Off-plan developers. 
  • Your Future: What's your intention for homeownership? Are you buying as a short-term investment, or will this be your retirement home? Most off-plan properties are apartments, so you should consider how this can affect you, especially in retirement when you want a quieter neighbourhood. 

Read Also: Planning for Retirement: Key Factors to Consider

  • Tax Breaks and Interest: Through the Affordable Housing Programme, you can get massive tax breaks and avoid paying interest. You will also qualify for up to Ksh300,000 tax relief on the interest you pay if you take a mortgage instead of buying in cash. 
  • Equity: How much equity do you want on the house, and how fast do you want it? If you pay 100% of the house's price upfront, you receive outright ownership giving you total equity. The less money you pay in deposits and installments, the longer it will take to build up equity on the home. 


Homeownership can bring you unmatched freedom and pride, more than renting can. But to get there, you have to go through a daunting homeownership process of deciding on the path to take and the ones to avoid. 

As you've seen, off-plan properties are one such path, and it comes with its fair share of advantages and disadvantages. Before adopting this path (or any other for that matter), consult your real estate agent or lawyer to walk you through each option and help you decide on the route that suits you best.

Read Also: Renting or Homeownership: How Do You Decide?

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Farah Nurow is an experienced Content Writer who enjoys writing creative and educative articles meant to provoke readers' thoughts. He loves sunny weather and thick books. You can connect with him on LinkedIn.

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