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The Hidden Costs of Homeownership in Kenya 
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The Hidden Costs of Homeownership in Kenya 

Homeownership can be a tedious process; as you go through it, you'll have to spend money at almost every stage. First-time homeowners often forget to budget for all these costs and blow their budgets or cut short their dreams.  

These costs start adding up the moment you start the homeownership process, from hiring a real estate lawyer to guide you through the legal process to when you move into your new home and need to pay to install security equipment. And the costs will continue adding up, turning into a lifetime commitment. Every once in a while, something will need fixing.

This article will explore some of the costs you need to budget for when you decide to be a homeowner and ensure you don't exceed your budget. Read on.

Also Read: 9 Reasons Why You Should Own A Home

Processing Costs

Processing costs include all the money you'll spend while closing on a home. These fees are unavoidable, and how much you spend will be dictated by the homeownership route you choose. Some costs (e.g. appraisal fees) are common across all the paths, while others (e.g. mortgage processing fees) are specific to only one. Here are some fees you'll pay along the process. 

Appraisal Fees

To avoid overpaying for a home, you'll need to know its current market value. While you could use the government valuation when paying stamp duty or looking at the land rates certificate, they're not always accurate and based on previous valuations. You'll need to hire an appraiser to conduct a valuation of the real estate property you are looking to buy. 

If you are constructing your house from scratch, apart from the land appraisal fee, you will also need to pay your cost engineer or quantity surveyor to produce a construction cost estimate that will forecast the amount it will cost you to build your home. 

Read Also: Homeownership Option 3: Building From Scratch 

Agent Fees

To avoid industry cons and ensure you get the best value for your money, you might need to hire a real estate agent and/or lawyer as well as a project manager if you like to hold your hand. 

The homeownership path you take will determine how much you spend on agent fees. If you buy a ready house in cash, you'll likely spend less than someone taking a mortgage or joint venture route. 

You might also have to pay broker fees if there's another party involved. Brokers often help you find properties not listed in formal real estate publications. 

Read Also: Homeownership Option 1: Buying a Ready House


There are two most vital insurance covers you will need to buy to protect your home and possessions: home insurance and mortgage insurance. Home insurance is a recurring cost, and you’ll need to pay for it as long as you live in the house. On the other hand, you will only pay for mortgage insurance as long as you are servicing the loan or when you choose to refinance your home.

Home Insurance: This policy covers you against loss or damage of the building structure and  personal properties in the event of theft, fires, or natural disasters like flooding and other incidents. 

You can also choose to get comprehensive home insurance covering everything from your building, home possessions, and any liability that might arise, like injury to your guests or domestic employees. 

Mortgage Insurance: This type of insurance protects your lender in case you default on your loan, pass away or lose your source of income. The borrower typically pays the premium and includes it in the monthly payments they make. Alongside home insurance, this is a must-have policy when applying for a mortgage loan. 

Inspection Costs

You will pay these costs when performing your due diligence before completing your homeownership journey. It will help you ascertain the legitimacy of the seller, bring to light any hidden encumbrances and vouch for the structural integrity of the building.

This will include a surveyor’s fee to help you determine the boundaries and size of the land your home will sit on, a title search to confirm who owns the house, and building inspection fees. 

After performing a building inspection, you will need to obtain a certificate of occupancy from your local county government.

Commitment Fees

A seller might require you to put commitment fees in an escrow account to show your willingness to complete a purchase. The amount is often refundable or is deducted from the house’s price when completing the buying process. The costs are normally associated with buying a ready home, mortgage, off-plan, and rent-to-own properties.

You should note that the amounts paid in rent-to-own properties are not refundable if you end up not completing a purchase when your lease expires or you cancel the agreement for other reasons.

Read Also: Homeownership Option 2: Rent to Own Properties


There are two types of taxes you will need to pay:

Stamp Duty: This is the tax charged on the transfer of real estate properties, and it's typically the purchaser who pays it. The amount you pay will be determined by the location of the property you are buying. The cost will be 4% of the property value if you buy in an urban area or 2% if the property is located in a rural area. 

Land Rates: These are yearly property taxes payable to the county government and are based on your land valuation determined by the government. The location of your land will dictate how much you will be paying; prime property owners will pay more.

Moving Costs

Once your new home is ready, you will need to move in, which comes at a cost. Most homebuyers normally forget to budget for this, and it's one of the pricey payments you need to settle. If you don't have a truck or the time to pack and transport your belongings to your new location, you will need to hire professional movers to do it for you.

The amount you'll pay to move from your rental home will depend on different factors such as:

  • The distance you're moving
  • The total weight/volume of your belongings 
  • Number of labourers required
  • Additional service you need, e.g. packing 
  • The road conditions 

Utility Bills 

Your utility bills will likely skyrocket when you move to your own place. First, you need to pay for a connection to get you started or to change the billing information if you are moving to a ready house. 

You will pay more electricity bills as your house will need more security lights, will have more rooms and typically more convenience appliances, for example. If your landlord included the sewer and water bills in your rent, you would be paying both of these from your pocket when you are no longer anyone's tenant.

Apart from electricity, water and sewage, you will also need to pay garbage collection/disposal, internet and gas bills. 

Another recurring monthly bill you will need to budget for, although not considered utility, is security. Depending on the crime rates in your location or to keep your family safe, you might have to hire a security guard and employ other security measures like installing CCTVs, motion sensor bulbs, etc.

Repair and Home Maintenance 

Once you are a homeowner, there is no more calling a landlord to come to fix a leaking roof or change the electrical wiring. You'll be in charge of handling all the repairs, the emergency ones like a clogged toilet or a planned one like changing the toilet seat after a few years. 

Depending on the conditions of your house when you moved in, you might need to do repairs very often. If you bought a new house or constructed one from scratch and received a clean bill of health, your home repair budget will be low. If you are moving into a house that's a few years old, you will fix a broken thing or change an outdated one every now and then.

Other routine home maintenance costs you'll need to budget for include pest control, thorough house cleaning, clearing drainage system, and lawn care if you have one.

When you become a homeowner, it's important to include these costs not just in your budget but also in your emergency funds. Most home repairs will need to be attended to when you notice them before more damage happens immediately.

Home Renovation Costs

These costs are different from home maintenance fees. They're more expensive, planned and happen rarely. They can include repainting the entire house, changing the roof, updating the drainage, sewage and electric system, replacing floor tiles or cabinets, and much more.

The main aim of home renovation is to prevent deterioration of the property which can lower its market value. Most of these renovations will include modernising the house and ensuring it retains or increases its value. If done correctly, it ensures property appreciation, helps you build more equity and raises your net worth.

Financing Hidden Homeownership Costs

The cost of homeownership can sometimes sum up to as much as or even more than paying rent. When you choose to be a homeowner, you will need to revise your budget to accommodate all these costs. You can direct a portion of your previous rent to cover utilities, security, insurance, taxes, and other recurring costs. 

For the minor unexpected and planned maintenance and repair fees, you should put aside 1-5% of your home's value to finance those costs. This is money you can put in your emergency funds kitty. You can invest this money in low-risk investment vehicles that can easily be liquidated. 

Read Also: Where Do I Keep my savings? The 7 Main Places to Put Your Savings

You should always invest in home insurance to cover the unexpected costly repair caused by natural disasters or man-made calamities. Without this, you might be forced to dig deep into your pocket, go into debt, or abandon the house for a while as you get your finances in order.

As time goes by, your house will start to deteriorate, and you will need to renovate, make improvements and complete makeovers to modernise the structure and prevent the loss of your home's value. You will need to save and invest in medium-term vehicles to help you cover these costs. You can also look into ways to increase your sources of income. 

You can also take a home improvement loan from your bank when you don't want to spend out of pocket. You should take this route when you are certain you can service the loan. Defaulting can lead to home repossession by your creditor. Kenyans can also enjoy up to Ksh300,000 annually in tax relief on loans taken for home improvements.

The Intangible Costs of Homeownership 

These costs can be seen but can't be measured as they're less directly monetary, but many homeowners rarely factor them in. They include:

Inflexibility Costs: Moving out can be hectic once you move into your own house. It might cost you a lot more to move out due to unplanned events leading to career change, transfer to another city for work, or increase in your family's size. This is one of the flexibility, and freedom renters enjoy.

Loss of Value: Some factors beyond your control can lead to your house losing its value. This can be anything from neighbourhood deterioration, rise in insecurity, or urban blight. If you decide to move, you might sell at a loss.

Dead Capital: A lot of your money will be tied up in one investment that generates no income. And if you choose to tap into it by refinancing your mortgage or taking a home equity loan, you'll pay exorbitant interests while also risking your house.

Time: You will need to invest a lot of hours into homeownership. Right from the start, when you are going through the owning process, you have to oversee repairs and improvements. The time you could spend improving your career or your employability.


While homeownership can provide you with financial stability, gift you freedom from rent, help you build wealth and equity, hedge against inflation and many more benefits, you should know that doesn't happen overnight. You'll need to constantly invest in your home to reap these benefits and ensure your house doesn't end up losing value.

Homeownership is an investment that comes with a lot of costs. Depending on the quality of your house when you move in, you can spend less per month or more than you did when renting. Before taking this route, you should ensure you can afford all these costs without going into debt or changing your lifestyle.

Invest in insurance and ramp up your rainy day funds to manage these costs. If you have the time, you can learn some basic plumbing and other repairing skills so that you don't have to pay someone to change your taps or unclog your toilet. 

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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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