Personal Finance

The true cost of owning a house

Whether it is a loan from your sacco or
Whether it is a loan from your sacco or mortgage from a bank, settle on the payment terms and commit to them. FILE PHOTO | NMG 

There are number of reasons that may make you want to move from a rental unit to buy your own house.

Maybe it is time for you to look for more stable living quarters or you are looking to start a family and need a different environment to raise your children in.

Whatever your reason, buying a home is a life-defining moment punctuated by the fact that you are starting a new chapter as a home owner.

Owning property will elevate you to become your own landlord which will come with its own set of expenses after settling the transaction, legal and closing fees.



This is the most obvious cost that is associated with real estate investing. Therefore, if we buy a Sh1,000,000 home, we think that we have invested only that amount. When people ask, “How much did you buy it for?” we give the above figure as the answer. However, as we shall discover in the course of this article, the layman’s viewpoint that Sh1,000,000 is the complete cost of the property is usually incorrect.

To begin with, there are transaction costs that are associated with the purchase. These include brokerage paid, processing fees paid to the bank to process the mortgage loan as well the legal charges that are collected by the government to register the property in the name of the new buyer. First time buyers have a tendency to underestimate these expenses. However, they can quickly climb up to anywhere between four percent and six percent of the property value.


Upon acquiring the property, you will have to pay property tax rates to the county government. The amount will depend on the market value of your house.

In Nairobi, City Hall will cap the new land rates at one percent of the current value of plots as opposed to using the 1980 valuation.

The rates which are set to take effect in January 2020 could see owners paying more or less from the current 25 percent of the unimproved site value based on the 1980 valuation.


Moving into a house that is presumably bigger than your rental unit will come with a sense of pride - at the same time, your items may not gel well with the new space.

As such you will have to furnish the house by acquiring furniture, maybe a new bigger cooker since your kitchen is more spacious, more beds for the extra rooms and probably a dining table.

You may want a different coat of paint or install shelves and extra cabinets. It is up to you to decide how you would want your new house decor.


Owning your own house will mean that you take up the costs for utilities. You should start factoring in bills like electricity, water and sewerage; and internet subscriptions which may be higher due to the increased number of appliances and people living in the house.

You will also pay for garbage collection and residential association fees which covers maintenance of common spaces like playgrounds and also keeping the environment around your estate clean and not to forget contracting guards for security.


Your maintenance and repair costs may vary depending on the age, condition and size of your home.

Leaking taps and power-gulping appliances can really run your utility bills high if not checked. Which is why ensuring your systems such as the plumbing and appliances are running efficiently will ultimately lead to a lower utility costs.

You need to factor in occasional maintenance costs as well as simple repairs which include fixing leaking roofs, loose tiles and broken windows as some of the expenses you will incur in your home.

Additionally, any upgrades you may want to install in the house, maybe an extra room will cost you more.


If you bought your house on a loan, you will definitely have to pay the instalments until you clear the balance.

Factoring in the payments before going into the deal will help you plan better for the future so that you don’t end up getting evicted after defaulting.

Whether it is a loan from your sacco or mortgage from a bank, settle on the payment terms and commit to them. You may also decide to insure the property which will be an extra expense. With research and careful planning, you can be sure to buy a home you can truly afford — even with all the extra expenses.
The writer is Head of Sales and Marketing Centum Real Estate.