The scheme, which has reportedly attracted 1,000 home buyers, has done away with the 20 per cent deposit that mortgage buyers are expected to raise and buyers are only required to pay monthly instalments – just like paying rent.
The new strategy targets people whose income levels enable them to make monthly instalments but cannot raise the deposit.
“We have been conducting diaspora home expos and when we saw this practise in the US we realised that Kenyans also need it,” said the firm’s CEO David Karau.
“It is just like paying rent and owning a home eventually without the headache of having to pay a deposit,” he added.
According to Mr Karau, prospective home owners just walk into the firm’s offices and express their interest in a planned housing project.
They are then presented with options, including monthly payment plans after which they sign a deal with the company.
The buyers are then obliged to make monthly instalment payments (just like paying rent) for between 18 and 24 months.
Once the home is completed, the buyer is free to rent it out or to occupy it as the scheme is converted into a negotiated mortgage that lowers or maintains the monthly instalments.
“Sometimes the buyers who opt to go beyond the scheduled payments complete paying for the homes by the time they are completed.
“That basically makes them home owners who never had to hassle for deposits,” said Mr Karau, a retired Kenya Defence Forces (KDF) soldier.
Kings Pride Properties is following in the footsteps of Superior Homes Ltd, which last September unveiled a scheme that allows home buyers to pay for their houses over a three year period without incurring any interest rates.
The product, dubbed Buy Over the Long Term (BOLT), enables individuals to buy homes at fixed prices despite rise in housing prices in the market.
“The instalment plan will include a deposit payment of at least 10 per cent of the selling price. The instalments will be calculated to pay for at least 80 per cent of the selling price by month 36,” Ian Henderson, Superior Homes managing director, said during the launch of the product.
The firm, according to Mr Henderson, is capable of managing the fixed price instalment product through the advance bulk purchase of building and construction materials at a fixed price locally and from overseas markets.
To sweeten the deal, BOLT takers were promised full refund – without penalty deductions – in the event that they were unable to finish paying for their houses due to any reasons.
The innovative schemes are set to boost home-ownership in a sector bedevilled by variable interest rates, demand for high mortgage qualifications and heavy penalties in case of mortgage cancellations.