Owning a home in the city is regarded an expensive affair, since in most cases it entails mortgages , while at the same time paying rent. This is a double expense for most people, who find it hard to pay rent, service mortgages and pay for a home simultaneously.
At one point, some people give up and lose a big chunk of money if they are unable to continue paying for the house, or maybe service their loans.
This is what prompted Rama Homes, real estate company, to start a rent-to-own home payment plan for clients in the city.
According to Adrash Hussein, Assistant General Manager at Rama Homes, the plan helps clients live a normal life, paying normal rent and finally owning the home of their dreams at the end of a specified period of time.
“This is one of the best methods of owning a home in Africa. In our case, it has 95 percent success rate as most people pay normal rent, with an ultimate goal of owning the house they live in. You will never feel the pinch since you do not have to take a loan. You pay a small percentage as deposit, then pay rent for the rest within a certain period as agreed with the company,” says Hussein.
In a rent-to-own agreement, you (as the buyer) pay the seller a one-time, usually nonrefundable, upfront fee called the option fee, option money or option consideration. This fee is what gives you the option to buy the house by some date in the future. The option fee is often negotiable, as there’s no standard rate.
In the case of Rama, one is required to pay a 10 percent deposit and a total of 47 percent in two years before proceeding to pay rent to own for the rest of the payment time.
In its previous projects which include Jumeira (Parklands), Deira (Parklands), Euromax (South ‘C’), Marina (Parklands) and Gateway Park (Syokimau) it has had an averaged sale of 90 percent, even before completion.
According to Hussein, being an Islamic firm, Rama Homes does not charge interest for its clients.
“This does not mean we serve Muslims only. No. We serve all regardless of religion, race and tribe, provided they are legally eligible to transact,” he says.
Hussein says that the plan is the future of home ownership, especially for middle class earners who are shying away from expensive bank mortgages.
“We decided to venture into the ‘rent-to-own’ programme to fill a deficit that had been left by banks and other real estate firms. The middle class also was shying away from bank loans that are characterized by high rates that they cannot afford. We came in to fill that gap,” he adds.
Recently, Rama announced the launch of a mixed use commercial complex in Kilimani area, Nairobi.
The 20-storey building will entail three and four bedroom apartments with a seven-year payment plan. Each unit will cost approximately Ksh19 million.
Rama Towers, the name of the new building, will cost Ksh6 billion to complete, and construction will start in the next two months.
“This is one of our mega projects, and will take at most three years to be complete,” said Hussein.