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When Gated Estate Costs Are Too High

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HF Development and Investment Limited Executive director James Karanja
HF Development and Investment Limited Executive director James Karanja (right) speaks during a handover ceremony to new home owners at the housing development project at Komarock Heights Phase 1 on August 10, 2018. PHOTO | SALATON NJAU | NMG 

Peter Kanyoro found out about a monthly service charge when he walked into his Sh6.7 million newly-bought house.

“It was a surprise to me since I had struggled to raise the principal amount for outright purchase of the apartment. Now every month I have to pay Sh5,000 for maintenance of gardens, swimming pool and 24-hour manning of the gate,” he said.

While many gated communities continue to attract buyers and are highly preferred by Kenyans, some fail to disclose value-add costs upfront when advertising the projects.

Banking and housing units developer, HFDI which has executed various projects across Kenya says buyers should be informed before signing the purchase deal on the overhead costs that will arise.

Most developers form a company for each gated community and initially run it during the sale window but hand over ownership of the company to new owners.

“No one wants their houses’ value to depreciate due to neglect of essential amenities such as gardens, swimming pools, security management and availability of shops for essential items and services,” said James Karanja, the HFDI executive director.

Rama Homes Limited sales manager Adrash Hussein said buyers of their housing units automatically become shareholders of the project management company.

“The house owners determine how they want the project maintained and this requires money that is raised from rent as well as from facilities such as restaurants, gym and hiring of community hall as well as contributions of residents,” he said.

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Mr Kanyoro said costs a full-time lifeguard at the facility’s swimming pool as well as security guards manning the gates add to the woes of new home buyers.

A recent research by the American Real Estate Society (ARES) warns that uptake of units within gated communities could continue falling if maintenance costs are high.

“Gated communities sell at a premium relative to comparable homes in non-gated communities due to actual or perceived benefits associated with additional privacy, homeowner associations’ tighter controls on maintenance, home design and the added assurances against crime and other undesirable activities,” said Ken Johnson.

But in Kenya, gated communities continue being attractive due to their know-your-neighbour philosophy that helps build closely-knit communities.

Children have a secure environment to live in as well as enjoy protection from and to school, grocery and service shops located within the facilities at anytime of the day or night.

Gated communities, said Mahiga Homes chief executive Patrick Muchoki, also provide residents with an opportunity for modern living where residents could jog as well as go to the gym regularly as well as occasional swimming within their protected communities.

“The tenants determine the services they require and hire professionals to provide them at a fee. This is about defining lifestyles that portends the need for residents to keep fit as well as manage the environment they bring up their children,” he said.

The US study found that while the amenities such as clubhouses, community swimming pools, tennis courts, schools made gated communities attractive, there was need to factor effect of maintenance costs or else risk losing their allure to buyers.

“Additional maintenance costs often outweigh their benefits and it appears that while a gate has value, additional neighbourhood amenities do not always provide additional value,” it said.

It recommended that buyers be fully briefed on overhead costs to allay discontent arising from lack of information.

“From the perspective of both the buyer and the seller, this information should help each to better price property. A good understanding of what adds value and what does not should help create increased marketability of gated homes,” adds Dr Mark Sunderman who also participated in writing the report.

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World Bank pushes G-20 to extend debt relief to 2021

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World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.

“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.

He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.

The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.

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People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.

For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.

Debt burdens, already unsustainable for many countries, are rising to crisis levels.

“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.

ALSO READ:Global Economy Plunges into Worst Recession – World Bank

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Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans

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The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.

“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”

According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.

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Tighter Reins on Platforms for Mobile Loans

The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.

Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.

Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.

SEE ALSO: Central Bank Unveils Measures to Tame Unregulated Digital Lenders

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Scope Markets Kenya customers to have instant access to global financial markets

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NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options. 

This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.

The Scope Markets app offers clients over 500 investment opportunities across global financial markets.

The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.

The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).

The platform also offers an enhanced client interface including catering for those who trade at night.

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The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour;  Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).

The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.

Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”

He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.

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