What was the value of Shakombo’s house?

By Francis Ayieko

Kenya: Losing your home to a financier is probably one of the most painful things that can ever happen to you as a property owner.

Having bought their dream homes after toiling for years, the last thing any homeowner would want to imagine is that some years down the line, the hammer would fall on their prized investment.

The reality, though, is that people are losing their homes to auctioneers over unpaid debts. If you doubt this, then ask Suleiman Shakombo, a former National Heritage Minister, who was last week evicted from his prime city residence following a court battle after the property was auctioned.

According to media reports, Shakombo’s house in Kilimani area, on Argwings Kodhek Grove, was sold through public auction by the Kenya Commercial Bank to Larista Limited for Sh17 million after allegedly defaulting on a loan he obtained from the bank.

Quoting court documents, the media reports said that Larista Limited was the highest bidder at the auction conducted on February 7, and the property was transferred after payment of the requisite deposit of Sh4.2 million at the fall of the hammer. Larista paid the balance to become the rightful owner of the four-bedroom house with servants’ quarters.

Shakombo was later served with a notice to vacate the premises but refused to comply with the notification, making Larista to move to court.

When I read this story, the first question that came to my mind was: How much was the loan amount? This is because I find it curious that a four-bedroom house in Kilimani was auctioned for Sh17 million.

Not to forget that a clause in the Land Act 2012, demands that in case of default, a property should not be sold below 75 per cent of the prevailing market price.

This rule was meant to ensure that the sale of a house in case of default would leave both parties better off. This means that the sales money should be enough to clear the loan balance, and leave the homeowner with the surplus to pocket.

Before such a sale can take place, fresh valuation has to be conducted to ascertain the current market value.

When writing this column, I tried to get in touch with Joram Kiarie, KCB’s Director of Mortgages to confirm the details of the loan, but he had not replied by the time of going to press.

Value

But I gathered from a real estate expert who has handled property transactions in Kilimani area that a four-bedroom house on half-acre plot in the area would not go for less than Sh100 million.

On average, the expert told me, a four-bedroom bungalow on half-acre plot could fetch as much as Sh150 million.

He gave the example of a three-bedroom old residential house on half-acre plot on Lenana Road, Hurlingham, which was last year sold for Sh120 million.

I don’t hold any brief for Shakombo and I must confess that I don’t know the finer details of the case like how much the loan was; how much the house was worth; whether it was valued afresh; and what was the plot size? But Sh17 million for a four-bedroom house in Kilimani, Nairobi, is definitely curious.

— fayieko@standardmedia.co.ke