Want to buy a house?

Most prospective home owners dream of living in super luxurious houses, but what does it take to get one? Sheila Naturinda finds out.

Whether you are buying a home on your own, with a partner or with a group of friends, stepping on the property ladder for the first time will always be scary. Low interest rates and competing home loan offers have sparked real estate frenzy, but many first-time home buyers don’t know how to begin financing a home. In many scenarios, brokers will get you a place anywhere, to interest you in their offers.

In a country like Uganda where real estate is not streamlined and much of it is in the hands of private investors, the market price will always dictate what they have to offer and what you hope to get for yourself. When Ms Florence Nankunda took some years saving for a house, she realised that building her own house would save her a lot of money. “It was very expensive when you walked into an office of real estate dealers to ask for how much charges are on a completed house,” she says. “However, it all needs a lot of patience.”

Everyone has what best fits them. Ms Nankunda was advised by friends of different options. Those who had built convinced her it was fulfilling; and those who hadn’t but were in the process of getting a mortgage advised her to join the long list.
Some people will argue that buying an already complete house saves you the burden of settling scores with engineers and contractors whom you pay to do the construction work for you. However, others will try convincing you that building will save you the stress of living in a house that wasn’t your dream house after all. They even say it is even cheaper, you get better designs of your choice, and tastes are also always different.

Mr Anatoli Kamugisha, the managing director of Akright Real Estate Developers, explains that houses in Uganda are in categories which total to 100 per cent. He says 45 per cent of houses in the Uganda are bankable or can get a financial institution to finance them. He adds that there are many options such as outright purchase, mortgage or even a property to develop for yourself.

Basic considerations
Mr Kamugisha says in all the types of houses, banks as well as real estate developers will encourage one to go for standard, luxury and super luxury houses. Mr Stanley Bemba, a property and real estate consultant with Guide Land Property, says if the choice was his, he would build his own house. “However, most people who have come to us for mortgages and outright purchases of complete houses are from the Diaspora,” he explains.

He adds that this is because these people, having worked very far, have no time for building and they chose to take what is complete and pay cash for it. “Buying a house also depends on the location, one’s interests, the type of the house and how much one is willing to part with,” Mr Bemba says.

To buy a two to three bed-roomed house in areas like Najeera, Kiira and Kyanja, one will need to part with Shs80m to Shs300m. “These are considered virgin areas because occupancy has just begun. They used to be seen as far from the city yet now they are much needed,” Mr Bemba says.

Mr Kamugisha however says, for a standard house in the periphery of Kampala with two to three bedrooms, one will part with Shs30m to Shs40m. Also, Shs70 to Shs80m will be charged on you when you want a luxury crib and Shs100 to Shs150m will pay for a super luxury house in the periphery of the city.

Mortgage/loan
A mortgage is a loan secured by a property or a house and paid in installments over a set period of time. The period and interest paid on the mortgage depends on the financial institutions and the mortgage will be the only assurance to the bank or any other financial institution that you will repay the money owed of you.

According to a guide prepared by the Uganda Primary Mortgage Market Initiative, most prospective home buyers in Uganda cannot pay the entire price upfront and must therefore rely on mortgage financing to purchase a residence.

Different lenders give different rates on terms of their mortgages they offer. The duration in which to repay, amount of interest, and the size of installments all vary from one lender to another. “Do not be afraid to negotiate with the lender until you are comfortable with what he offers,” the guide to mortgages in Uganda reads. “Shopping around, negotiating and comparing could save you millions of shillings in the long run.”

Different rates
Developers will not have the same rates when selling houses or any other property no matter how similar the property may seem. Some have used cheap materials while the others have used expensive materials. And going by the types of houses, a standard house at one agency may be charged differently from the same standard house at another agency. In most cases, the house location will also determine how much the developer charges.

According to Mr Bemba, the National Housing and Construction Corporation would have better houses for purchase but some buyers are skeptical about them because of the high rates and the phobia associated with payment of mortgages.

“Some people are not conversant with such options like mortgages. So they get interested in buying from local real estate dealers like Jomayi and Akright because these offer property on private Mailo land where one gets permanent ownership,” he explains. He adds that the kind of technology used to develop the property will determine the rates.

However, he also states that some real estate company motives and objectives matter. There are some companies which want quick cash and there are others which target numbers but not margins.

“Some work on a principle of availability, affordability, and dependability while others aim at how much they will take home,” Mr Kamugisha says. The market also dictates the price to be charged on a property from a real estate developer although some times the market is manipulated by some developers when they get uninformed buyers.

Home types
Every individual has what they prefer to be their dream house. However, talking to real estate developers and financiers will help give you direction on what could be best for you also taking into account the amount of money you have. Mr Kamugisha says there are different types of houses or homes in the country. However, of all the types, only a few can be financed by bankers or the real estate developers.

Unclosed shells
These account for only 10 per cent in Uganda because they are merely accommodative, but suitable enough for habitability. They are roofed, but without door and window fittings and they are not fully finished.

Closed shells
They account for 20 per cent of the houses in the country. They are shells but closed. They are not plastered and lack most basic necessities of a house.
Basic shelters
This accounts for 25 per cent. They are plastered, have water and electricity but lack toilets. “A basic shelter user will have latrines because that is what it offers. These are also referred to as village homes,” Mr Kamugisha says.

Standard shelter
They account for 30 per cent. These houses are plastered, painted and have external landscaping. They also have all utilities including toilets.

Luxury shelter
This accounts for 10 per cent. The name “luxury” explains what is found in the homes. “They could also have tiles, and many other utilities that one could do without,” Mr Kamugisha explains.

Super luxury
These take up only five per cent because most of the utilities in the house are unnecessary but some people will go for them.

Loan specifications
Mr Kamugisha explains that when one wants a mortgage for a house, there are four ways of getting property when you don’t have full amounts.
* An individual who prefers to build their own home should seek short term commercial bank salary loans if they are employed.
* The real estate developer can allow you to make a small deposit on a property, and then you take a flexible schedule of payment for say a year. However, the security here is the land title. You can’t get it unless you have completed payment. It is said that such a method is the best because as you service the mortgage, you are staying in the house hence avoiding double expenditure by paying rent.
* The third method is where the real estate developer gets a deposit from you (the intending home owner), and if he wants an outright purchase, then he takes you to a financial institution who will pay the dealer directly and you then deal with the bank. The Housing Finance Bank mortgage manual states that such an arrangement can be done for 20 years with interest, which interest varies from one banker to another.
* The most commonly practiced method is to completely acquire land, keep on developing it gradually even if it takes you 10 years until its completion. To buy a house, Mr Bemba says there are basic considerations to look out for. This includes the type of the roof, flooring and fencing.
Other conditions people observe are whether the house is in the executive parts of Kampala or in the far reaching areas of the city, but Mr Kamugisha says that of recent, the houses being searched for are not in the middle of town because of spaces therein.