Currently trending: Home ownership the Sacco way

By ALLAN OLINGO aolingo@ke.nationmedia.com, May 23  2013 

In Summary

• Tofinas housing concept, which was registered in 2002 as Tofina Rom Buildres, is a housing co-operative society
• Through the concept, members buy land and build houses at minimal cost, riding on the fact that owning one doe not have to come with the exorbitant profit margins charged by local developers
• The trick in building affordable housing is to always ensure that all the costs are minimal. From the cost of land to architectural designs, approvals, construction costs and such, members need to find the best deal in town that guarantees them the finest in terms of quality and returns on investment

Formed to coordinate shelter issues using the co-operative model by providing financial and technical service, housing-inspired associations are fast becoming the latest craze in the Kenyan property scene.

About 10 years ago, Lucy Mwendwa Ringera was looking for a house to buy in Nairobi. But, though employed by an oil marketing company, her savings could not afford her the kind of house she wanted, and so she approached her boss with the idea of pooling their resources together in order to buy land and then build houses as a team.

“The boss bought in to my idea and we roped in some of our staff,” she remembers. “Through this initiative we were able to buy land and build decent housing units for each of the members who joined us.”

With a few of her colleagues, they decided to turn this initiative into a business concept in order to help others get decent and affordable housing at places of their choice. This marked the birth of the Tofinas housing concept, which was registered in 2002 as Tofina Rom Buildres, a housing co-operative society. Lucy today is one of the directors of the association.

From the outset, Tofina’s aim was to enable members acquire quality, affordable houses within Nairobi’s upmarket areas, which otherwise would have remained a dream to many.

Through the concept, members buy land and build houses at minimal cost, riding on the fact that owning one doe not have to come with the exorbitant profit margins charged by local developers. Here the middleman’s margin as well as the (usually) inflated cost of materials, which is normally pushed to the consumer, is shelved.

Says Lucy: “Our commitment to the people is unique. When you are stuck, we will work a way out. If we are to sell the unit, we will refund you the amount that you have invested in the project. That is the beauty of it.

“You can also decide to sell your share at market price and walk away with the margin.”

The main advantage of this investment model is that you end up building at below cost in a prime area. You can also take it up as a business model, where after the units are complete, you can sell them at market rates, making an impressive margin.

This kind of model is also attractive because, unlike mortgages, it offers a flexible payment model, especially for those who cannot qualify for bank loans.

“This is because we will agree on the amounts and intervals they are to be paid as we build. The clients are consulted from the stage of buying land through architectural planning and the building process itself. Basically, we become the link between you and the house, ensuring that you earn value for your investment,” says Habbakuk Mboya, a director with the company.

“Some of the people we have brought together cannot qualify for a mortgage but have been able to own house in the upmarket neighbourhoods of Kileleshwa and Lavington. This is because they might have an occasional extra source of income which they decide to pump into housing,” says Mboya.

The trick in building affordable housing is to always ensure that all the costs are minimal. From the cost of land to architectural designs, approvals, construction costs and such, members need to find the best deal in town that guarantees them the finest in terms of quality and returns on investment. The same applies to any other prospective home owner, especially in the urban areas.

Lucy says they split the cost of land among members, then make monthly contributions for the constructions.

“Whatever Tofina Rom Builders makes is just for the effort,” she says. “It is very small compared to the margins developers give themselves. Imagine building for you a three-bedroom master en suite apartment at Kileleshwa for Sh8 million. Or even a four-bedroompent house in Lavington for Sh23 million.

There are about 17,000 mortgages in Kenya yet buildings are coming up every day. How are those who are not in mortgages managing? We are the bridge between them, because we have come up with a very attractive model.”

Mboya says the best feature about this and the greater role of Saccos in real estate is that they are open to suggestions from members on where they want to build, the kinds of houses they want and even the finishings.

“Our work is just to ensure that there are enough members on board, search for affordable land, agree with the members on the architectural designs and cost of the house, then source for the building material, ensure a smooth process and hand over the house to the members,” he says.

The group sources for land and ensures that it is affordable to members before purchasing it.

“We have seen the cost of land skyrocket, especially within the city suburbs; we ensure that the cost of land will be friendly to the members before purchasing it. We also ensure that we have at least a unit so that we become part and parcel of the project,” Lucy says.

Tofina Rom Builders have since put up many other projects for its members.

“Our Tofina Ringroad project on Kasuku Road is sold out; it was going for Sh8 million for a three-bedroom apartment flat, all en suite. Our other projects are Conquest Park on Mandela Road, Lavington at Sh9.3 million, Socian Villas on Tinderet Road going for Sh11.3 million, and Tofina Hatheru Road going for Sh11.2 million. All houses are three-bedroom – all en suite,” she says.

Mboya says that in 2010, he managed to secure a four bed-roomed all en-suite townhouse on Amboseli Drive in Nairobis’ Lavington at a cost of Sh8.5 million. The current value of that house stands at Sh40 million.

Charles Peter Mwangi of Rubyland Limited says the reason this model is fast becoming popular is that Saccos allow members to decide on all aspects of the project, including design, architecture and engineering.

“I belong to one of these Saccos and I like the fact that there are regular meetings between the executive directors in consultation with the facilitating committee, thereby keeping members informed of the day-to-day matters in their respective projects,” he says.

This arrangement ensures transparency and accountability as most members will agree on the construction timetable and payment remittance installation frequency.

Lucy says that, depending on the nature and size of the project, the normal agreeable construction period is between 12 and 18 calendar months.

“Of urgency is the money required for the purchase of land. After land is purchased, members can enjoy some breathing space to source for construction funds while approvals are sought from the relevant authorities,” she says.

“We are proud of the unity and neighbourhoods that we have so far created. We are happy that we have conceptualised an idea, which in turn has helped many families secure affordable yet elegant housing,” Lucy concludes.