The 1K Magic

The housing deficit in Kenya is growing day by day. Most developers are shy to come up with innovative ways to let Kenyans own houses. Delta Homes Ltd (DHL)is calling all the stake holders not limited to Government, financial institutions and county governments to come up with incentives to make it easier for Kenyans to own houses. The idea of Ksh 1,000 per week is to encourage and give hope to Kenyans as well as open up their minds to options available to owning homes hustle free and within their means. Our target is to help Kenyans own decent homes.

If you save Ksh 1,000 per week for twenty 22 years, you will build house worth ksh 1,144, 000 land excluded, but you will be too old to live in it if you stared saving late. So what is one required to do to unlock this within shorter period?
Let assume you save only Ksh 1,000 per week for one year, it means in 52 weeks you have saved ksh52, 000.Is this money enough to buy land? Of course not. But what if there is land costing Ksh 1,000,000 and can comfortably fit 20 units basic two bedroom and the only thing you need is a two bedroom house. That means we need only twenty people each contributing 50,000 to buy land. Therefore Ksh 1,000 per week is enough to buy land within one year.
Now that the land is already there, you need to do construction. Let assume again that construction cost of a basic two bedroom house is Ksh 1, 000,000 will Ksh 1,000 per week be enough to build? Again it will take you 20 years to raise such amount. What if you raise a third of that amount and balance is financed through Sacco or bank? That means you need 6.5 years to raise 333,333 saving Ksh 1,000 per week. In total you need 7.5 years to build same house you could have built in 22 years. The balance of 70% you pay as you occupy the house. At this point the house is a security and you can secure mortgage to pay in long term. You can also rent your unit to pay off your loan or sell the unit at higher price and buy another one cash. What if you can raise the money for land and a third of the construction (Ksh 357,000) within one year? Then in second year you should be living in your own house.

This case explained is typical and can work for anyone. Its unfortunate most Kenyans live in houses less expensive than theirs cars and they don’t know it. An average basic two bedroom rental house will cost about Ksh 1,000,000 to construct, with rental income between Ksh 15,000 and Ksh 25,000 depending on location.

A full member must contribute money for land to be considered part of the project. Each person will be given enough time to raise money for land. This will be equivalent to one share in the company owning the land and it also allows you to be in management of resources.

After acquiring land, land can be used as security to secure construction mortgage. DHL is working with financial institutions to enable our members raise only 20% of construction cost and balance of 70% to be financed by the bank as construction mortgage. Upon completion of construction, the construction mortgage will be converted into a full mortgage. That means payment period will be longer and easier. DHL will bargain moratorium of construction period within which members will continue rising money to pay the interest of amount dispersed.

Some projects are better financed as Chamas. Most microfinance institutions and mainstream banks have good products for Chamas. In fact some will finance up to 9x Chamas contributions. DHL is exploiting this options to speed up the process. Members with similar needs and financial capacity will be formatted as Chamas where necessary to benefit from this option.

This is untapped potential for real estate market maybe because of short term aspect of their loans. If well-crafted it will shorten acquisition time. DHL is working closely with some reputable Sacco’s to finance our members.

DHL is working tirelessly towards sourcing for local and international financiers who offers better terms.

  • Kindly note budget homes are developed with basic finishes. Affordable houses have standard finishes. All this will be well outlined in the bill of quantities.
  • Location determine 80% of project value. The cost of land is a factor of location and current prevailing market

When you pay full cost of land, you become the shareholder of the company owning the land. If the unit are 20, you will have one share in that company if you are taking one unit. If you have two units then you will have two shares. The company owning the land will have the bank account that the shareholders are controlling. This way the shareholders becomes the custodian of the money in their own account.

  • If one wishes to withdraw while in the process of land value contribution, all the money will be refunded except registration and legal fees paid to lawyers.
  • If one decides to exit when already a shareholder in the project, one has to sell the share to recover the money.

a. Change of user cost(actual)
b. Legal fees(conveyancing fee)
c. Approval fees(local government ,Nema and Nca)
d. Stump duty (4% of unit value)

Nb: These cost will be predetermined and agreed upon before commencement of
the process.

1.  Contribute for land purchase
2. Select housing unit that fit both financial and social need
3. Construction (mostly will take one year)
4. Transfer the unit to your name
5. Occupy the unit

1. Fill in the membership sheet. This form will inform us about your financial capacity, your housing need, your preferred location address and other necessary details that will help us know where to fit you.
2. Pay membership fees of Ksh 2,000
3. Sign commitment forms
4. Define your monthly contribution min Ksh 1000 per week
5. Pay your contribution without fail

ZURI RIDGE APARTMENT
Based in Ruaka and under costruction.The project is a 10 member’s project who are based in USA. Each member contributed Ksh 1,000,000 for land purchase and now are contributing for construction as construction is ongoing.

ASOF MAMANGEMENT LTD
A 9 member project based in Kikuyu. Each member has contributed over Ksh 45,000 per month for over 4 years. Construction about to start.

1. Advice our members on financing options that fit them best.
2. Profile and bring together members with the same house and financial need and craft a project that meet their needs.
3. Source for funds to finance projects.
4. Design, approve and develop the units for members.
5. Put construction team together (in-house team of architects, Engineers, Qs and mechanical engineers)
6. Custodian of the concept.

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