Buying a house can be one of the most thrilling and rewarding decisions you’ll ever make. It represents stability, growth, and a sense of ownership. However, while most people focus on the purchase price and mortgage payments, few realize that homeownership comes with hidden costs that can easily be overlooked.
Some of the advantages of buying a home include the opportunity to build equity and long-term wealth, enjoy full control over your property, and even benefit from potential tax savings.
However, owning a home also comes with its own challenges, such as high upfront costs, reduced flexibility, increased responsibility, and a long-term financial commitment.
If you’re still deciding between the two, check out our guide: Buying Vs. Renting: Which One Is More Profitable.
For now, let’s break down the hidden costs of buying a home, especially those that first-time buyers often overlook. Keep in mind that these costs vary depending on your country and location, but they generally apply to most homebuyers.
These costs can catch you off guard if you are not prepared. Therefore, before you sign those papers, here is what you need to know.
Closing Costs
They are some fees paid by both the buyer and seller to various service providers to finalize the home buying process.
Some of these closing costs of buying a home may include:
- Legal fees
- Title searches
- Estate agents fees
- Property appraisals
- Mortgage fees.
Typically, closing costs range between 2% and 6% of the home’s purchase price. It’s crucial to budget for these expenses early to avoid financial strain just before closing day.
Property Taxes
Once you have a home of your own, you will be required to pay property taxes annually. The amount is determined by your home’s value and local government rates.
These taxes might have a big effect on your monthly spending plan, particularly if you’re moving to a more upscale area. Property taxes may apply to buildings, land, or both.
In Kenya, the main property-related taxes include:
Stamp Duty– which is the tax payable when transferring ownership. For urban area it’s 4%, for commercial areas it’s 6% and 2% for rural areas.
There are reliefs and exemptions to stamp duty. Read here to learn more.
- Value added tax (VAT)
- Capital gains taxes
- Land rates and rents
- Title Registration fees
It all just depends on the property you are purchasing and where it is. And where you come from.
Home Insurance
It is essential to protect your home/ investment with insurance. This protects it from unexpected disasters like fire, theft or even natural occurrences, like floods and earth quakes.
It is however an added costs of buying a home that will come with purchasing a home. Insurance premiums vary depending on the location, size, and value of your property. Some lenders even require specific types of coverage, which can push the cost higher than expected.
Utility and energy Costs
A larger home often means higher utility bills. You might notice increased costs for water, electricity, and heating, especially if you’re upgrading from an apartment to a standalone house.
To manage these costs, consider investing in energy-efficient appliances or smart home systems, which can significantly reduce monthly utility expenses over time.
Maintenance and Repairs
Unlike renting, where the landlord handles repairs, homeownership means you’re fully responsible for maintenance. From plumbing leaks and roof repairs to repainting and landscaping, these costs can add up quickly.
Experts recommend setting aside at least 1% of your home’s value each year for maintenance. Some say it should be between 1% to 4% depending on certain factors such as, age of the home, size and the climate of the area.
Older homes may have less efficient insulation and systems, which could result in greater energy costs.
Homeowners Association Fees (HOA) Fee
If you’re buying a home in an apartment complex or gated community, you’ll likely be required to pay a Homeowners Association (HOA) fee, commonly known as a service charge in Kenya.
This fee is collected monthly or annually to help manage and maintain the shared spaces and services within the community.
These fees typically cover:
Maintenance: Landscaping, cleaning, and general upkeep of common areas.
Amenities: Shared facilities such as swimming pools, gyms, playgrounds and clubhouses.
Services: Security, garbage collection, pest control, and other essential services.
While HOA fees ensure a well-maintained and secure living environment, they can also add a significant recurring cost to homeownership.
To avoid unpleasant surprises, always ask about the amount, payment frequency, and what it covers before finalizing your purchase.
Common Costs of Buying a House in Kenya Stamp Duty Fees
When purchasing property in Kenya, here are the additional expenses you may incur:
- Legal and Conveyancing fees
- Utility Fees
- Inspection Costs
- Moving Costs
- Mortgage Application Costs
- Valuation and Survey fees
Conclusion
Purchasing a home is one of the biggest real estate investments since it creates long-term value in addition to stability. However, it’s a commitment that requires thoughtful planning and financial preparation. Take time to research the right property by considering key factors such as location, size, and local taxes.
To effectively manage these expenses, evaluate the short-term and long-term costs and create a structured savings plan, either monthly or annually.
Once you’ve successfully purchased your dream home, explore our guide on 20 Home Color Palettes for Your Living Room and Bedroom to help you create a space that both increases the appeal of your property and accurately expresses your personal style.
