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From the blog

The “hidden costs” of buying a plot using a bank loan.

For ease of workings, let us assume that the value of the plot is Kshs 1 million. So at the end of the process, the plot will be registered to yourself and charged to the bank for the total amount borrowed.

  Item Who do you pay? Assumption Calculation Amount in Kshs
1 Deposit Seller 30% of value of plot.

Most times the bank will not lend more than 70% of the value of the plot .

30% x 1,000,000 300,000
2 Stamp duty on transfer KRA through the Ministry of Land. 4%  of the value of the plot if it is in an urban area and 2% in rural areas. Let us work with the higher percentage.   4% x 1,000,000   40,000
3 Stamp duty on charge KRA through the Ministry of Land. Normally 0.01% of the amount to be charged / borrowed from the bank. Say you borrow Kshs 900,000 because you already paid Kshs 100,000 as deposit in “1” above. 0.01 % x 900,000       900
4. Legal fees Private lawyer 2% of the value of the property

Add VAT and disbursements, say Kshs 10,000

2% x 1,000,000 20,000


5. Valuation fees Private valuer Minimum fee of Kshs 15,000 because the value is below Kshs 2 million

Add VAT and disbursements, say Kshs  10,000




6. Loan processing fees Bank 3% of loan amount 3% x 900,000 27,000
7. Excise duty on loan processing fees KRA through the bank 0.3% of loan amount 0.3% x 900,000  2,700
8. Mortgage protection insurance Insurance 0.4% of loan amount per year multiplied by the number of years of the loan.

Assume a loan term of 5 years.

0.4% x 900,000 x 5 years 18,000
                                                                                   Total 443,600

So, before you walk into the bank, prepare Kshs 443,600 or say Kshs 450,000. If you want to buy a more expensive plot, just do the math and prepare adequately.

Kariùki Wawerù

PS. Kariùki Wawerù is the author of Kenya’s ONLY real estate book called “The ABC of Real Estate Investment in Kenya”. To have the book delivered to your door step, kindly call +254 723 477 035 or email


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