Uncovering the Unexpected Expenses of Buying Your First Home

Buying a home requires planning for unexpected expenses. Being informed ensures a smoother process and safeguards your investment.

Uncovering the Unexpected Expenses of Buying Your First Home

Though exciting, the process of buying your first home can in all honesty, be a tedious one. This is because there are usually a lot of processes involved that necessitate a substantial amount of money. Unfortunately, a lot of people are not fully aware of what it totally entails to purchase a home. There are a couple of what would be termed as ‘unexpected expenses’ that most people don’t take into consideration. As such, it is important to be informed so as to be prepared, and as Sir Francis Bacon said, ‘Knowledge is power’.

So, what are some of the unexpected expenses when it comes to home ownership?

READ MORE: A Step-by-Step Guide to Buying a House in Kenya

Processing Fees

Processing fees are charges levied by banks and financial institutions in Kenya for handling and processing mortgage applications. These fees typically range from 0.5% to 1% of the loan amount and cover administrative costs, credit checks, and other related services necessary for the approval and disbursement of the mortgage. It is essential for prospective homebuyers to account for these fees when budgeting for their home purchase, as they represent an additional cost to secure financing.

When purchasing a property in Kenya, it is paramount to conduct thorough due diligence on the property documents. This step is crucial to ensure that you are indeed purchasing the correct property from the rightful sellers or owners. For such an endeavour, hiring a qualified lawyer is essential. Legal fees in Kenya typically range from 1% to 2% of the property value. The lawyer will verify the authenticity of the title deed, check for any encumbrances or liens on the property, and ensure that all necessary documentation is in order. This process helps safeguard your investment and provides peace of mind, knowing that your property transaction is legitimate and secure.


There are two types of taxes you will need to pay:

(i) Stamp Duty: When purchasing a property in Kenya, there are two types of taxes you will need to pay: stamp duty and capital gains tax. Stamp duty is a tax on the transfer of property, typically set at 4% of the property value in urban areas and 2% in rural areas. This tax must be paid to the Kenya Revenue Authority (KRA) before the property can be registered in your name.

(ii) Land Rates: Land rates in Kenya are another type of tax that property owners need to consider. These rates are levied by the county governments and are charged annually based on the value of the land. The rates vary depending on the location and size of the property. Property owners are required to pay these rates regularly to the respective county government where the property is located. It’s important to factor in these land rates when budgeting for property ownership in Kenya, as they constitute ongoing financial obligations beyond the initial purchase costs.

Valuation Fees

Valuation fees are crucial expenses incurred during the property purchasing process, typically ranging from 0.25% to 0.5% of the property’s value. Professional valuers charge these fees to assess the market worth of the property. Such valuations are often mandatory for obtaining mortgage approval, as banks and financial institutions require an accurate assessment to ensure the property’s value aligns with the loan amount. The valuation report provides a detailed, unbiased evaluation of the property’s condition, market value, and potential risks, aiding both buyers and lenders in making informed decisions. Budgeting for valuation fees is essential to ensure transparency and accuracy in property transactions in Kenya.

Property Inspection Cost

Property inspection is an important and vital expense that prospective homebuyers incur. These costs typically range from Ksh 10,000 to Ksh 30,000, depending on the property’s size and location. A thorough property inspection involves a professional examiner assessing the structural integrity, electrical systems, plumbing, and overall condition of the property. This process helps identify any existing or potential issues that could require costly repairs or renovations. Conducting a property inspection before finalising the purchase ensures that buyers are fully aware of the property’s state, allowing them to make informed decisions and negotiate repairs or price adjustments if necessary.

A title deed search is a critical step in the property purchase process, ensuring that the title deed is legitimate and free of encumbrances. Conducted through the Ministry of Lands and Physical Planning, this search typically costs around Ksh 500 to Ksh 1,000. It involves verifying the ownership details, confirming that the property is registered correctly, and checking for any existing liens, disputes, or legal issues associated with the property. Performing a thorough title deed search helps prevent potential legal complications and fraud, providing buyers with confidence that they are acquiring the property from the rightful owner. It is an essential measure for safeguarding one’s investment and ensuring a smooth transaction.


Insurance is a crucial aspect of homeownership as it provides financial protection against various risks. Home insurance typically covers the structure of the property and may include additional coverage for personal belongings and liability protection. The cost of home insurance varies based on factors such as the property’s location, value, and coverage level, but it generally ranges from 0.1% to 0.3% of the property’s value annually. Additionally, if the property is financed through a mortgage, the lender often requires mortgage insurance, which covers the outstanding loan amount in case of the borrower’s death or disability. Having adequate insurance ensures that homeowners are safeguarded against unexpected events such as fire, theft, natural disasters, and other potential damages, providing peace of mind and financial security.

READ MORE: 6 Tips on How to Safely Acquire Property in Kenya


In conclusion, buying your first home in Kenya requires careful financial planning and awareness of the various associated costs. Understanding these unexpected expenses and incorporating them into your budget ensures a smoother and more secure property acquisition process. Proper preparation not only safeguards your investment but also provides peace of mind, allowing you to focus on enjoying your new home. As you embark on this significant journey, remember that being informed and proactive is essential to successful homeownership.

Lulu Kiritu
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