A six-storey hotel in Machakos town belonging to former Cabinet minister Gideon Ndambuki was Monday put up for auction over a Sh80 million loan.
Mortgage firm Housing Finance moved to court to have Roof Garden Hotel sold to recover the debt owed by Mr Kaiti, also a former Kaiti MP.
The hotel is located near Kenyatta Stadium and sits on 0.0389 hectares.
Mr Ndambuki unsuccessfully sought to stop the auction in court and have the property sold to Machakos Teachers Sacco instead.
High Court David Majanja declined the ex-minister’s plea to freeze the auction and review an earlier debt repayments plan, saying consents once registered were contractual agreements that the court had no powers to change.
Mr Ndambuki had cited the Covid for delaying the Machakos Teachers Sacco deal when he sought to freeze the auction.
“The plaintiff has stated that he paid Sh4.6 million and not Sh5 million which amounts to prima facie default. Having admitted that he has not settled the arrears as agreed in the consent order, the bank is now entitled to exercise its statutory and contractual remedies,” said Justice Majanja
Mr Ndambuki served as Planning and National Development minister during President Daniel arap Moi’s administration.
He unsuccessfully vied for the Makueni gubernatorial seat and was later appointed chairman of the National Social Security Fund in 2017.
The politician is the latest prominent personality to battle auctioneers over unpaid bank loans and try to hold onto their prime assets as Kenya’s economy slows down and repossessions pick up.
Former Cabinet minister Suleiman Shakombo lost his house in Kilimani over a debt while assistant minister Stephen Tarus is fighting to stop the auction of his Karen home.
Mr Ndambuki’s Roof Garden Hotel has a restaurant, bar, kitchen and cashier’s office among other facilities on the ground floor and guest rooms on all other floors. It also operates a bar on the first floor.
The auctioneer indicated that the title to the property is on leasehold with an annual rent of Sh3,030. The hotel earns a monthly income of Sh1 million.
The hotel is scheduled to be auctioned on September 29 at Garam Investment’s offices in Westlands, Nairobi. Purchasers must pay a deposit of 10 percent in cash or a banker’s cheque at the fall of the hammer and the balance in three months. They are also required have a bidding deposit of Sh1 million.
Defaults on mortgages have jumped in recent months, pointing to widespread distress in real estate.
The mounting defaults in the property market are a reflection of the struggles that mortgage holders are undergoing in an economy that has witnessed a string of job losses in recent months across nearly all sectors as corporates intensify austerity measures to protect profits.
This has seen workers who took mortgages on the strength of their payslips default.
The slowdown in real estate is also hurting property developers who are finding it difficult to sell units that were built on loan.
Auctioneers reckon they held more sales over the past two years linked to mortgage defaults, arguing that banks were moving much faster to seize properties from defaulters.
A bank lending slowdown and reduced economic activity worsened by Covid-19 are creating a growing pool of distressed borrowers.
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