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More property was put on auction this year than in 2017

The number of property put up for auction rose this year compared with 2017, but auctioneers are struggling to sell them. Auctioneers said they were holding more auctions compared to last year following a growing pool of distressed borrowers whose assets were seized by aggressive lenders.While the economy is on a recovery path from last year’s severe drought, a bank lending slowdown and prolonged political uncertainty saw businesses and workers struggle with cash flow.

More property was put on auction this year than in 2017

Auctioneers said they were holding more auctions compared to last year following a growing pool of distressed borrowers whose assets were seized by aggressive lenders. FILE PHOTO | NMG

The number of property put up for auction rose this year compared with 2017, but auctioneers are struggling to sell them. Auctioneers said they were holding more auctions compared to last year following a growing pool of distressed borrowers whose assets were seized by aggressive lenders.While the economy is on a recovery path from last year’s severe drought, a bank lending slowdown and prolonged political uncertainty saw businesses and workers struggle with cash flow.There is a glut of repossessed vehicles, land, homes and office equipment being sold off cheaply across Kenya.“Things got worse and the auctions were more compared to last year,” said Stephen Kang’ethe, an auctioneer with Nairobi-based Dalali Traders.He said that the number of property going under the hammer or businesses crippled by mounting debt had risen, adding that the situation was compounded by lack of buyers.“The irony is that there are no buyers even for property being put up for auction. Things are bad. There is no money,” said Mr Kang’ethe.He added that potential defaulters would previously get second or third loans to repay and stave off auctioneers, but with the advent of listing on credit reference bureaus this window has been closed.

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Banks are said to move faster to seize property from defaulters since the cap on loans, which has slowed lending, was introduced in September 2016.This came as the stock of bad loans held by banks grew by Sh66 billion in the nine months to end of September 2018, indicating a challenging business environment which has seen many small businesses and households default.Banking sector data for the first nine months of the year showed that non-performing loans rose to Sh326 billion from Sh260 billion in a similar period last year, driven by defaults from small businesses and the taxi sector. The data paints a picture of households and small traders taking loans that they are unable to service.The report is also a reflection of businesses that are struggling to stay afloat and others whose operations have ground to a halt following failure by the national and county governments as well as the private sector to settle their dues.

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