Property Valuation Requirements for SACCOs and Cooperatives in Kenya

The SACCO Societies Regulatory Authority (SASRA) requires deposit-taking SACCOs to maintain a register of all assets pledged as security for loans. Where property is used as collateral, SASRA's prudential guidelines require that the property be valued by a registered valuer who is independent of the borrowing member. This is not optional — it is a condition of the SACCO's licence.

A valuation for SACCO lending purposes must report both market value and forced sale value. The forced sale value is critical because it determines the realisable amount if the SACCO needs to auction the property to recover a defaulted loan. Most SACCOs apply a loan-to-value ratio of between 60% and 80% of forced sale value, not market value.

The valuation report should also confirm the registered proprietor matches the borrowing member, confirm there are no encumbrances or caveats that would impede a sale in the event of default, and confirm that the property is accessible and in a marketable condition. A valuer who fails to identify a caveat or a boundary dispute is exposing the SACCO to a non-performing loan with no realisable security.

SASRA conducts periodic inspections and reviews the adequacy of collateral valuations. SACCOs that rely on informal or desktop valuations risk regulatory sanctions. The best practice is to maintain a panel of two or three registered valuation firms and rotate instructions to maintain independence.

For cooperative housing schemes and land buying companies, the valuation exercise is different. Here the purpose is typically to determine a fair allocation price or a subdivision value per plot. The valuer must consider not just the raw land value but also the cost of infrastructure already installed — roads, water, sewer, electricity — and the planning conditions attaching to the subdivision approval.