The Safest and Legal Way to Buy a House Off the Plan.

To many people, buying a house will almost certainly be the biggest purchase they will ever make. One of the important considerations you will need to make when buying a property is; should you buy an established home or off the plan? While the excitement and the flexibility to choose the floor height and location of your house may be appealing, there are also some common pitfalls that you need to be aware of if you intend to buy off the plan.Despite this huge investment, many people still are unable to understand the details on a layout plan of the house, during the pre-purchase viewing. This is magnified to its extreme when the purchase is made off-plan, because many people can’t interpret the drawings or even visualise how a non existing house will look like be when finished.
This article is about buying a house off plan, but people intending to buy an established house or one that is at an advanced stage still need to factor in the points discussed in this article.

 The Benefits to buying off the plan:

 

Fixed buying price – One of the advantages of buying off the plan is that you will pay the current market price for a property, even though it will be completed in the future. You can sell at a profit later when the property gains value.
Securing a high value asset for a low initial capital outlay – While a deposit is made to secure the property (usually 10%), the entire payment doesn’t need to be paid until the property has been built. This provides you with time to organise your finances
Increase in property value – If the market experiences growth, the property you purchase off the plan today may increase in value when you settle a year or more later.
Privilege .You are able to choose a good location, with splendid view, right height.

The Risks to buying off the plan:

Falling property market – There is a risk that you may pay too much for a property if the market falls, especially to speculators who buy off plan and sell later when the house is complete at much higher profit.

Failed expectations –There is a risk that what you envision is not what you will receive. The quality of work may also not meet your standards.
Rising Interest rates – If you have bought the property with loan, interest rates could increase before you settle on the property, this will increase your remaining loan amount.
Extension of Project Duration – The project duration may take longer than the expected. This can cause serious inconveniences to buyers especially if the property was bought with mortgage, hence the pain of servicing both the loan at the same time paying rent for the current house. This can greatly disorganise your finances and negatively impart on the lifestyle of your family.
Bankruptcy – Many buyers fear the developer could go into liquidation before the project is completed. You need to ask what the options are if this occurs; will you get your money back and what guarantees do you have?

Factor to consider before you sign the dotted line……

1.Financial Capacity.

Are you buying from your savings or with mortgage? Know your financial position, your borrowing capacity and the lending policies of the bank in relation to different property types and locations.

Are you buying from your savings or with mortgage? Know your financial position, your borrowing capacity and the lending policies of the bank in relation to different property types and locations.

2.The Legality of the Land and the Developer.

Verify the legality of the land and the company developing the property. It is important to visit the lands registry so as to conduct a search of the parcel in question, the search at the lands office, will help the buyer ascertain the true ownership of the property, how genuine is it, establish whether the land actually exists, whether it is a public land, and establish the conditions and/or restrictions on the title. From the search, you will be able to establish the user of the title, verify the size of the land, and establish the history of a parcel of land. This is where you will understand how the land is and if there are any caveats, surcharges, or pending rates on it. When buying property from a company, you need to do a company registry search at Sheria House (Kenya), division of company registration, to ascertain that you are actually dealing with a duly incorporated company. This will also help you establish the directors and shareholders of the company developing the property and their selling agent.

3.The Competency and Experience of the Project team.

Research the project development team, who’s going to delivery this project? What’s the track record for the builder, developer, architect and engineers? Ask how long they have been in the industry and how many properties they have built. Visit your developer’s previous work, inspect the quality and speak to previous clients to determine their satisfaction with the property.House sold off the plan

4.What are you purchasing?

Ask questions to determine what is covered as part of the purchase price, such as, what fittings, floor coverings, painting etc, is part of the package and what is additional. How many parking spaces will you get? What other extra external amenity are included in the purchase price, swimming pool, club house, gym etc. Will the houses have underground water tank or bore hole? Electricity back up like a generator, electric fence?

5.Get Legal Advice from Professional Real Estate Experts.

Get proper independent legal advice from a specialist real estate lawyer before signing anything. Carefully review the contract with a legal professional. Understand the median apartment prices growth, vacancy rates, rents, employment statistics and demographics. Get to know the area, transportation linkages, and current and future infrastructure projects. Take note of points below.
• The completion date. Time frames around the delivery of the project.
• If you decide to withdrawal from the contract, what happens, will you be    penalised? How much will be the penalty?
• Will there be site visit restrictions during construction?
• If you can make changes to finishes and fixtures.
• What happens if the developers run into financial problems and what happens to your deposit?
• What happens if defects are identified post-completion? What is the defect liability period?
• Can you sell the house to a third-party while the construction is on going?
• How much time will you have for clearing my balance after the property is fully developed?
• Who will pay the transfer fee of documents from developers name to your name?

6.The Quality of Finish.

Carefully inspect the show house (sample house), models and plans. If the show house is exactly the same as your prospective purchase things will be a lot easier. If your property is different from the show house you will spend more time working through the differences, until you’re happy you can visualize your own property, investigate the fixtures, fittings and finishes. Take note of the fixtures fittings and finishes and ask whether your house will have the same specifications. This a very important point, Unscrupulous developers will build a beautiful show house, but will put fittings, fixtures and finishes of lower quality in the other units. In your contract know the type of electrical, plumbing fittings you will get, let the developer specify the number of coat painting on the wall. What is your floor finish? The type and sizes of windows, doors.In short know your final finishes. Discuss your expectations for the property with your developer and have them written into the contract to avoid disagreement with the developer at the completion of the project.

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