How to get value for your money in an off-plan home purchase

Saturday October 18 2014

A building under construction. Housing experts warn that many off-plan buyers are being swindled into paying more for homes that, in essence, cost much less as developers often compromise on quality to cut costs. PHOTO | FILE |

A building under construction. Housing experts warn that many off-plan buyers are being swindled into paying more for homes that, in essence, cost much less as developers often compromise on quality to cut costs. PHOTO | FILE |  NATION

By KENFREY KIBERENGE
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Many off-plan home buyers do not get value for their money, real estate experts have warned.

The housing experts say Kenyans should take precautionary measures while buying houses off-plan to avoid being swindled.

With the craze for home ownership pushing prices beyond the reach of most Kenyans, many buyers have learnt to skirt around by buying off-plan where one purchases a house based on the plans of a building that has not yet been built.

Such houses are cheaper — at times by up to 40 per cent — compared to the finished product, according to National Construction Authority chairman Steve Oundo.

But according to Martin Tairo Maseghe, a director at Architecture Kenya Media, there are actually no advantages of buying off-plan except for the discounted price one gets.

“And this is not a real discount as the developers use your money to build,” he says.

Real estate investors were rattled a fortnight ago when a group of disgruntled house buyers took a developer to court, citing breach of contract.

The investors alleged the developer had failed to fulfill an undertaking to provide services that formed part of the agreement for the purchase of the houses.

In the suit papers, there are claims that the company had promised to construct commercial buildings, a shopping mall, a school, a clubhouse, a hotel, a car park and playgrounds, among others. All these are missing.

WARNED BUYERS

Mr Maseghe warns buyers not to be swayed by fancy advertisements as many developers promise more than they can deliver, in a bid to entice buyers.
“Images of swimming pools, club houses, health clubs, restaurants, etc will always be displayed in marketing brochures but these will in many cases be missing in implementation as developers strive to save on costs,” he says.

To avoid such pitfalls, Mr Oundo advises buyers to first look at the profile of the consultancy team.

“Who is the architect; the quantity surveyor, structural, electrical and mechanical engineer as well as the project manager? If they have a history of swindling clients or using substandard materials, then you should run,” he said.

Mr Francis Gichuhi Kamau, an architect at A4architect, says since construction is largely unregulated, buyers are usually left at the mercy of developers with little or no quality control input mechanism to protect them.

“Buyers will have to set up their own personal mechanisms such as hiring independent professionals to counter-check quality until such a time when such laws will be in place and enforced to ensure consumer protection,” said Mr Kamau.

Indeed, Mr Oundo said NCA can only take action against proven claims of fraud against contractors, since they are the only ones directly under their supervision.

Mr Maseghe says developers ought to rope in professional consultants to advise on the designs and costing for the project.

“It is up to the developer to ensure that they have adequate funds in place to build. This is completely out of control of consultants,” he adds.

Mr Oundo, who is a developer, argues that a contractor’s record and their past projects can inform a buyer’s decision.

“If the contractor has had successful projects in the past, then you can rest assured that he or she is in it for the long haul, not to rip off buyers in one project and then go underground.”

He also says buyers should avoid vagueness in the contracts.

“Insist on clarity of the drawings; don’t accept general statements such as spacious rooms. Get the true measurements, preferably done on the ground,” he says.

“Also don’t sign if the contract says tiled floors or nice windows; have the developer tell you the type of tiles and glasses so that you can decide.”
The NCA boss says that where every detail is clear, arbitration will be easy.

Mr Mwiti Kaburu, an advocate of the high court and real estate expert, says purchasers should protect themselves by getting the developer to bind themselves through a contract.

“This means the purchaser should ensure that there is in place a watertight sale agreement with specific provisions on the timelines of completion, standard of finishes and the consequences of breach by each party,” he says.

Mr Maseghe advises buyers to ensure that the contract provides for certain damages should the developer fail to deliver, or if the project is delayed. “If there is none, then the risk is high for the buyer.”

Mr Kamau adds that buyers can also opt to retain independent architects, engineers and quantity surveyors to advise them throughout the construction process.

“If buyers insist on the architects, engineers and quantity surveyors involvement in supervision of construction, chances of technical problems are reduced to nil,” he says.

In addition, investors are advised to keep tabs on the project by frequently visiting the construction site to assess the project.

“People are very good while making a prototype but poor in the real product so don’t be comfortable. In my projects, I always insist that the contractor should bring me a sample at every stage,” says Mr Oundo.

“Is it a tile? Let me see the sample. Is it a window pane? Bring a sample, etc.”

Lawyer Kaburu advises clients to investigate the financial stability of the developer.

“Further, the purchaser can get the developer to guarantee their financial stability in writing,” says Mr Kaburu.

The lawyer says buyers should get the developer’s commitment in writing complete with the timeframe within which the property will be completed.
“You should also ensure they know what their remedy is if the developer breaches the agreement in terms of the final construction, the timeframe or any other condition agreed upon by the parties,” says Mr Kaburu.

“There should be a specific remedy set out in the contract for each of the anticipated breaches.”