Is seeing believing? For some off-plan buyers, brochures do not tell the truth

In 2013, Ms Juliet Mazera decided she needed a house to call her own. After searching all over Nairobi for a house that would fit the bill of what she wanted, she stumbled upon a swanky gated community off the new Thika Highway on Kamiti Road.

The property development, which we cannot name in this article because the developers refused to talk to us, was the perfect place to be; the houses were modern, the location just a few minutes drive from Nairobi, the gardens lush, the walkways cabro-paved, a huge perimetre wall to ward off louts, they were putting up a school inside the development... everything was perfect, and Ms Mazera was hooked.

At the time the idea of gated communities was just beginning to pick up, and this was high up there in the quality and affordability scale. Phase One and Two were already complete, and oh, weren’t they beautiful on the glossy brochures!

“For Sh7.6 million, we were offered a three-bedroom house in a gated community that had a fitness centre, a clubhouse and abundance of fresh air, among other appealing attributes,” says Ms Mazera.

She wasted no time and started dealing with the taxing paperwork that comes with buying a house. The developers assured her that they were in the process of putting up a clubhouse and a shopping centre, and that a kindergarten was in the works as well.

Her priority was the kindergarten within the small, exclusive community that the developers were introducing on Kamiti Road, for she had a child who was soon to begin schooling.

About a year earlier, Mr Robert Mugambi and his wife had also moved into the neighbourhood, based on almost similar promises.

“We were searching through the Internet, opening website after website, when the development popped up on the computer screen,” says Mr Mugambi.

CONVENIENCE UNMATCHED

“The convenience the place offered, we believed, was unmatched, and so we decided to explore the place further through virtual tours. We never visited the site before making the purchase as we believed what we were being told by the agents. After all, why would the developers lie when they know you are going to live there permanently?”

The Sh5.8 million they were asked to pay for a fairly large house in an exclusive neighbourhood, complete with a swimming pool, a playground, kindergarten and ample parking, seemed like a bargain to them.

Two years later, however, the Mazeras and Mugambis are beginning to have reservations about the deals they got themselves into, as none of the amenities promised have been provided. The kindergaten they were told would be put up within the residence, they say, is now a Chinese restaurant, while the clubhouse is now an office.

Even worse, on the space that was initially designated to be a playground now stands a police post, and a shallow sewer continuously leaks, making the area uncomfortable to live in. The homeowners, like many others around here, feel betrayed, and their frustrations boiled over into a protest on June 12 this year.

They are, however, not alone, because, as the real estate industry grows, prospective buyers are being forced to pay upfront in order to secure houses through off-plan buying due to high demand. In an off-plan purchase, a buyer pays for property which is not yet complete.
Lawyer Mwiti Kaburu says the trend is picking up pace as this is the most affordable way to buy property.

“At the start of the project, developers are keen to secure more sales to enable them proceed with the project, hence the prices are lower when the project is starting,” he says.

“In addition, it offers you more time to save money to buy the property, particularly if construction hasn’t started yet, so you won’t necessarily have to borrow as much.”

But, on the flipside, this can be a risky venture if not done with proper due diligence, or if one is dealing with a rogue developer.

“The most common problem is delays in completion of the project, meaning that it might not go according to your plans. This could lead to serious inconvenience to an investor, especially if you wanted to resell the property,” he says.

In addition, he says, complications could arise if the buyer changes mind in between buying the property and moving in.

“You could lose your job, your marital status or health status could change, leading to a change of needs. This may create financial constraints or change of mind regarding the property,” he says.

There is also a chance the property may fail to meet the expectations of the buyer as most of the times the buyer makes a purchase based on the artistic impressions of the property.

“The artist’s impression may not be reflected on the actual project, leading to disappointment on the part of the investor as it might not be as big or look as nice as you thought,” explains Mr Kaburu. “In other cases some developers promise what they cannot deliver. They promise investors nice things like swimming pools, playing grounds and so forth and fail to deliver them intentionally.”

In April this year, residents of Delta Plains Estate along Mombasa Road in Nairobi filed a case in court against Delta Corporation East Africa.
They claimed the developer had promised them that a shopping complex would be part of the estate, situated just a few kilometres after Mlolongo. A juice bar, shops and a fully equipped gym were also advertised as part of the complex.

However, upon completion, the residents argued, the complex changed ownership and was turned into a nursery school. Furthermore, the school tapped into the community’s sewer system, causing a strain on the system.

Residents of another gated community along Kiambu Road are also crying foul. Like the ones on Kamiti and Mombasa roads, they too accuse the developer of the estate of not meeting their expectations on time as promised.

“We bought a house knowing that we would have a shopping centre and a school, as assured to us by the developer,” says Ms Wangechi Gitahi, one of the residents. “But the developer told us that the reason we would not get our amenities in time was that the place they were hoping to put up the amenities housed their offices at the time.”

DISHONEST

Although it is unclear whether these developers are dishonest or are simply unable to deliver the promised amenities, the Kenya Alliance of Residents Associations (Kara), which handles such cases, says the problem is largely caused by dishonesty.

“Many developers relax when they get the money from the buyers and they choose to maximise on the profits they get by minimising on expenditure,” says Mr Henry Ochieng, the association’s deputy chief executive officer.

“They also pry on the weakness of purchasers not being organised into a neighbourhood association so that these issues can be handled as one entity.”
The only common thing among the residents of gated communities often tends to be the fact that they live in one area and most of them lack neighbourhood associations. As a result, in case of a problem, they are unable to seek a common solution.

Mr Mwenda Thuranira of MySpace Properties thinks part of the problem could be as a result of over-marketing by developers. “If you are selling a unit for, say Sh10 million, and as the construction goes on and you notice that the prices shoot up, you may need to choose to give essentials and do away with luxuries, as long as you communicate this to your clients,” he says.

He also says that the real property market is mostly controlled by agents who would tell buyers anything and therefore it is upon the buyers to do due diligence on the property as this is a “high-risk” business.

Buyers should also ensure that the developers commit themselves contractually before making any payments. The sale agreement should have specific provisions on the timelines of completion, standard of the finishing of the house and the consequences of breach by each party.

Lawyer Mwiti Kaburu says the purchaser should discuss his expectations at length with the developer, and their agreement reduced into writing. This ensures both parties are operating on the same page.

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

Buyers, too, should do a background check of the developers they are intending to deal with as some of them may already have a bad reputation.

“Find out who the developer is and check their previous work and their current financial status. What other projects have they done, and have they always delivered? Were other buyers happy with the end results? Further, the purchaser can get the developer to guarantee their financial stability in writing,” he advises.