The Cons of Buying a Home off Plan in the Kenyan Market do exist. However, the pros always outdo the cons.
This is an arrangement where a home buyer buys a property before it is constructed or complete. In most cases, the purchase is in form of a 10 to 30% deposit towards the total sale price.
Off-plan purchasing is a trend that has seen many aspiring homeowners acquire their dream properties by putting their money on nothing more than an architectural plan and a good vision.
Buying a Home off Plan can be somewhat daunting especially if you have never done it before. Moreover, it is a route to homeownership that some consider risky, but one which has proved very rewarding for others. This is especially so if the project is located in a high growth area.
For many, the appeal of an off plan is that the property is brand new and buyers can secure a unit on the day of launch simply by putting down a relatively small deposit. Here are some Cons of Buying a Home off Plan in the Kenyan Market.
Unpredictable Market Trends
There is a certain level of uncertainty when buying property off the plan. If the market goes up, then you made a good bargain. If the market remains flat or goes down,
Difficulty in mortgage
Despite the ease of having the paperwork done for the buyer, Richard says mortgages can be harder to obtain.
“It’s difficult to establish the value for a new build compared with older properties where there are immediate comparables,” he says.
If the prices are inflated, the lender may not be prepared to give you a mortgage. As in the case of repossession, it may not get back the original amount loaned to the buyer.
Cons of Buying a Home off Plan: Loss Of Deposit
Of course, one of the big risks for buyers is losing their deposit should the developer go bust.
For this reason, it is important to check that there is a clause in your contract that details if the development doesn’t go ahead, you will be reimbursed in full.
You should also do some background research on the builder and go for off the plan developments constructed by bigger companies that have a good reputation. That way the risk will be much lower, plus you’re more likely to be approved for finance as banks prefer to approve off the plan properties constructed by reputable builders.
Construction goes over the sunset period
One of the biggest stories doing the rounds in the media is around developers canceling contracts due to construction running past the sunset date. They then sell the property at a much higher price.
If your property is taking longer than expected, ensure your developer updates your contract. This ensures that the sunset date falls at a later date than construction completion. As we mentioned previously, it’s important to ensure that in the worst case scenario of you being pushed out of the contract, there is a guarantee stating you will receive your deposit back in full.