Off plan purchasing: Pro and Cons of buying a home off-plan in Kenya.
Buying a home off-plan is investing in a property that
does not yet exist. The project could be under construction or only exist as a
set of plans and a show house. There have been numerous press accounts of
developers failing to deliver on their promises, leaving customers stranded
after spending a significant amount of money on a house. In this article, we’ll
discuss why off-plan investing important, the risks involved, and whether it’s
a choice a buyer should consider.
Pros of buying a home off-plan.
It is cheap: You
save money by buying an empty box instead of a completed property. Prices are frequently
changed in stages, so early buyers can expect a substantial return on their
investment by the time building is finished.
Flexible payment plan: Instead of spending a large amount of capital all at
once, payments in home off-plan projects are spread out during the construction
term. This allows buyers to pay over time without incurring debt, allowing them
to free up cash for other purposes.
Finishes and fixtures of higher
properties reflect the newest trends, and there’s a good probability that a new
project will stand out from what’s currently on the market. But this usually
depends with the developer. You can also pick the finishes you desire, with no
restrictions on how you can personalize your home.
Cons of buying a home off-plan
Failure by developers: Buyers have been duped, and developers have gone away
with their hard-earned money, as shown in several incidents in Kenya. This is
also due to a lack of enough regulation to safeguard all parties involved.
Delays: Anyone who
has worked on a construction project knows that something is bound to go wrong,
causing delays. This has a significant influence on buyers who had made
preparations to move in by a certain date.
Unexpected lower finishing standards: Some developers may use low marketing materials to
entice purchasers, the finished product in some cases falls far short of
How to overcome the risks.
Deal with developers with good
reputations: Examine the
developer’s track record before investing in home off-plan. Have they finished
any more jobs? Is it true that they delivered them on time? Do they have
experience with this market? What capital structure do they have? Is their
budget sufficient? It’s also a good idea to check at their previous projects,
talk to customers, see what was delivered, and ask them about their experience.
It’s advisable to take your time to get more information as possible before buying
a home off-plan.
Find a lawyer to represent you: When it comes at an additional cost, hiring
a property lawyer is crucial. They will be able to
interpret complicated contracts that are strongly biased in favor of the
developer and advise you on the risks involved. They’ll also be able to examine
all supporting documents, such as land
titles and building
licenses, to ensure that you’re signing a contract with a
project that’s in good order.
Request updates: Any developer that refuses to provide customers with
updates is a major red flag. If at all possible, have a contact within the
company who can provide weekly updates or even alert you to underlying issues
that a developer may be hiding from buyers.
Ask for funding structure: Never be afraid to inquire about a developer’s funding
strategy. As previously said, a smart developer should not rely on off-plan
sales to fund a project; how can building continue if people stop buying? Which
bank is funding the debt if it’s a bank loan? What options do I have if the
developer fails and I’ve already made payments? Asking for such
information may be challenging because developers are not legally required to
provide it, but you should insist on it.
Visit the site regularly: During site visits, you will be able to observe the
development firsthand, meet with the team on the ground, and most likely learn
new facts that will be critical to your investment.
At the end of
the day, there are risks, and it all relies on your goals and risk tolerance.
Most people invest in off-plan properties as their home, so getting it
correctly is very important. Many once-reputable developers have failed to
deliver on their promises, tarnishing the real estate industry’s reputation.
However, given the benefits listed above, an off-plan investment should not be