Developer sweetens deal for buyers with new payment model

A developer has introduced a new payment model that gives home buyers up to three years to pay up.

Superior Homes Kenya, developers of the Greenpark housing project in Athi River, will allow purchasers to pay at least a 10 per cent deposit of the selling price, another 10 per cent a month later, and the remaining 80 per cent in the next 36 months. The price of the house will remain fixed over the period.

Dubbed ‘Buy over the Long Term (BOLT)’, the concept is a tool for prospective buyers who have good cash flows and who do not wish to be tied down by costly mortgages over long periods of time.

Buyers will be allowed to select their houses off-plan six to nine months before completion. Any balance remaining after the full installment period must be cleared ahead of the key handover.

 Instalments

The developer says the BOLT instalment plan will be tailored to suit the cash flow of buyers, especially those in seasonal businesses that produce cash surpluses over certain months of the year.

“Each BOLT sale will be evaluated on its own merit in consideration of the financial ability of each individual,” says the company’s managing director Ian Henderson. The concept, he adds, offers a number of benefits over current payment methods.

“The price will be fixed through a legal contract and will not change in any event, including rises in interest rates, increases in the cost of building materials or increases in house prices to other buyers. This move will also make lenders become more innovative and offer products that resonate well with prospective homeowners,” says Henderson.

Henderson says this is more of a leap of faith considering that it is the developer that will ultimately expose itself to the vagaries of the market such as a surges in the cost of construction materials or any hike in the cost of borrowing for construction purposes.

However, the developer says the such factors can be mitigated with some foresight. Henderson says having undertaken housing construction for some time now, he can gauge the average cost of construction materials in any given period, thus projecting average prices within the full payment period.

 Risk

In addition, the installments will also go along way in developing individual houses, thus lowering the developer’s risk of heavy borrowing for construction purposes.

“Superior Homes is able to manage this fixed-price installment offer through the advance bulk purchase of construction materials at a fixed price locally and from overseas,” he said.

However, there will be a small price to be paid by defaulters. In case the buyer’s circumstances change and he wishes to withdraw from the transaction, he must give the company 30 days notice. In such a case, all payments will be returned to the buyer less the portion of the initial payments made to cover administration costs.

And if a buyer is late in paying installments by more than seven days, a warning letter will be issued. If this occurs on more than two occasions, the company will have the right to cancel the sale and return the buyer’s payments less administrative costs.