When buying a home off-plan is a frustrating option
By David Nguthuri | September 15th 2016
Five years ago, John Mwenda decided to own a home and bought a three-bedroom house off-plan in Syokimau. Today, he and his fellow homeowners are a frustrated lot.
“I bought my house in 2011 at Sh4 million,” says an angry Mwenda. “I thought it was the best deal I had ever got.”
Today, various parts and fixtures of the house are in a sorry state. “Get in and see: the toilet bins, bathroom tubs, kitchen appliances and walls all are crumbling, and are in an urgent need of a repair that will cost me thousands of shillings,” he says as he ushers me into the house.
Mwenda isn’t alone. His neighbours are also in the same situation. In 2012, barely a year after he bought the house, he and his neighbours confronted the developer who later stepped in and settled some of the cost that they had identified in the form of peeling paints, breakages of the substandard waste water and ceramic sanitary appliances.
“We had to force him do a second finishing the moment all of us realised the shoddy work the developers had done moments after moving in. He had to do a thorough repainting and furnished the kitchen, bathtubs and other appliances with standardised items,” says Erick Wambugu, another homeowner.
These are not the only ones suffering after buying homes off-plan or already built houses. As the Kenyan real estate and construction sectors grew, off-pan purchasing grew as a way for buyers to buy into a project early and make some savings. In many cases, however, the final product is different from the promised house.
Earlier this year, The Standard ran a report on the residents of Red Hill Estate in Ndenderu, Kiambu, who bought housing units for Sh20 million each, but who have been spending a fortune in repairs. In the article, the residents lamented that they had been forced to incur costs of up to Sh500,000 each on repairs as some bits of their houses were falling apart due to sub-standard construction materials.
“Apart from drilling a borehole on their own as the estate has no piped water — despite that fact that the contractors promised running water — some residents were forced to erect perimeter walls, fence their homes and dig trenches to solve the problem of storm water,” a resident was quoted as saying.
Property indices released this year by various firms indicate that as of 2016, on average, return on investment in the real estate sector ranged from 20 to 30 per cent from the sale of developments and six to eight per cent on rentals, per year.
At the same time, demand from potential home owners far outstrip supply. This has led to the mushrooming of individual developers out to make a quick buck. “To rake in profits and take our clients away out of the perceived desperation, they are maximising on everything, creating substandard ready-made houses and flats for sale,” says Ann Murage, a Nairobi-based property manager.
But the situation has not always been bad. “Ten years ago, it took years before someone did some maintenance for a house they bought. Developers’ work by then was beyond reproach; it was a question of design not durability,” says Eustacia Mac’Onyango, an engineer.
John Muiruri, of Joyska Realtors, a top contractor and housing management company based in Westlands, acknowledges that for all the properties they were contracted to maintain before 2011, many of which were off-plan developments, it took them close to five years before the owners approached them for maintenance.
“Some of the properties we have been managing for years now, normally take us three to four years before we are called upon to fix things around. Some of these were built in the early 2000s and late 1990s,” Muiruri says.
“It’s not the same case for the new developments being sold today,” adds Muiruri. “Many people are yearning for a life free of a landlord. Equally, the living space in Nairobi is growing smaller by the day. This is making some developers do their work in a hurry to meet the demand,” says Muiruri.
“As everyone shies away from paying an extra coin for rent, the focus has shifted into owning a home in Nairobi as fast as possible. Those who have access to loans prefer servicing a home loan after paying in cash to developers other than paying a similar amount to a landlord. They end up going for off-plan units because they are readily available, especially for home loan buyers,” says John Mauta, a credit bureau expert.
The choice to buy a ready house is a departure from the tried and tested way of buying a piece of land and build your own house. It frees a buyer from the headaches associated with overseeing a construction project and the attendants processes.
Some view the conventional build-yourself model as a way out. According to Samson Kimathi, an engineer with Geomap Surveying and Engineering Co Ltd , the cost of buying land and constructing a house in Nairobi is much cheaper than going for off-plan or ready built houses. “When doing it traditionally, one receives bulk discounts on building materials, which are then reflected in the home’s cost, saving on the cost of construction,” he says.
For example, he says, building a three-bedroom house in Syokimau, exclusive of the cost of land, one can spend Sh5 million on the lower side, depending on the house design and other architectural choices. A similar ready-built apartment unit in the same area sells for about Sh13 million.
Kimathi adds that the finishing is the most tedious and costly aspects of home building. Ironically, this is where some developers are going wrong. They are using attractive but cheap imported finishing materials to complete the work, which appeal to a buyer’s eyes, when they are being taken around by a sales agent.
However, not all off-plan or ready built homes are faulty. According to Fedice Nyaboke, a chief investment officer at Kenafriq Investments, this kind of investment, be it for commercial purposes or settling down, needs a buyer who understands what they want.
“As Nairobi experiences rapid population and urban growth of 2.4 per cent and 4.4 per cent, respectively per annum, coupled with an increased demand for housing due to the continued families growth, those planning to settle down should be careful when making these purchases. They need to understand how these plans work to avoid being taken advantage of,” says Murage.
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