Why home buyers face scary times in this Covid-19 pandemic
Steve Umidha @UmidhaSteve
Aspiring homeowners continue to grieve in the hands of rogue property developers now using the ongoing coronavirus pandemic to dupe clients of their hard-earned money.
Fuelled by the dazzling wealth of investors, especially in the diaspora, these steroidal tactics by off-plan housing developers are now causing irreparable harm to gullible home-buyers if recent revelations that a local real estate developer had failed to deliver houses to buyers two years after starting their projects, is anything to go by.
Off-plan investment refers to the purchase of property before completion and is usually marketed to real estate developers and to early buyers to secure more favourable finance terms from their lenders with property speculators purchasing off-plan property with the aim of making substantial capital gains.
There have been rising complaints over missed completion timelines and lack of information on final products in off-plan housing projects while customer trust, according to industry experts, has also been eroded in a critical sector whose growth rate is this year expected to reduce significantly owing to effects of Covid-19.
“The housing challenge can only worsen if this trend of developer-buyer trust issues persists.
The biggest losers will be Kenyans. Majority will not be able to realise their big dreams of owning a home,” says George Mburu, a director at Mizizi Africa Homes.
Kenyan property developers, homeowners and landlords have been benefiting from the property boom and buoyant housing market in recent years – even after the introduction of interest rate cap in 2016, but recent complaints in the off-plan housing schemes as well as growing uncertainty in the sector according to Questworks chief finance officer Tim Kipchumba could further slow the sector’s growth.
Nairobi – and especially its environs, where stratospheric land values now beget bloated developments, has become a target of cash-rich investors looking to buy homes but lack time to develop on their own, and often chose to enter into sales agreement with property developers to supervise the project in their absence.
This routine is now proving to be a costly affair with most homeowners now reeling from lost investments and constant legal fights with rogue developers – with missed time frames to deliver such projects also affecting the buyers’ financial plans.
Developers have also been blamed for delivery of substandard products hence the buyers do not get value for money unlike when paying for a complete unit, where a buyer has the liberty to negotiate the purchase price based on tangible evidence.
A recent study by Sagaci Research and McKinsey showed that 60 per cent of Nairobi residents were considering buying ready-to-occupy apartments over off-plans due to emerging concerns on developer reliability – even though it was not the best option when “economic and aesthetic value aspects were placed on the weighing scale.”