The pitfalls of buying in a new development and how to avoid them
There is a need for the property sector to inform the public about potential difficulties and possible pitfalls that most buyers of new homes face when they come to making their choices.
This is according to Rowan Alexander, Director of Alexander Swart Property, who says that as this is unlikely to happen, the least estate agents can do is to repeatedly remind buyers that they must learn all they can about the negotiation and sale process, as well the dangers that might have to be avoided.
The first, is that the completed home could be significantly different from what the buyer thought they were getting, when they initially saw the plans and signed a purchase agreement.
He says laymen quite frequently misinterpret plans and some developers have a way of getting round 100% compliance with the plans. Those not familiar with plans can fail to realise that features such as cupboards, electrical plug points, floor and site levels, need to be explained and clarified. Buyers have been known to show surprise and annoyance when, for example, they discover that there are one or two steps between one rooms, or that cupboards cover only half the space they thought was allotted to them.
To the layman the plan may mean one thing, to the developer another
A further cause of dissatisfaction among buyers is often as a result of not understanding certain legitimate ‘extra’ costs: they may, for example, find that they are liable for all water and electrical connection fees, for approval of building plans by the municipality and for the interim interest on building loan agreements during the construction period.
Buyers may also find that they have been charged for NHBRC enrolment fees, e.g. the state’s protection to the buyer against subsequent failures in the building. The only remedy for these and other costly annoyances, is for the buyers to ensure that they fully understand every clause in the contract before signing it.
Such problems can be exacerbated by contracts containing a clause which allows the builder to change the plans ‘moderately’ as they go along. In the best cases, this is done to improve the home or to cope with some unforeseen difficulty.
In the worst cases, the aim is simply to increase the developer’s profit or to make the task easier. Buyers have been angered, for example, to find that the entrance point to the project has been moved (and is now right opposite their home) or that a promised park area has been relocated.
Some sale contracts include a clause that actually allows the developer to reduce the size of the home by 10% without the buyer’s permission and compensation, which can be exploited by a less than transparent developer.
In some well-documented cases, Alexander says an unscrupulous developer marketed their product on the promise that the development would have 50 homes after receiving only 30, or vice versa. In other cases developers have been known to market and sell the development before they have received official approval from the relevant authorities.
For all these and similar reasons, Alexander says it is essential that buyers get to grips with, and fully understand the negotiation and sale process. They should make sure that they look into the developer’s reputation, visit previous developments and ask for telephone numbers of previous buyers.