How To Buy Off-Plan Properties In Kenya
Off-plan property refers to purchasing property in its construction phase. In Kenya, the off-plan properties are sold at a lower price, and the price appreciates as the project progresses. The potential for capital appreciation for the completed homes is a significant attraction for investors.
Real estate investors are allured by the lower purchase prices for off-plan investments, which has driven the trend's significant growth in recent years. Capital appreciation, however, is not always guaranteed. As with any other investment, there are risks and benefits. These dualities emphasize the importance of carefully evaluating the rewards against the risks before committing to an off-plan property investment.
Below is a comprehensive guide on the critical steps when buying off-plan property.
Once you plan on buying any off-plan property, you must do a detailed investigation of the projects and the developers. Research various projects for property purchase and check off those that meet your requirements. You must do a background check on the developer's track record, reputation, and financial stability.
You should also assess the project's future market potential by examining its feasibility, accessibility, location, and infrastructure development. A detailed examination of architectural plans is necessary before finalizing an off-plan purchase.
Conducting and performing due diligence and complying with the legal framework about buying off-plan properties is essential. Hire a qualified real estate attorney to help with the legal due diligence process and review all legal documents. The lack of specific legal frameworks makes off-plan investments risky and has legal implications.
The lawyer can conduct research and ensure the developer has a valid title deed for the land on which the project is being developed. They also check for approvals to ensure the developer has all the required approvals and permits from relevant authorities.
The real estate lawyer helps draft and thoroughly review the sales agreement, including the purchase terms, payment schedules, obligations, and timelines. The contract should comply with Kenyan laws and protect the parties' interests.
Before signing the sales agreement, negotiate any terms that might seem unfair or unfavorable, and once everything is clear, sign and pay for the initial deposit.
It is essential to have a clear understanding of the payment schedule and ensure it fits your budget. Payment structure plans should be transparent and manageable for the buyer. Most off-plan purchases require flexible payments, such as milestone payments, to protect the buyer's interests, and the construction is in continuous progress.
Lenders offer several mortgage options to help buyers manage the payments to purchase off-plan properties. Ensure that you choose a lender that suits your needs or considers the developer's housing financing options.
It is very important to monitor the progress of the construction; this is not an investment you forget about. The developer should provide progress reports from the developer and the architect in charge of the project. Regularly asking for updates and doing site visits ensures the developer meets the agreed specifications and timelines.
Buyers dread the risk of construction delays, but some things are inevitable, so what do you do at this stage?
First, dealing with delays requires a buyer to understand the provisions in the contract regarding construction delays and how they are to be handled. Ensure any time extensions are justified and documented.
Conducting a thorough inspection upon completion is recommended before finalizing the buying process of the purchase. A home inspection before the property handover process is essential as it helps identify any defects or issues that must be addressed.
Any defects identified should be communicated to the developer to ensure they can rectify them before the final handover. Once the unit is free of issues, the developer must hand over the property with all the necessary transfer documents.
The transfer of ownership requires a legal lawyer to prepare the necessary transfer documents. It also comes with additional costs like stamp duty payment, which is 4% of the property value. The transfer documents are then lodged at the Lands Registry for registration.
In case of unresolved disputes, you may seek legal recourse through the courts. Ensure your lawyer is involved in all stages to protect your interests. These steps ensure you have a clear understanding of the recourse to protect your investment and seek resolution even if legal issues arise.
Seek legal advice from a qualified real estate attorney who can help you understand your legal options, review your contract, and determine if any clauses support your claims.
In some cases, issues can be resolved through negotiation or mediation. Many contracts require that disputes be addressed through mediation before any legal action. A mediator can facilitate discussions and help you reach an agreeable resolution with the developer.
If the developer has violated property laws, regulations, or consumer codes, you may file a complaint with relevant authorities such as the local real estate regulatory board. These bodies can investigate and may impose penalties on the developer.
If your sales agreement includes penalty clauses (e.g., for construction delays), you can request compensation based on these terms. This could involve financial reimbursement or a reduction in the purchase price.
If the developer fails to deliver the project or deviates significantly from the agreed specifications, you may be entitled to a refund. Based on the contract terms, your attorney can guide you on proceeding with this claim.
If other avenues fail, you can file a lawsuit against the developer for breach of contract, seeking compensation, or forcing the developer to fulfill its obligations. This is a more time-consuming and costly option, but it may be necessary in serious cases.
Many jurisdictions require developers to offer warranties or abide by a consumer code. If available, leverage these protections to claim compensation or repair services for quality issues.
The property market for off-plan properties in Kenya offers a promising investment opportunity but requires careful consideration of potential risks and due diligence to secure a rewarding experience. Buying off-plan is a great way to purchase a property below its actual market value, which makes it a unique opportunity to own a home at a competitive price.
First, it is essential to assess the developer’s track record, review architectural plans, and seek legal advice to understand the legal implications. Engaging a qualified real estate attorney helps buyers navigate the off-plan property market, verify legal documents, and conduct due diligence on project viability. An initial deposit typically secures the property, followed by a structured payment plan aligned with construction milestones.
Additionally, buyers should negotiate a clear payment schedule, understand the sale agreement terms, and inspect completed developments for quality assurance. Monitoring construction progress and relevant county government approvals are also crucial. With these steps, real estate investors can make informed decisions, leverage competitive prices, and reduce legal risks, making off-plan property investments in Kenya a secure and potentially profitable endeavor.
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Conveyancing ( OFFPLAN transactions) - kenya school of law advocates training programme page: 1. Studocu. (n.d.). https://www.studocu.com/row/document/kenya-school-of-law/conveyancing/conveyancing-offplan-transactions/73877026
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