Check new properties for snags

Off-plan properties are an attractive option for many people, but who protects the buyer from unsightly finishes, visible defects and homes not built according to the original plan?In the face of interest rate hikes and slowing property prices, the building industry remains steady with an ever increasing demand for properties built off-plan. These properties are an attractive option for many people, especially first-time homeowners, for a number of reasons. Most of the properties progressively appreciate, buyers save on transfer fees, are often allowed to choose their own finishes and they are afforded the protection of a secure complex.

But who protects the buyer from unsightly finishes, visible defects and homes not built according to the original plan?

Today’s market demands tighter deadlines which involves contractors employed “on price”. This has produced a trend to cut corners and therefore lower the standards of workmanship. Some new developments are also built by sub-standard tradesmen who have very little supervision or quality control. All of this can amount to a homeowner taking occupation of a dwelling that is riddled with defects and well below the accepted standard.

“Buyers need to understand the importance of snagging their new home,” says Eric Bell, CEO of Inspect-A-Home, a professional inspection company often called in to carry out professional snags.

Snagging is where the property is checked thoroughly for defects and poor finishes. This can be anything from poor paintwork to badly hung doors, broken window-catches and faulty sockets.

“Our inspectors have found floor tiles with no expansion joints, geysers not installed according to regulations, roof trusses not braced securely and a host of other defects.”

“Buyers mistakenly believe that they are covered when buying a new build from a reputable developer. What they don’t realise is that the developer often sub-contracts to building contractors, who are under pressure to complete the units within a certain timeframe. This results in short cuts being taken and best building practices not always being followed.”

“We often list between 100 – 200 snags per dwelling and have found some new homes with far more than that.”

Bell recommends a snag list is completed prior to occupation. This ensures that no defects or poor finishes are hidden by furniture or appliances. He says that it is best to go through the property a few times before completing the snag list as often a second visit will reveal further snags.

Once completed, the snag list should be handed over to either the site supervisor or the site agent so that the items listed can be attended to. This can create its own share of headaches as the builder often has moved on to the next phase of housing or to a completely new development.

“Developers put pressure on buyers to pay in full and then only complete a snag list after they have taken occupation. Obviously this serves only in the developer’s best interest.”

“Buyers should consider inserting a ‘retention clause’ in their contract,” mentions Bell. “This is where a sum of money is held back until all the snags in a property are put right. They should speak to their attorneys about including this when they sign the initial contract. It is a way of holding the developer accountable, ensuring their snags are dealt with and that they receive the quality home they were expecting.” 

Buying a home? Have it checked

When buying a second-hand car, most people will have it checked by the AA or a mechanic to make sure it is in good working order. So why then, when a property is one of the most expensive purchases a person can make, do purchasers not get their homes checked out properly before they commit to buying?The most common defects in residential homes are found in the roof structure and the foundations. Eric Bell of Inspect-a-Home says many of these are structural defects are severe, but are patched cosmetically and don’t look serious to the untrained eye.

“I recently inspected a 35-year old home where there were serious roof problems. The owner had put a layer of sawdust in the ceiling to prevent leaking when it rained and of course when the sun came out, the sawdust dried up, and no one would be the wiser.”

In many cases the structural beams in roofs are rotten and need extensive repairs but this is a problem that will be discovered only if the roof is properly inspected.

Bell explains that cracks in walls are also a common problem and it is often caused by blocked drainage which affects the foundations. Many sellers then simply use polyfiller to cosmetically repair these cracks, when in actual fact the foundations need to be underpinned.

Underpinning a home is a fairly expensive process where the weight of the building on the foundations needs to be transferred to special pads to stabilise the crack. The plaster then needs to be taken off the walls so that 90° grooves can be cut across the crack. The cracks are further stabilised by metal stitching. The crack is then filled with epoxy and mortar, further strengthened with chicken mesh before it can be replastered and painted.

In one case Inspect-a-Home supervised a repair job on a house that cost the owner in excess of R50k to metal-stitch and repair the cracks in the walls.

Bell talks about a variety of horror stories and although he has been in the business for nearly 20 years, he is still shocked at how trusting people are when buying a home.

“Buyers should not take what the seller says about the condition of the house at face value. They should always have the home inspected by a professional before committing to purchase.”

There was a recent case in which a house in Pietermaritzburg had a huge problem with cracks and the whole kitchen had shifted by 45mm. The engineering report had found nothing wrong with this home before the owner purchased, but now he is stuck with about R373k worth of damages that he has to repair.

The swimming pool area was of concern as no expansive joints around the pool edge or between the pool and the house were installed during construction. Due to normal expansion and contraction, the ceramic tiles laid were guaranteed to crack and de-bond without any expansion joints being installed.

Bell warns that the “voetstoets” clause in many sales agreements protects the seller exclusively and that often, whether maliciously or unintentionally, the seller and/or the agent do not disclose the defects.

Bell says if the buyer can prove latent defects, then the seller could still be held liable for any damages or cost of repairs.

“All those who are looking to buy a property should ensure that the offer to purchase is subject to a favourable report by a qualified inspector. Once any defects have been disclosed to the owner/seller, it is fraud if it is not disclosed to the buyer,” says Bell. 

Makeover apartments sell well

There is significant potential for developers in the refurbishment and upgrade of older apartment buildings, while for buyers they offer a solution to the problem of housing affordability.A classic example is a circa 1950s development in Beyers Park on the East Rand which has been brought to the market by the original owners, a syndicate established decades ago.

In the space of five months 40 units have been sold at prices ranging from R560k to R590k for units that average 100sq m in size.

Homenet’s George Rennie, which has the mandate for the two blocks, says prices for comparable, recently-built units would be at least 10% to 15% more. Alternatively, the same pricing would buy a unit of about 65sq m to 70sq m at today’s building costs.

Lance van Heerden of Homenet George Rennie says the ideal formula for developments of this nature is well-built, low-maintenance structures close to all amenities and with full security.

In that sense Edelhurst and Sandhurst, the two blocks in question, fit the profile ideally, he says.

The blocks are U-shaped and are set in spacious gardens. They were sectionalised in 1994. A typical unit comprises lounge, separate dining room, kitchen, double lock-up garages, two bedrooms and two bathrooms.

“In today’s terms this is a lot of accommodation for the price, notwithstanding the need for a degree of refurbishment.

“Position-wise the blocks lie roughly equidistant between the Lakeside Mall and the East Rand Mall, they are close to all the other important amenities and offer easy access to the N12 highway.

“Interestingly about 65% of the buyers have been investors and there is a thriving demand from tenants as well as a strong likelihood of capital appreciation although to date, no re-sales have been made, indicating that investors see this as a medium to long-term prospect. The buyer mix is also worthy of note, ranging from young couples right through to retirees.

“Clearly developments such as these, to be found in all the major centers, fulfill a distinct need.”

Estimate the vacancy rate before you invest

There are very few rental properties that will be occupied 100% of the time, but the vacancy rate can vary considerably – and make all the difference between a good investment and a bad one.

“So before you buy an investment property, you should look at the factors that could affect the vacancy rate in future, the first being the overall availability of rental property in the area,” says Berry Everitt, MD of the Chas Everitt International property group.

Writing in the Property Signposts newsletter, he explains that if there has been overbuilding, the vacancy rate in individual units will rise and it will be difficult for landlords to raise rentals.

“But if the local population is expanding faster than the number of units required to provide housing, the vacancy rate per unit will fall and higher rents will become possible.”

Secondly, he says, investors should consider the position of the rental property within a particular area. Drive-by traffic generates many rental leads while the hard-to-find property is likely to stay vacant for longer. “Potential tenants usually also prefer properties that are close to schools, shopping centres, public transport and arterial roads.”Everitt notes that property condition can also have a significant impact on the vacancy rate.

“Tenants don’t only move because of life changes such as a new job or a new baby. Rental homes need to be well-maintained or any rental increase will swiftly prompt a move to a newer or better-managed property – leaving you with a vacant unit that will in all likelihood have to be cleaned, painted and repaired anyway to attract a new tenant.”

Article from CyberProp