T This column is brought to you by Peter Allsopp, MD of the National Home Builders Registration Council from 1995-2000 and member of the Estate Agents Board 1996-2000, who is now in private practice providing trouble shooting and consumer protection services to Home Owners who are in difficulties with their homes.
With the price of new homes getting higher and higher every month (ABSA say the price of new homes is increasing 26% each year) more and more erstwhile first time home owners are falling out of the affordability net.
There is not too much one can buy in the less-than-a-million category in Jo’burg. That means that unless you get a government subsidy, one has to have a family income of around R40 000 per month.
What about all those families/people who don’t earn this much?
Well the same dilemma occurs all around the world. This is not just a South African phenomenon.
The answer lies in the many developers who find an affordable product, usually based upon economies of scale, where they can cram lots and lots of affordable (read smaller) new homes for the discerning new home buyer (read younger/less affluent).
Now this all sounds great, you say. The lack of product determining the market, or as our business experts would rather say, a demand-driven market economy!
Now most of our regular readers will know that at Baobab, we tend to be somewhat sceptical about all this good-for-you hype. The reason is quite simple; whilst there are many good and well intentioned developers out there; we have seen far too many rip-offs in the business.
Let me give you some guidelines as to how this works.
Firstly Mr. Suntan has grown from being a simple builder into a developer. He likes this, because he can now wear a shirt and tie instead of vellies and kort broeke.
He links up with someone who owns a piece of land, they get together with an Architect and Town Planner, who are briefed to “maximize the return on investment”, this means cram as many units into the project as possible. But Mr. Suntan’s Architects are cleaver, they dress the units up with all the latest Tuscan-architectural features and they look great!
Come Sales Sunday the units sell like hot-cakes, they are bound to, they are selling “From R399 000”. This means there is one unit at R399 000 (down by the waste skips) and all the rest sell from R499 000 to R799 000.
Why don’t we say from R500 to R800 thousand?
Now whilst this is perhaps double the advertised amount, because of the affordability of these units, associated with the pretty pictures and the sales hype, they DO sell and happy-happy for the developer they haven’t even had to build a show house. All they needed was a R1000 shade cloth gazebo and some sales brochures.
The sting in the tale only comes when the suckers, oops I mean the buyers, want to move in.
Firstly many of the contracts, will have so many subject-to clauses, one wonders when the units will actually be built. It is not uncommon for the sales to have taken place 12 months before subdivision of the land has taken place. This is because Mr. Suntan wants to make sure he can sell the units before he has to spend the many thousands required to subdivide and obtain planning permission for the development.
Secondly the specifications of the homes are reduced to about 20 lines on the back of the contract. This gives the Developer the maximum opportunity to provide the cheapest doors/handles/baths/taps etc, etc as he can.
Are we rumour mongering, do I hear you say?
No chap, this is real. We have seen specifications that do not even state how many plug and lights points you will get. So when you see your house eventually under construction and ask where you are expected to plug in the TV, all you get is a shrug of the shoulder and “It’s in the spec” as a response and “No you can’t see the salesman, he works for an agent and is not available”.
Remember there was not a show house, so how do you know what type of bath or shower door you are getting unless it is specified.
We have been involved with a client who was actually told,
“Listen, if you want to pay so little for this crap, what do you expect!?”
Now that is what I call really good customer relations. I am afraid however that it is oh, so common.
No problem you say, it will be on the drawings we were given.
Let’s have a look at these drawings. Are they working drawings? No. Are they specification drawings? No. They are simple sales drawings.
We have been involved where even the size of the units were detailed as 10 square metres larger than the units were actually registered for at the deeds office.
Another case where the Site Development Plans (SDP) show “2 metre, semi face brick boundary walls”. What was delivered were 1,7m mock-brick concrete panelled walls, which the developer absolutely refused to change (until we became involved).
Another scenario we are currently engaged on, where the plans show a “Tuscan-rough-bagged wall finish.”
What was provided was a multi-colour, multi-texture, paint/slurry, which after only six months is beginning to flake off and leave exposed clay stock bricks.
Now for those of you who are real experts in Tuscan, that is everyone who goes to the Monte Casino at Fourways, you know that real Tuscan does have flaking plaster and exposed brick. But this is supposed to happen after 200 years, not six months! Strangely enough, our developer doesn’t seem to appreciate the difference.
I wonder why, is it because it is affecting his return on investment?
Probably worst of all is when a Developer rings a prospective new occupant, who has been watching her dream home grow from the muddy morass of foundation trenches, and are expecting to take occupation in a couple of weeks, and says,
“I’m sorry Miss Ellis, but we have just realized we have over subscribed on your (read MY) unit.”
“AAAGH” you say,
“No, don’t worry” says Suntan,
“We can give you unit number 2 instead”
“AAAGH” you say,
“No, it’s a MUCH better unit, and we’ll even add some extras in for your inconvenience”.
Now you start to soften; not realizing that is going to be another six weeks before your occupation, or that as you or your (Baobab) Building Consultant, haven’t been watching the building of this unit, and therefore God knows what has gone on under the plaster;
but after all what else can you do?
Go back to the Sunday sales tent/show house ritual and start from scratch?
“Nah, lets go with the flow and get this over with!”
“Who gives a damn about these bl**dy builders anyway?”
If you are considering entering into the housing market, visit www.baocon.co.za and see what services they can offer you to prevent you from falling into these very common pitfalls.