BUYING A PROPERTY OFF PLAN

Newly built properties on estates became popular in the 70’s and 80’s and even more so in recent years as bank mortgages became unaffordable and impossible to get. Due to rapid rises in house prices, buyers are happy to put cash deposits down on homes before they are even built. Developers now offer attractive payment plans for buyers spread throughout the building progress.
The biggest question to anyone putting down money on a property that they have not seen is how to reduce the risk of purchasing a property that has not been built yet?
 Buying off-plan does have its advantages. It can be cheaper to secure a property before it is finished and it usually allows buyers to sometimes have a say in design features, fixtures and fittings. But there are also significant risks to be aware of. You need to research the development plan, check the developer’s credentials and track record to see if there is a history of delivering on time or providing low quality finishing’s. Buyers should ensure the developer has insurance so that if they collapse, you will get back your deposit. Use a good lawyer to check the paperwork which you should be able to view before purchase. Look at other properties the developer has built to see the value for money you are getting and to get an idea of what to expect once it completes.
Make sure you are aware of the timeline of the project so you can plan your payments and when to move in. If your property is going to be part of a big development, find out when the other homes will be finished, otherwise you risk living in a building site for a while.

If however a buyer fails to go through with the purchase for whatever reason, they will usually lose their deposit on the basis that they have failed to fulfil their side of the agreement. When buying a property off-plan, buyers are usually asked to pay a deposit of 10-30 per cent and sign a contract, usually prepared by the developer, agreeing to pay the balance over about one or two years and complete the transaction when the property is handed over to them. If the buyer is forced to withdraw from the deal because they are unable to raise the balance of the purchase price, they can be also be sued by the developer.  When buying off-plan, most buyers do not realise that if they do not complete the transaction, then not only will they lose their deposit, but they can also be sued by the house builder for further payment of losses.

During the building stages It is hard to judge how a property will look just from the computer generated pictures but you can get an idea of what it will be like living there by finding out where in the development your property will be.
Make sure you visit the site so you can visualise what it will look like and ask questions such as how much sunshine you will get and what the surrounding area is like. Get an idea of the size of the rooms so you can get the right furniture and make sure it suits your needs. Keep an eye on the property throughout the building process and conduct a 'snagging' survey near completion so you can spot any defects and get them fixed by the developer. It is best to protect yourself and your investment whist also ensuring that you keep your end of the bargain by having your payments ready on time..

EBOLA FREE ZONES

With all the panic about Enola sweeping the country and the world, everyone seems to be on red alert about touching other people or even just breathing in the same air as them or God forbid, them sneezing or coughing near you. In all its seriousness, there are still causes for amazement when the driver turns up late, frantically chewing kola nut because he claims he was bathing in salt water as prevention against Ebola, or the Security men at the gate of an estate wearing winter wool gloves to hand you the visitors book and pen. I had to visit a vacant newly completed block of flats in Lekki this week and on getting there, I found the gate open and no gateman around, the gateman two doors away came rushing up to me and whispered that the gateman was inside the building and had been sick for a few days and no one was going near him for fear that it may be Ebola, you should have seen me practice Michael Jacksons fast Moonwalk and hot foot it to my car, whipping out my bacterial wipes to clean my hands, even though I had touched nothing. This panic is all a bit out of control, but we should be safe rather than sorry. I have actually cut back on my visits especially where it is a busy work sites. The truth is that the fear of Ebola, is the beginning of wisdom to many Nigerians. As I write this article, the virus has claimed its third victim, with many more quarantined. Those practicing in the Real Estate market, need to be very careful about interactions and staff safety

It was in the papers this week that the Nigerian Mortgage Refinancing Company(NMRC) which is a private sector company is being set up to encourage financial institutions to increase their mortgage lending by providing them with long term funds and assist in reducing mortgage rates. It has set 20 percent as the minimum equity contribution banks must consider when a loan application is made, if an applicant is to be considered for a home loan, of course earnings and assets will contribute to the acceptance, and the lease must be at least 20 years to work. It will take at least six months for loans to be granted.

I sincerely hope this will all become clearer as they start, as prospective home buyers are in need of financial help to secure their own homes.

PROPERTY HOTSPOTS

There are so many new areas of development coming up in Lagos mostly on the outskirts of Lekki, Magodo Isheri Sango, Akowonjo, Epe and the list goes on. Traditional built up areas like Ikoyi, Victoria Island, Ikeja, Surulere and Yaba are being transformed daily and becoming unaffordable. Take a drive through some streets in Ikoyi or VI and they are impassable with potholes and stagnant lakes of water everywhere. The price of land in some of these areas is now worth more than the properties that stand on the land that is why developers are putting up multi story high rises with prices being quoted in dollars. Of course these areas and these properties are out of the reach of most. In order to maximise ones investment and possible future property rises, it is best to consider areas that have access to good existing infrastructure like roads, schools, power and transport, I say “existing infrastructure” because in many cases people have bought in areas where infrastructure was promised and years later nothing has been delivered, leaving the residents signing petitions and making complaints to government regulatory agencies. It is important to check out the area before buying there. Areas like Apapa which it is rumoured that property prices are depreciating due to the infrastructural decay, pollution and heavy traffic is a fantastic area to invest in if you can afford something there. The reason for this is that it is centrally located has already been tried and tested and has good infrastructure. It may be going through a period of depression now but it will certainly improve in years to come. Abijo, Ibeju Lekki and the Lekki Free trade Zone are also areas to consider as urbanisation on this axis is rapid; it is acquiring the required infrastructure and is still relatively affordable. All the mentioned areas are on solid land and not sand filled or reclaimed. A lot of new estates being built near lagoons and beaches are on sand filled land and care needs to be taken that the developers have carried out the necessary filling of the land and waterproofing of the buildings.

 Areas that need an injection of good quality residential apartments, is Surulere,Akoka, Yaba, Ilupeju, Maryland and Ikeja. At the moment a place like Surulere and its surrounding areas like Itire, Masha etc looks like they are in a confused state of commercialisation. All available single dwelling units on major streets are being converted into banks, eateries, malls, bars etc. It will require someone with vision and a deep pocket to develop some luxury dwellings for the residents give the community back the finesse that it once held, as the rapid overdevelopment of these areas has put severe pressure on its infrastructure and aesthetics with electric cables crisscrossing the roads and buildings haphazardly. Any developer wanting to gentrify these areas will have to buy up and probably demolish what is already there in order to start properly from the foundation up.

New developers are now building town houses, terraces, flats, high rises etc. The days of building one unit on one plot is over and done with. The demands of building multi tenanted units are that residents expect some considerations from the developer, like parking spaces, airconditioner plumbing, fitted kitchens, security gates and external cleaning, generators big enough to supply the whole development instead of individual sets which more than likely will constitute a nuisance to other residents through noise and carbon monoxide pollution.

 If one takes time to look, you will find affordable land and properties that are set to rise in price in the near future

PHCN's DISAPPEARING ACT

I have written about this many times in the past five years but power supply is unfortunately getting worse. Getting access to reasonable supply of electricity by PHCN is getting less and less by the day despite repeated empty government promises and DISCO take over’s. Some areas have not had more than one hours supply in total in the last two weeks. People are spending hundreds of thousands to fuel their generators, just to have some reasonable quality of life, yet are still being hit with astronomically over inflated PHCN bills that do not reflect their supply and meter readings that they have fought so hard over the years to get installed and now the meters are installed, the readings are being ignored?

The country has been promised increased megawatts of power every other day for the last ten years or more. The latest being 10,000mw by the end of July 2014. In the last few years these promises were made by the Power Ministers and went out to privatisation, yet it seems that with each passing day and power report we receive, it is to say that one power station has closed down or a leak was detected in one or another plant. We are urged to be patient, yet it seems nothing is being done apart from blame being thrown about. Apart from a couple of years ago when a former Minister of Power as in charge and we could obviously see some improvements, we are yet to see any benefits of the current privatisation initiative. The current power output stands at about 2,500mw; five years ago it was 3,200mw.

We must however continue to rely on our trusted generators to power our homes and businesses and hope that one fine day we will see stable supply.  Estates must now provide power as part of its services in order to get buyers and renters. Individual home owners must now factor in two or more generators in their budget as well as servicing, fuelling and replacement of the generators. Interestingly, it is reported that Nigeria is the largest importer and user of generator sets in the world. It appears that we may hold this important title for many more years to come.

THE FUTURE IMPACT OF DIVORCE ON HOUSING

On the surface, it does not seem like divorce would cause such a great impact on housing. However, when you think about it a little more closely you start to see how it is already affecting housing provision around the world.  Divorce rates are rising alarmingly and with so many families being split up, it is only logical that more homes need to be provided and also smaller homes. For couples who “manage” to stay together for social or religious reasons, the two of them together are often beneficially greater than either one of them independently. While one of them may have health issues, the other may be strong enough to help with support and medication. In a sense, no matter what the faults or weaknesses, with a two person partnership it is far more likely that the two will be able to live independently in their one home for far longer than if it were just one of them. Once split up, each partner would require a great deal more support which would mean an increase in medical care and finances that could be quite significant and unavailable. It is sometimes pitiful when you visit an old uncle or aunt who used to be very vibrant and mobile back in their day and to see what has become of them now that they are alone living with a houseboy or housegirl or even a distant distant relative who has no real interest in their welfare other than pocketing the money that the kids who are spread far and wide, send home from time to time.  This is a growing problem and in the next few years will reach epidemic proportions. In Nigeria we have not really noticed the impact on housing yet because the older generation still manages to live in their old family homes which are decaying around them with no one to maintain them. Of course immediately they die, the kids sell the property to the highest bidder. If this family home is on a large plot of land in Ikoyi, Victoria Island or Ikeja, you can bet that in an apartment block will be put up in its place

Younger divorced couples are now buying or renting homes and apartments on serviced estates where essential services like security and power are provided, apart from their personal care. In the next few years we may need to consider going the way of other developed countries and building retirement homes for the growing divorced aging population. Abroad the Governments have already taken notice of this increase in divorce rates and have invested in research into understanding the increase as well as preventing its continuation. Many are stating that the UK Government needs to start investing in saving marriages if it has any hopes of keeping its current enviable housing and care system manageable!

Whatever the cause of this increase in divorce, the ramifications are clear; the housing sector will be severely affected should this trend continue. That being said, although Nigeria is not a “welfare friendly” country, it may be wise for the Government to start to look into ways to help ease the growing problem of divorce and its future impact, otherwise there may not be enough resources to sustain the looming housing provision for as long as it will be needed. This growing problem is something that should taken up by media and overall society awareness, especially as our health care system already cannot support all the strains being created simple health demands, not to talk of increasing health issues. In the UK, the Government has tried to ease the pain of home ownership for all by starting “The Help to Buy Mortgage Scheme” which program allows people to buy homes at a much reduced interest rate of something like 3%. It comes in two different varieties. The first of these is the interest-free loan opportunity. The second allows the Government to function as the guarantor for a portion of the borrower’s debt. The mortgage guarantees provided by “Help To Buy” are open to first-time home buyers as well as home movers. The purpose of this part of the program is to help those buyers who do not have enough money to put down as a deposit on their home. If this is the only thing preventing the borrower, the “Help to Buy” program will help to raise enough money for the initial deposit. In Nigeria it is unfortunately a case of “everyman for himself and God for us all” with no Government intervention, unless steps can be taken NOW to redress what is already a growing problem. Even with the rate of construction by private developers, it will not be enough to meet the needs of what is coming ahead. As the say “to be forewarned, is to be forearmed”

LEAVING INHERITANCE PROPERTIES, A DYING TREND

We all know of the tradition of parents leaving properties and large sums of money to their children in their wills when they die? Well it appears that this long held tradition is on its way out in the UK and USA and certainly is spreading to Nigeria. Many parents are still making huge financial contributions to support children and grandchildren even into adulthood due to current financial difficulties.  As people are living longer in many other parts of the world (apart from Nigeria it seems) they are spending more to support their lifestyles and retirement.  Many wealthy over 60s are travelling the world and treating themselves to luxuries they could not afford when they were younger. Bill Gates the owner of Microsoft and one of the wealthiest men in the world has famously said that he intends to spend all of his wealth and give very little or no to his children because he does not want to cripple them as he has already equipped them with good education and training. He wants them to know what it is like to work for their money and achieve their own wealth and have a sense of pride in what they do. Here in Nigeria, we hear so many cases of children fighting for many years after their parents have died, over one house or the inheritance that the parents have left them. Again in Nigeria, we frequently have families where there is more than one wife or numerous children from various women, which makes it a nightmare to share the inheritance left behind. Often you find the first wife trying not to let the children of the other “small” wives get their hands on the man’s inheritance. But it seems this is becoming a thing of the past as the older generation now need to use their money to fund their own retirement.

It is perhaps not something you hear about in the media every day, but statistics show that the divorce rate among retirees (over 50s) is increasing rapidly. Whenever we talk about divorce rates or couples separating, we typically focus on the impact that the divorce will have on the couple’s children. Very rarely do we discuss the impact on the individuals themselves, or on their healthcare and living needs. This is an issue that has been growing for a few years now and is now at a point that requires attention and action to prevent our society fragmenting into copy cat versions of developed societies which are already having problems catering for a rapidly ageing population with no obvious financial means of supporting themselves. Whatever inheritance that would have gone towards children, is now being diverted to cater for the needs of the parents. In the UK the divorce rate for couples over the age of 60 has grown by an amazing 30% just in the last ten years. Furthermore, there has been an increase in the number of elderly over age 75 that are now living alone. In terms of pressure on the care system, this could mean that adult social care costs could increase at a staggering rate, especially if divorce rates continue to increase in the same way they are now.

There is an ongoing argument that children are becoming even more reliant on their parents to help and support them financially for longer. Of course, there are a variety of different schools of thought related to why this is happening. One reason is the decline in our education system, the societal decay and the lack of jobs One thing to keep in mind when discussing the evolving family make up, is that not every parent manages their parental responsibilities in the same way or have the resources to support children or even themselves, and even furthermore, parents can really only do so much to manage how their children react to the everyday struggle of real life. That being said, adult children will essentially live their lives as they see fit, whether it was the way in which they were raised or not. Perhaps one of the biggest things to keep in mind when focusing on how children have grown to be so reliant on parents is the way in which parents now help their children, which is quite different from years and decades passed. The method of helping has certainly evolved and has grown to include much larger expenses and costs. It is no longer just that parents give their children a car for their birthday when they have reached the age old enough to drive. Now, parents seem to be taking financing to a new level. Some parents are even taking on the responsibility of using their own properties as guarantors for mortgages for their children or even giving the children their savings to buy land or property to support them. This is a growing problem

THE RISING GROWTH OF SHOPPING MALLS

There seems to be a rapid increase in the building of shopping and entertainment Malls springing up in Lagos and major cities in Nigeria. They range from large properly constructed malls to small unregulated malls. In Lagos alone we have seen at least twelve large major malls spring up in just a few years and hundreds of smaller ones. On the Lagos Island we previously for many years just had two major malls, Silverbird Galleria and The Palms which came with cinemas and food courts, many smaller shopping outlets like Mega Plaza and Lafayette mall were also trailblazers. Now all of a sudden, everyone is building shopping malls on every little space they can find. Just take a drive along major roads like Adeniran Ogunsanya in Surulere which also houses a large Shoprite, go to Opebi and Allen Avenue in Ikeja, drive along the Lekki expressway and Admiralty Road in Lekki 1, you will be shocked to see how rapidly residential homes are being converted into every kind of mall imaginable. Some of these malls have been so haphazardly converted, that you are unsure what is behind every door unless you enter. The stairways are poorly lit and there is usually insufficient sanitary provision even where there are restaurants. In the major shopping malls I can already see the signs of a breakdown in facility maintenance, like cleanliness of the public spaces and toilets, broken toilets, Air conditioners always not working, poor security, broken floor tiles, blown light bulbs etc. The list is endless. Last year I went to a major mall to watch a film and the air conditioners in the cinema hall was not working, it was like an oven, the toilets were locked because they was no water in the mall. You can never find that happening abroad. Take a trip to the Adeniran Ogunsanya Shoprite mall and you will be shocked to note that this is a recently built mall. It is dark with endless corridors not sign posted and empty. It feels like you are in desolate dark world that you see in Sci-Fi movies. It is really a strange place. Unfortunately a lot of so called “malls” do not have planning permission and have not been constructed/converted according to any architectural plan. The main reason for these malls is purely financial and not longevity, therefore many of them shut down in a couple of years.

Shopping Malls are really modern, indoor version of traditional outdoor marketplaces where we now have lots of different shops clustered together to form a network of shops under one roof.  Malls provide all sorts of convenience like time saving, safety, car parking and a calm environment that smaller shops may not be able to provide. There are a few advantages and disadvantages that need to be taken into consideration. The most noticeable advantage that Shopping Malls provide to the community is the ease of shopping for the consumers. There are usually car parking spaces available, security cameras in almost every shop to ensure that criminals are caught, moreover, there are security guards at every entrance and exits to the Mall in order to maintain a safe environment. In addition the creation of competition in one place can also helps to provide a better range of products and choices for the customers. Shopping malls are usually air-conditioned which is always beneficial from the heat and stress that you get in outdoor market places. The disadvantages are the high rents that some of the larger malls command without the attending customer traffic to buy their goods, leading to a short life span for businesses and loss in profits. Prices also tend to be inflated to take into account the rent, service charge and staff outlay. Malls also encourage people hanging around for needlessly prolonged periods. The security in large malls needs to be really good owing to the large traffic under one roof at any point in time. There can be serious implications if a mall is targeted for criminal activities.

There are lessons to be learned however from America where Mall business started and is such a part of the society there. Unfortunately due to the proliferation of malls in the US some malls in some states there, are being closed down due to lack of customers and are being turned into homes for the community after consultations with community leaders. There were too many malls in close proximity providing more or less the same goods. You can already see that this is happening in some areas here, as you may find that out of twelve shops in a small mall, six are selling clothes albeit different prices and quality, but how many shops will attract customers unless it is already known or a branded name. New areas are daily sprouting new malls and I do not foresee this unchecked growth slowing down anytime soon