Buying Off-Plan

There are three problems buyers commonly experience when buying off-plan. One is the possibility of an unreasonable delay where your developer has a serious cashflow shortage, another is poor workmanship in finishing the structure (often caused by the same problem), while the third is the possibility of ending up paying much more for far less by the time the job is done. You’re protected at law now against the first two but the third can still be a nightmare. Buyer’s who contract to build their own homes according to their own particular wishes often get caught here - your builder may hit you for extra expenses while you go along, only for you to find that he hasn’t done anything like what he promised by the time your home is completed. If you’re planning to build off-plan, make sure the specific items, even down to light fittings and bathroom extras, are clearly defined.
Beware of agreeing to clauses giving the builder the right to increase prices at his own discretion unless this allowance covers no more than actual increases in acquisition costs of any materials he may need.

Your Protection Under New Housing Laws

A few years ago the Housing Consumers Protection Measures Act was introduced. This has effectively closed the door on fly-by-night builders and no contractor can now get away with shoddy or incomplete workmanship or unreasonable delays in finishing a project. Under this law the National Home Builders Registration Council was established to protect your interests. The NHBRC has wide
powers over all builders who now have to be registered with the Council before they can commence any building operations. A Certificate of Enrol-ment has to be obtained prior to foundations being laid and to obtain this each builder has to furnish approved plans of the new building as well as a specification schedule of the actual work to be done and the materials the contractor intends using. A copy of this certificate has to be supplied to you before work begins. Your builder also has to give you a copy of his building contract which has to comply with the provisions of the Act together with a copy of the approved plans. If the work is not completed in good time or is defective, you have a recourse against the builder but have to take action within three months of taking occupation of the premises. Only in cases of serious structural defects will you be entitled to claim within a period of five years. If your builder defaults completely you can report him to the Council which may act to remove his certificate if the problem is serious and he has made no attempt to rectify it. Provision has also been made for compensation to aggrieved property owners if the builder goes insolvent or does not have the means to complete the project. Building your own dream home or buying a unit in a new complex off-plan is no longer fraught with high risks as it used to be, but you still need to look carefully at your agreement and ensure you are not giving your builder too much room to increase the costs of your new home. You also need to ensure that the actual work to be done is clearly stated so as to prevent uncertainty later which the builder may twist to his own advantage.

If you are prejudiced in any way by a defaulting builder, contact the NHBRC immediately. The Council can also give you a list of all registered builders in your area.
Phone Johannesburg (011) 348 5700 or
visit www.nhbrc.org for assistance.