Listen to This Article Enhance your reading experience by listening to this article.

No country, globally, has done away with off plan properties neither will we. Off-plan model of house ownership has numerous advantages but most materially, it is the ideal model to assist bridge the housing gap for a country like ours.

The challenges of off-plan properties are not bespoke to Kenya. Amidst these challenges, we must calibrate genuine and ingenious solutions to ring-fence this important property acquisition method for the better of our people. Here is what I think we can do:-

First, we need to create a Real Estate Authority. Something similar to the Real Estate Regulatory Authority (India) or the Real Estate Regulatory Agency (Dubai). Probably have it as self-regulating body away from the lethargic and bureaucratic inefficiencies synonymous with most government bodies.

The functions of this authority would include, inter alia; registration of real estate developers and projects, regulating trust accounts of real estate projects, supervising property advertisement in the mass media, listening to complaints from the public, carrying out and publishing studies for the property sector.

Secondly, we need to pronto formulate regulations that require developers to open and maintain escrow accounts for each off plan projects in partnership with Central Bank of Kenya accredited financial institutions.

A developer should be obligated to deposit all payments received from purchasers into the escrow account and strictly withdrawn in accordance with projects work done valuations certified by qualified Quantity Surveyor and Architect.

Third, a regulation that no project should be sold off plan unless the developer has; a bank guarantee of 20 per cent of the project cost or has deposited 20 per cent of the project cost in the escrow account or has constructed 20 per cent of the project value.

The open door invitation that anyone can be a developer is primarily the reason for the unbridled tears in this industry.

How about a regulation that no developer should be allowed to conclude any sale agreement contract for any off plan property unless they have received the development approval from the construction statutory authorities like counties, Nema, National Construction Authority etc?

It should be clear that any sale agreement contract done prior to these approvals is to be deemed null and void.

To curb the perennial projects delay by developers after receiving deposit payments from buyers, we can introduce a caveat regulation that any developer who hasn’t commenced or completed construction work on a project after a certain period of time for any reason beyond his/her control or not, must refund all payments made to the purchasers.

This will ensure real estate developers do not treat project’s stipulated time durations with contempt. We must cancel the blank construction duration cheque issued to developers and make it punitive to wilfully delay projects.

To cure the incessant complaints by buyers of their units sizes being reduced after purchase, we can create a regulation that no developer shall decrease the area of a sold property and no increase in area shall be accepted and the developer shouldn’t claim in case of such increase. Where the area is decreased, the developer shall compensate the buyer unless the decrease is insignificant.

Lastly, let’s formulate a regulation that all projects escrow accounts shall be regularly audited and monitored by the Real Estate Regulatory Authority.

While appreciate the fears of such properties are well grounded due to what we have witnessed and experienced, we can certainly insulate this property acquisition model for the better of the industry.

Off plan properties will above all immeasurably assist in realising housing deficit.
— The writer is a construction manager and author