Buying a property can be an overwhelming experience, especially if you are a first-time homebuyer. To help you make a more informed decision, here is a list of questions to ask your developer, sales staff, or real estate agent when buying a new property in the primary market.
1. Who is the developer?
Purchasing projects under construction carries the risks of delays, or the possibility of the project being abandoned altogether.
Finding out who the developer is will allow you to look further into their previous accomplishments and other ongoing developments.
Buying from a reputable developer with strong financials and a proven track record helps minimise the risks.
2. What layouts are available?
A project could have various layouts in multiple configurations. A high-rise building may offer two- or three-bedroom units, but unit types might differ in size despite a similar number of rooms, thus explaining the variations in price.
Learning the layout types available would allow you to choose a unit to your liking and budget, while providing insights into the potential demographic in your building. A high-rise building with only studio units, for example, might cater to young couples and working adults, but a three-bedroom condo is likely to be more family-orientated.
Buyers can also expect to pay a premium depending on the floor level.
3. What rebates and incentives are offered?
Purchasing a property involves ancillary costs that go beyond the price of the unit. Fortunately, buyers can enjoy rebates and other incentives when buying a new project from a property developer.
Besides discounts on the purchase of the property itself, incentives may include coverage of legal fees and for the memorandum of transfer.
Also check with the developer’s sales staff or property agent if you are eligible for a full loan or any exemptions as a first-home buyer.
4. What are the total costs and payment schedule?
Buying a property under construction in Malaysia means the development will have a payment schedule. With subsale developments, payment goes directly to the previous owner; but in the case of new projects, the payment goes to the developer in stages depending on the level of completion.
For homebuyers funding the property under a mortgage, the bank will handle payments to the developer; however, buyers should clarify the amount of monthly mortgage payments pre-completion.
The payments are broken down into five main stages:
- signing of the sale and purchase agreement (SPA);
- various completion stages of the development (more on this below);
- vacant possession;
- submission for subdivision of building; and
- final payments.
5. What fixtures and furnishings are provided?
Typically, buyers of new properties view the property online, via a catalogue, or visit the show unit. Show units are often fully furnished and could mislead you into thinking what you see is what you get.
Since show units are often remodelled by an interior designer, even fixtures such as partitions and panelling could differ from the actual property. Hence, it is important to ascertain exactly what fixtures and furnishings are provided.
Most bare units omit kitchen cabinets and lighting, while certain developers might provide fixed furnishings such as air-conditioning, water heaters and kitchens, or complete interior-design packages as an add-on.
6. Freehold or leasehold?
The distinction between freehold and leasehold developments is less of a priority compared with other factors such as pricing, amenities and accessibility.
Although not all leasehold properties are cheaper, these properties do tend to offer more facilities to woo buyers.
Challenges arise, however, when leasehold properties are due for renewal in the future. New developments often have lengthy lease periods taken care of, but do check with the developer on the remaining years, especially in the case of landed properties.
Bumiputera homebuyers may also wish to be cautious when purchasing leasehold properties in predominantly non-Bumi areas to avoid difficulty when selling them off.
7. Is the property under a residential or commercial title?
Commercial utility rates are higher than residential ones, with buyers of commercial-titled properties – including small office, home office (SoHo) and serviced apartments – potentially having to pay 30-50% more in electricity tariffs.
However, homeowners or management bodies may apply to TNB to convert the electricity tariff from a commercial rate to a residential one.
Taxes are another factor, as quit rent and assessment rates for properties with commercial titles are approximately 2.5 times higher.
Furthermore, buyers of residential-titled properties are protected by statute under the Housing Development Act (HDA), while commercial-titled properties are not.
That said, there are certain exceptions, which leads to the following:
8. Is the property covered under the HDA?
Buyers of residential title properties such as houses, flats, apartments and condominiums are covered under the HDA. The act was later amended to include serviced apartments and SoHo properties, despite their commercial title, but small office, flexible office (SoFo) and small office, versatile office (SoVo) continue to be excluded.
Some SoHos and serviced apartments might also be specifically excluded from the HDA, so it is crucial you ask if the property falls under the protection of the act.
The HDA regulates property developers and offers some statutory protection for homebuyers – among which are standard terms in the SPA, which also require strict adherence to rules on vacant possession, defect liability period, and others.
9. When is the estimated completion date?
The most obvious reason for this question is to find out when the property would be ready so you can move into your new home.
But there are also legal reasons for learning the completion date, as property developers may be liable to pay compensation if the project is delayed. This is known as liquidated ascertained damages, and is calculated at 10% per annum of the purchase price from the scheduled completion date.
For properties under the HDA, the commencement date is that as stated in the SPA.
10. Strata or individual title?
These days, landed properties increasingly carry strata titles, as opposed to traditional individual titles.
Strata properties fall under the Strata Management Act, and owners are compelled to pay monthly maintenance fees and sinking funds. These properties also have restrictions on renovations to the facade of the building.
Source: freemalaysiatoday
