DO YOU get better value building on a plot of land rather than buying from a developer? The calculations below should help answer this question:
(a) Land cost
Acquisition price CYP
+ Transfer fees CYP
Total land cost CYP
(b) Provided the land is reasonable level (assume a house of 200m²) the building cost is estimated approximately CYP650-CYP750/m², depending on quality.
Building cost depends also on location. Paphos has a slightly higher price and the Larnaca area less (+-5% in either case). Hilly grounds or distant areas may push the cost up by 15%-20%.
(c) Central heating +CYP25/m²
Air conditioning if central +CYP 30/m²
(d) External works, such as a garden
(approximately garden 700m²) +CYP6.000
Swimming pool (4 m. x 8 m.) skimmer
with pavings, shower etc +CYP10.000
Car port +CYP50/m²
Verandahs (open) +CYP120/m²
Solar heating +CYP600
Borehole & irrigation +CYP3.500
Total cost of a 200 sq.mts. house
Excluding land cost say (+-) CYP180.000
(e) Add
Authorities/permits CYP3.000
Architects + Consultants fees 7% on total building cost
On the total cost of CYP180.000 = CYP13.000
Unforseen CYP5.000
Total cost (excluding land) say +- CYP200.000
Add
Finance cost —-
Mortgage fees etc 1% (spot CYP2.000)
Interest on finance ?% (spot CYP8.000)
Legal & other fees CYP2.000
Total development cost +- CYP212.000 (+ land cost)
Building costs are moving upwards at the rate of approximately 10 per cent per annum. Bear in mind that contractors love indecisive clients or those who cause delays (since he can charge you extras at higher prices and he can claim compensation for the delay). For this reason your plans must be complete and decisions must be taken on the spot, whereas if you are supplying materials, make sure that they are on site in time. Use licensed architects of the more known names, even if you have to pay something more. It is worth it. Things being what they are, make sure appointment letters of consultants (architect, civil engineer, Q.S., electrical and mechanical) state that they must visit the site/house at least once a week (more for the architect and E/M than the others).
Try to negotiate an “all in” contract, so that you are not charged inflation on top (labor & material increases during development). Yes the contractor in this case will up the price, but at least you know from the start, the end result. Do not start the building process unless you have (at least) in hand the town planning permit and chase (the architect) the building permit. No electricity will be provided if no building permit is not there at the delivery stage (the danger of having the local authority stopping your works since you do not have a building permit apart – most people risk it).
Look into the planning permit and ascertain if you have to make up the pavements, roads, public green etc (if not a building plot but a field).
The builder has a guarantee period of 12 months after delivery. If a snag list is rectified during the 12 months warranty negotiate the extension of the warranty by an analogous period.
If you are not in Cyprus/on top of things and or, if your house is of a high value, it is highly recommended to use a project manager, i.e. the man whom you can pick up the phone and inform you of the goings on. This is your man who looks after your interests and chases everybody for timely and quality delivery – cost for a year around CYP12.000.
Bear in mind that there are various classifications of contractors who are allowed to build a building up to x m², depending on their class. If your contractor has no valid permit for the size of your home, you may be in default.
If you use your own sub-contractors, make sure that they are “nominated” to the main contractor under the building contract, so that he bears the responsibility, including those of health and insurance. If you want to use your own sub-contractors, get a quotation also from the main contractor and compare prices.
For any “new” extras that you may decide, or the architect and the contractor is making, always get a quote beforehand.
Make sure that your architect bears the responsibility after completion to seek the certificate of final approval and from there on, the procedure to register the house on the deed. Always remember that if you do not secure the certificate of final approval, you cannot occupy the property (not enforced but it happens at times).
For those who have in mind a possible future sale, build a house/building which is of a general appeal, as opposed to one which reflects your own particular taste since you may find that it is not easily saleable afterwards.
On a final note, do not get particularly impressed by friendly contractors and consultants and base your decision on professional basis alone. Keep your eyes and ears open and use the best advice you can get. Do not always blame the “others” since our experience has been that a percentage of the blame rests on the “client”, who gets carried away over a lunch/dinner with the ever promising consultants and contractors.
At the end of the day and if you “play your cards right”, you will get the home/ building you wanted of a better quality (rather than from a developer) but it can also go the other way.
Antonis Loizou & Associates Ltd – Property Valuers & Property Consultants, www.aloizou.com.cy, [email protected]
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