Purchasing a property, even a holiday home, is a serious business that could affect the rest of your life. Don’t take such a decision lightly, warns KIM BROWN
WHEN buying a property in Cyprus it’s possible to buy from a developer that provides bad service, is unauthorised to build property, and leaves town with all your money. It’s also possible to find a good developer that builds a property on time, to specification and within the budget requested. And then there are all the other developers that fall somewhere in between!
There are three stages to choosing a good developer. However, many buyers are either unaware of, or simply skip, the first two. Failure to spend time on stages 1 and 2 dramatically increases the likelihood of serious problems later on in the buying process.
Stage 1: Research the property market and get an understanding of who’s who regarding developers.
Stage 2: Pick a developer and take actions that will increase your likelihood for a smooth purchase process.
Stage 3: Sign a contract of sale with your chosen developer.
Starting with stage 1, it is very important to get a good understanding of the Cyprus property market and the various developers that contribute to that market. There are some very shoddy developers out there that should be avoided at all costs; however, if you don’t know the market, or the players in that market, it’s difficult to determine exactly who is good and who’s not so good.
To ensure that you find a good developer, there are several things you should consider before determining the developer for you. Below are five actions you can take. However, the ultimate action to be taken is to do your homework, get information from a variety of resources and never, ever rush into anything!
1. If possible, move into rented accommodation for around six months BEFORE you plan to buy. Living with and talking to people in shops, restaurants or during a walk on the beach will give you a very good idea about reputable developers as opposed to the not so good ones. In Cyprus, everybody knows everybody else, and conversations often centre on the wonderful weather, a new restaurant that comes highly recommended… or the latest property scandal. Simply spending time in the area that you’re interested in can provide you with all sorts of important, indeed essential, information.
2. Search the internet for ‘Expats in Cyprus’ and you’ll find various forums and groups that discuss a multitude of issues. Some forums highlight poor practices and name and shame shoddy developers. Others provide testimonials of purchases that went swimmingly well! Reading the forums will help you to determine the developers to instantly cross from your list and those that can be considered ‘maybes’.
3. Consider using an estate agent as they have a certain amount of leverage over developers. The last thing an agent wants is hassle, thus many tend to work with developers that have a good reputation and provide a good product. If the developer decides to cause problems, the agent often has the upper hand by threatening to withdraw future business unless the developer complies with the needs and wants of the agent and buyer.
4. View many different developers in many different areas to get a comprehensive idea as to property styles, prices and value for money. Some developers will charge €10,000 to €30,000 more for the same spec property than other developers – it pays to shop around and get to know the developers that inflate their prices.
5. Look for projects from developers that have started after the recent upgrade in EU legislation for build quality. The EU has really clamped down on building regulations and thus properties are now being built with insulation, better materials and of a higher standard.
In addition to Stage 1, you’ll want to pick a developer and take actions that will increase your likelihood for a smooth purchase process. You may want to consider some of the following actions:
– Visit a couple of the developers’ previous projects, knock on doors and talk to the previous buyers. Ask them what problems they had, what went well, what could have been improved. Also ask them if they have any advice for you.
– Force the developer to comply with your requirements by retaining a solicitor independent of the developer that will create a Contract of Sale that has several clauses inserted to protect you. Also make sure that the developer’s financial staged payments (stipulated in the contract of sale) require you to pay according to completion of milestones not simply by dates in the calendar. Some people have had to pay almost the full cost without a brick being laid if they omitted this step!
– Buy a bond or take out insurance. Yes, it costs money, but it does mean that you are covered if the developer goes bust or there are any major issues with the build.
– Interview the prospective developer: ask them for testimonials and enquire about the amount of successful projects they’ve completed (to time, to budget and within specification). You can also ask about their customer service and after-sales follow up. What is their complaints process? Do they assist with setting up bank accounts, getting mortgages, getting the water and electric bills set up?
The key points: eliminate the bad developers and find out who’s who in the world of developers (Stage 1), seek out a developer that has a past record of happy buyers and research various options that increase the likelihood of success (Stage 2) and then finally it’s time to sign a contract of sale that protects you, with a developer that has a good reputation (Stage 3).
All this said, the majority of buyers in Cyprus fly over for a holiday or a three-day inspection trip and fail completely to do any research at all. They get caught up in the wonderful atmosphere, become emotional about living the dream and make uninformed decisions about something that could potentially affect the rest of their lives. Don’t make this mistake! Take responsibility for the entire buying journey, do your homework, don’t rush into anything and set yourself up for success.
n Kim Brown is the author of the Cyprus Buying Guide. The guide is a publication dedicated to exposing poor practices, property buying pitfalls and providing an educational instruction manual to buying and/or investing in Cyprus property. To get a free mini version of the guide, go to www.cyprus-buying-guide.com/mail.htm.
