Before you sign a contract with any builder, check references as banks do not protect clients from unscrupulous builders, says home loan executive.
Property owners are often ripped off by builders. Some do not complete building the house, others build poor quality and sub-standard houses, said Luthando Vutula, managing executive of Absa Home Loans.
Vutula said where a property owner finds him or herself in such a situation, banks do not protect the owner from the builder.
The contractual obligation that banks have with the client is in terms of the mortgage loan agreement, said Vutula.
He advises that before an owner employs the services of a builder, he or she needs to ensure that they fully understand the content of the building contracts that they sign.
In particular, pay attention to payment clauses, the building specifications and time clauses.
"Always conduct reference checks on the building contractor before signing agreements," he said.
Where the owner is not satisfied with the standard and quality of work, speak directly to the builder or developer (whichever is applicable).
This engagement will give the builder the opportunity to address concerns expressed by the owner and rectify the problem.
If no resolution is reached , as a last resort the owner can instruct the bank to make no further payment on the building until the work has been done to the owner's satisfaction and concerns fully dealt with, said Vutula.
Banks are not party to the building contract signed between the client and the builder.
For this reason, any disputes between the two parties should be taken to the National Home Builders Regulatory Council (NHBRC), a body which protects the interest of consumers and regulate the home building industry.
Vutula said the NHBRC protects consumers from builders who either build to an unacceptable quality standard or builders who refuse to get involved in the rectification of built-in defects in the home.
Although the bank cannot recommend builders to its clients, the legislation stipulates that all builders involved with building projects that are subject to a mortgage loan should be registered with the NHBRC.
Information on registered builders can be obtained form the NHBRC, said Vutula.
While building contractors are not the same, it remains the owner's responsibility to carefully peruse the contract before signing. It is advisable to obtain legal advice for clarity on the contract terms and conditions to avoid unpleasantness with the builder at a later stage, he said.
For example, said Vutula, the client is obliged to pay the builder for work that is satisfactorily completed and the builder has obligations to provide his services as per stipulations in the building contract.
When a client applies for loan on building works on their property, the bank appoints a valuer whose does checks on the construction or building site to ensure work is being carried out in accordance with the minimum building requirements and plans submitted to the bank.
"The client has a right to withhold payment from the builder if the work done is not up to standard," said Vutula.
If this happens, the client should first familiarise themselves with the contract and also be aware of their legal position regarding withholding funds, said Vutula.
He added that the bank can only act on instructions from the client to not to proceed with payments to the builder.
Denise Mhlanga
Realestateweb.co.za - Johannesburg,Gauteng,South Africa
Thursday, 04 December 2008
Mhlahlo engineers a turnaround in housing.
AFTER taking office in August, Housing MEC Thobile Mhlahlo vowed not to allow a cent of his R1,2-billion in conditional grants to remain unspent, and set the department a target of building 15000 new homes before the end of this financial year.
He said the department would recall allocated budgets from all municipalities that were not spending them, so they could be redistributed to other projects.
“At the beginning of this term I called public and private sector financial institutions together at a breakfast meeting to introduce my ambitious multi- million-rand housing turnaround delivery plan.”
He said major banks, including Absa, FNB, Standard Bank and Nedbank, as well as other public and government financial institutions such as the Development Bank of Southern Africa (DBSA), the National Housing Finance Corporation (NHFC) and the National Urban Reconstruction and Housing Agency (Nurcha) were already working with his department on housing projects.
About R464-million of the conditional grants have already been spent, and Mhlahlo has approved funding amounting to R285-million for other housing projects in the province.
“The consultative breakfast meeting was a culmination of meetings that I had with contractors, municipalities and NHBRC as part of my intervention plan to remove stumbling blocks (projects that had stalled due to lack of finance) in the province.
“After the meeting with all the banks I had individual one-on-one meetings with Absa, FNB and Nedbank.
“FNB has purchased a pineapple field near the Da Gama Textiles factory on the way to East London that is big enough to build 6000 houses on and I have appointed a task team to facilitate the process of engaging other stakeholders like Buffalo City to come on board.”
Mhlahlo has handed over 500 houses from the Sundays River municipality, 300 in the Nomathamsanqa township in Addo and 200 in Kirkwood.
Some 5475 houses will be handed over in Nelson Mandela Bay shortly. Of these, 900 will be handed over in Joe Slovo before Christmas, while others will be handed over in areas like Bethelsdorp, Matthew Goniwe and Chatty before the end of this financial year.
“Some of the beneficiaries of these houses are seasonal farm workers who depend on old age grants, domestic workers and other people who earn less than R1000 a month,” he said.
Mhlahlo also introduced the Sakhi‘themba graduate development programme in October.
“The project is aimed at creating employment opportunities for young people and also to address the challenge of lack of monitoring.
“It will also be reviewed after two years.”
Some of the problems Mhlahlo said he had faced during his 100 days of office included:
Contractors assuming developer status with limited capacity and resources.
Slow implementation of projects by implementing agents.
Slow processes of municipalities – especially on blocked projects.
Poor performance of contractors.
Lack of monitoring and evaluation of projects.
Land availability.
“We have tried to solve some of these problems, but now the biggest challenge we are facing is that of municipalities not spending the monies allocated to them.
“We have found that they do want to spend the money but many did not know how. My department is assisting those municipalities that want to be helped,” he said.
Khanyi Ndabeni
The Herald Eastern Cape - Port Elizabeth,Eastern Cape,South Africa
He said the department would recall allocated budgets from all municipalities that were not spending them, so they could be redistributed to other projects.
“At the beginning of this term I called public and private sector financial institutions together at a breakfast meeting to introduce my ambitious multi- million-rand housing turnaround delivery plan.”
He said major banks, including Absa, FNB, Standard Bank and Nedbank, as well as other public and government financial institutions such as the Development Bank of Southern Africa (DBSA), the National Housing Finance Corporation (NHFC) and the National Urban Reconstruction and Housing Agency (Nurcha) were already working with his department on housing projects.
About R464-million of the conditional grants have already been spent, and Mhlahlo has approved funding amounting to R285-million for other housing projects in the province.
“The consultative breakfast meeting was a culmination of meetings that I had with contractors, municipalities and NHBRC as part of my intervention plan to remove stumbling blocks (projects that had stalled due to lack of finance) in the province.
“After the meeting with all the banks I had individual one-on-one meetings with Absa, FNB and Nedbank.
“FNB has purchased a pineapple field near the Da Gama Textiles factory on the way to East London that is big enough to build 6000 houses on and I have appointed a task team to facilitate the process of engaging other stakeholders like Buffalo City to come on board.”
Mhlahlo has handed over 500 houses from the Sundays River municipality, 300 in the Nomathamsanqa township in Addo and 200 in Kirkwood.
Some 5475 houses will be handed over in Nelson Mandela Bay shortly. Of these, 900 will be handed over in Joe Slovo before Christmas, while others will be handed over in areas like Bethelsdorp, Matthew Goniwe and Chatty before the end of this financial year.
“Some of the beneficiaries of these houses are seasonal farm workers who depend on old age grants, domestic workers and other people who earn less than R1000 a month,” he said.
Mhlahlo also introduced the Sakhi‘themba graduate development programme in October.
“The project is aimed at creating employment opportunities for young people and also to address the challenge of lack of monitoring.
“It will also be reviewed after two years.”
Some of the problems Mhlahlo said he had faced during his 100 days of office included:
Contractors assuming developer status with limited capacity and resources.
Slow implementation of projects by implementing agents.
Slow processes of municipalities – especially on blocked projects.
Poor performance of contractors.
Lack of monitoring and evaluation of projects.
Land availability.
“We have tried to solve some of these problems, but now the biggest challenge we are facing is that of municipalities not spending the monies allocated to them.
“We have found that they do want to spend the money but many did not know how. My department is assisting those municipalities that want to be helped,” he said.
Khanyi Ndabeni
The Herald Eastern Cape - Port Elizabeth,Eastern Cape,South Africa
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