10 Lessons - Part 5 - Building Condition
Hi, and welcome back to part 5 in our 10 part article series on the 10 things I have learnt about property development, while navigating construction and property investing in South Africa..
In this lesson I want to touch on a few items that relate to properties already developed with buildings, and why it is important to know what the overall condition of the building is, for example if there are any hidden or unknown issues, such as damp or rotting roof trusses on the building and what you can do about it..
No matter the property type, residential, commercial office block, retail mall, it is recommended to get a building condition inspection done. A building condition Assessment will inform of any potential problems and costs, that might be encountered down the line. Buildings of a certain value may, in addition to the normal requirements, have a Building Condition Assessment as a requirement for financing the purchase. .
A building condition assessment will check the exterior site and grounds for signs of maintenance; the structure for major cracks and the source of these; the building exterior for any structural and finishing issues; the building interior for any finishing issues; the mechanical systems, such as plumbing and air-conditioning, for the current condition and expected time to replace these at the end of their useful life span; and finally for regulatory compliance to check the safety, compliance and functionality of the systems to ensure that the building has been built to regulation code.
Let me explain why this is so important. Unknown or undeclared defects and problems will soon enough cost money to repair and is not something a new property owner wants to land up with, especially if it is a big problem like rising damp. But, similarly, there may be features and fixtures on a property that increase its equity value. With a formal building condition assessment, these costs and features are clearly identified and listed, which makes a good case for obtaining a lower purchase price on the property due to the amount of repair works required, or as support for financing due to the higher equity that can be realized.
It should be noted here that with the release of the Property Practitioners Act no 22 of 2019, persons selling a property are legally required to provide a signed disclosure document listing all of the defect items that they are aware of. This is to ensure that the buyer is not left with a surprise discovery and bill to replace something major just after they took possession. However, people only know what they know, and if the owner doesn't know of a defect, they will not be able to disclose it, which is why it is recommended that you get a professional to check and provide a formal building condition report..
There you have it, part 5 of the 10 lessons I have learnt about developing property through being a project manager. I hope that you have gained some insight from this article that will help you to make more informed decisions on your next building project.
Be sure and keep an eye out for my next articles on the remaining lessons, and leave a comment with any questions or topics you would most like to hear about next. You can also sign up to our mailing list and receive our articles direct in your inbox so you never have to miss an issue.