Beware when buying Village Houses in Lantau

Thanks for the heads up.


I would never buy anything with a defective title - if the bank won't lend, I will not buy.


Whenever I hear an agent start to tell me about how much the vendor of any property has spent on decoration, I know I am wasting my time.

Had exactly the same problem with a house in Sai Kung in 2008. The trouble was we learnt VERY late about the problems (house should of been two floors and not 3) that we had made some minor renovations. It took six months to get the deposit back and then we lost 50,000 in the process. We easily got a mortgage and the bank did no checks on the title deed. They are pretty strict on high deposit requirements though. Good advice offered by the OP.

totally blown out of proportion and out of context. How many village houses have you owned before>??? I am not an expert on Lantau but I have lived in the Sai Kung distt for 18 years and bought my house 8 years ago. Most expat friends also own their own properties here. Other than car parking issues and right to access both of which are never documented, none of your issues hold true UNLESS YOU ARE PAYING CASH FOR THE PURCHASE. Things are complex for new houses under construction as villagers try to blackmail you half way down the construction process (right of access issues) but for older built up properties, its usually straightforward. 8 years ago things were lax which is when I bought my house. Since the last 2 years things are v tough as I found out having to go through 5 banks for a refinancing. I eventually did get Hibor and am now paying a net of nearly 1.7% PA on my mortgage.

here is why.

a) When you buy a house the deposit sits in ESCROW till the title is verified by the LAWYER.(assuming you go through a reputed agency and lawyer)

b) Its your lawyers job to get the title of the property verified.So do not skimp on a good Lawyer. (The lawyer also has to be approved by your bank).

c) Once this is done you will most likely apply for a bank loan. At this stage the Banks will send their OWN SURVEYOR to have a physical inspection of the property. (5-7 years ago there was no sphysical urvey done). They check for illegal structures etc and valuation . BY LAW even an AWNING is an illegal structure but they do not count it as a deal breaker. In Village houses typical illegal structures are covering roof tops with glass houses, covering G/F patios with glass conservatory type enclosures and extending or covering balconies. some surveyors even count a wooden staircase as an illegal structure in case of a fire.

During the discovery of documents stage our Lawyer invited us to his office and went through the complete file over 2 hours (since the property was built 28 years ago. ). The adjoining land in our case was/is owned by the govt and been leased to the g/f owners of the property for the past 25 years on 5 yr contracts.


Yes there are plenty of cowboys out there but if you are looking at forgery even an appartment deed can be forged. As for illegal structures even 2 appartments joined as one are technically illlegal and can not be financed.


Banks usually play 2 tricks when you buy a village house. 1st they pay less than what they would for an appt in terms of a loan percentage (60 % at best) . Secondly they will value your home way below the market price in case something were to go wrong. My property which is commercuially worth 16 million has a bank valuation of 5 million due to age.


Compared to buying an appt its not as straight forward . Agreed.

But its still not as bad in this part of HK.

Another expat friend KNOWINGLY bought a village house in CWB with illegal structures as she got a good deal (banks would not loan any money for it so there were limited buyers). She spent a year on the rennovation and got everything done legally to make it proper with approvals. The banks were willing to give a 70% mortgage after the second survey.


It depends on your stamina.

1.5 million for a village house renovation IS quite easy possible: if you elect to move a staircase from a central position into a corner of the house you're in with 800,000 right there ...

Most of what OP said is common sense, but it's nonetheless a good warning for the overly naive ...

@ Onyxwhisky - easy, just look for the ones with defective title and no public access

Shreq

Have you looked at Villas in Cheung Fu St. in Lantau at Cheung Sha, these houses

have no legal problems with title etc. Also Villas at Golden Coast and Leyburn Villas.

These are all great to live in, all have parking and most have gardens that will be on

deeds so no Village BS.

Onyxwhisky, your remark about BANKS DO NOT CARE ABOUT ILLEGAL STRUCTURES is misleading and risky for 1st time buyers. You may have applied for a mortgage a while ago. Things are quite predictable and straightforward with most banks unless you are a GOLDEN CLIENT with a few million in Fixed deposits with them and they turn a blind eye to a few things.


I applied for a refinance 18 months ago and all 4 banks I used sent their surveyors who took photos and measurements. The final mortgage was only good with one bank as the other 3 thought I was a high risk as I am self employed. They offered a mortgage but made it 10 years instead of 25 or offfered it at stupid interest rates.


A friend who bought a village house with illegal construction also tried with 3 banks and they came , took pictures and all rejected it with one bank agreeing to do a finance in case they did a reinspection after the rennovation and it was all legit.


I spoke to a v senior bank manager at HSBC a while ago when a family member opened a Premier account with them. He smiled and said that in the past year they had only approved 2 mortgages for village houses. They do not declare it as policy but they offer you such poor terms that you would not accept it.


Shreq, seems you were dealing with the Village house mafia who have been infamous for chopping off trees, making roads getting villagers to sign off the rights and sell village houses like developers (which is NOT what the indegenous house policy was meant to be).


Yes you are right the chance of getting duped on an appartment is statistically a lot less than in a village house which comes with a lot of unknowns for new comers to the village.

I guess we are the few lucky ones who bought 9 years ago when things were still flexible.

Iwork in the same office as a guy who owns and sold quite a few village homes (an expat) and if anyone wants any advice from him I am sure he will be only too happy to answer questions. Feel free to message me