To buy or not? Our 1st house

Now that I have a baby boy growing up in a mouldy home, have decided to move out and buy a bigger house with little bit of fresh village air. So How about helping a brother with some advice huh? thanks.


Got a village house in sight somewhere in Yuen Long. Asking price was HK$2.88mio, 700 sq. ft, with rooftop. After flat viewing with owner and property agent, the agent told me that it was valued by a bank at 2.7mio, thinking that she was / (believe still is) honest, I told her that if it's within 2.68mio range, I will consider buying it.


I was shown this house by the owner and agent for a reason. I had met this owner before, where she showed me a 3 story village house she is building, where I liked the top floor, but told her I could not afford it. So she knew that I don't have that much down payment to give her and since the 2nd property (described above) she bought recently and is not allowed to sell it for 3 years, so she propsed, either:


a) I give her 268K now + 10k monthly for 3 years, after which I can get the house officially under my name. and can get mortgage. The current contract will mention that I will have the option to buy after the 3 years period and the 1st 3 year will be converted / considered my downpayment, Total 628K down payment completion in 3 years. If I make the contract fixed on such terms and she won't do any renovation at the above premises, otherwise she was going to do some cleaning and painting.


Option b) I give her 15K per month without any down payment for 3 years, rest is same as above.

total 540K down payment completion in 3 years.


c) Price to remain at 2.88 mio and I give her 10K per month for 3 years, after which i give her down payment and get a mortgage. res of the story is same as A above.


I contacted 2 different mortgage referral companies and valuations from most banks on average came to 2.2 to 2.7 mio. Both brokers said, I should further discuss the price with owner and ask for a reduction.


Contacted agent, her reply was that I had made an offer 2.68, so I should stick to it.


House is 12 years old. so I still got 13 years for which i maybe able to get mortgage.


I am currently paying 7K in my mouldy 6th floor no lift house in kowloon.


My requests to you guys is, what potential pittfalls do you see given the above 3 scenarios.


Another request is that the owner is rich, so she may agree that I give her 268K + 15+K for 13 years in total. this will save me from paying interest to the banks. It's a big "MAY" but I see possibility.


So how would a contract like that work? 268K + 15K for 3 years, after which I get the ownership of the house, what will she be left with for the balance 1.87 mio?


I am thinking a Loan contract where she pays me 1.87 mio, which I give her for her house and then I owe her 1.87 mio which I pay over 10 years period. Like I said she is rich and so pls don't laugh at my hopes.. who knows it might actually happen heh?


so how would a contract like that have to be drafted? any lawyers around to provide input as well?


Overall, I know it's not a good time to buy. but do you guys see house prices going up even further or a sudden nose dive is in order? or just my wishful thinking?


May you all have a great evening, sorry for the long read.

Are you a local? Methinks that any contract of a foreigner with a local is risky, because locals are not very honest. Ok, shoot me! :)


Also, village houses are inherently risky properties. Are you very very sure that all papers are correct? You can buy a village house, and then find out that it was actually built illegally, and you lose all your investment.


To me, the biggest problems here is that your contract needs to be fool proofed by lawyers. Don't trust agents!!! Of course don't trust the lawyer!!! I don't think I would do this, but if you can do a good deal (e.g. pay a "rent" for 15 years, and then you own the building), that sounds like an excellent thing for you. Problem is, if it's too good to be true, it's probably not true.


Also, interest rates are set to rise over the next years, surely nobody in his right mind would offer you such a deal!!


Finally, rich people didn't get rich by giving gifts to others. If a rich person comes to me and offers me a very good deal, I am going to be mistrustful.


As to which deal is the best, do the math considering that interest rates will go up in the next few years.

Thanks Jessie James,

You are awfully mistrustful for a guy who killed Brad pitt, or brad pitt let you kill him? heh? If you don't get the joke, let me know.

I am not a local, am a brown skin non-chinese reader. The agent is american educated chinese gal, and have 2 kids, but when money is involved, who knows? the owner works for some kind of bank / financial institute, so I don't think she would have gotten cheated herself, she seems to be a buying / selling / building these village houses, and since she has dogs / rabbits instead of kids, so I am tending to think that she is greedy, but not necessarilly dishonest. (apologies to all those who fall into this category, since I have first hands experience, both my uncles / aunts without kids, extremely greedy, so not pointing fingers, just have not yet seen the opposite good natured, animals loving, non-greedy people)

I am not getting a full building, just the 3rd floor with roof top. she is building a 3 storey house elsewhere in yuen long, which I told her I can't afford, so she came up with some of the solutions i mentioned above. Of course she also will benefit, since she can't sell the house for 3 years.

Ciao,

Yes, I got the joke, and I killed him. He didn't let me. I am awesome!


Are you relatively new to HK? There are village houses that are illegally built, and openly sold in the market, and people live in for years, but they are still illegal. The government can kick you out any time, and another villager can build a house in front of your door, and you can't get in any longer. Or then block the road, so you can't drive to your car. You can do a web search if you don't believe me, or other posters might post as well.


Village houses are very complicated things. There are entire villages which are illegal. It takes years to get the paperwork to build a village house, and a business person who builds a village house and then immediately sells tells me: this structure is illegal.


The fact that you are brown skinned won't help. Villagers are often racist, and don't like outsiders coming in. They key your car, etc.


Somebody posted here his trouble with village houses. You can search the threads...


Conclusion: make very very sure that everything is legally certified.

Good job, poor brad was tired of his life neways.

Thanks sure will, take care that is..

I am not new, fluent in Cantonese / Mandarin and work for a bank vetting contracts, (unfortunately not HK's property buying, selling, mortgage ones) otherwise would not have had problem drafting one myself.

The house is relatively new, and they say, if it has got land search / dd lot #'s e.t.c, then it's safe. there are houses way too old in front of this house I want to buy and they maybe rebuilt, but may take years. as for the car, I have yet to get a licence, though back home even as a teenager, nobody would ask me for a license, if i drove, dad's suzuki in most nearby small cities. ;( miss the old youthful days.

the house is near the main road, so I won't have much interaction with locals, will go straight to main road, get the mini bus, get the LRT, get the west rai line, arrive in kowloon. damn.. that does sound scary, i should get a license.

Buy a motorcycle, it's very safe.

Haha. Kidding.

Good luck!

Yes. Very safe to leave Parked and as long as it's an old Vespa and not a Ducati.

Thanks for the advises.

Ciao.

the fundamental issue i see is that the conracts she is offering you are all illegal, hence you have zero protection:


IF she is offering you an official rentral contract for these 10 or 15k/month, which gets stamped with the government to make it official, then you hold no title of the property.

- if the price of the property goes up, she can sell it to someone else and pocket the profits. you have only been a tenant, so you have zero recourse to her to own the property or at least get the profit as your profit

- if the price goes down, then she will try to make you purchase the property at the originally agreed price, which means you will then hold a property which has lost value. of course you could walk away at that point and write off the 10/15k per month as rental only


IF however she is offering you a purchase contract, then she won't be able to get it government stamped since she can only sell after 3 years. as a result your purchase contract is invalid and you don't hold any title to the property


IF she is offering you neither a government stamped rental or a government stamped purchase contract, then she is offering you something illegal which means you will most likely lose out since you are the gweilo and she is likely connected to some village triads, else she would not be in the village house construction business


seriously: if you are not a villager yourself, do NOT make this deal

"Contacted agent, her reply was that I had made an offer 2.68, so I should stick to it."

You can change your offer at any point until it is included in a signed contract.


From what you are describing, the reason she "cannot" sell is that there will be extra stamp duty on the buyer and seller as she bought it herself recently. It is not that she cannot sell, but is maybe trying to evade tax. Not something to get caught up in.

If this is the case also find out what she paid for the property herself to see if you are overpaying.


However either way, what she is proposing is risky, (in our village, a similar deal went badly sour), and as this is a big step for you, probably not worth it.


There are many houses and floors for sale in NT. Suggest you just keep on looking and strongly suggest you talk to several different agents and companies.

It seems we all agree. Very risky business transaction, perhaps illegal, and if it's illegal you have no recourse to the rule of law if she breaks the (illegal) contract. Plus, villages don't follow the rule of law in HK...

Jessie, I think your last statement is too general. Some villages are very well organized. Others are more difficult for outsiders. I think we have a great village, and our village head is fair and reasonable. You need to understand the dynamics and know a bit about the village before committing to buying. Many village houses have legal issues, especially when it comes to illegal structures, but as long as you understand what is illegal and how much it would cost to rectify, it is not necessarily a reason not to buy. When it comes to deed of title, again, you need to get a good lawyer to check the docs, but for many houses the deed is fine. Again do your own research, and dont believe the hype that the agents tell you.

Alright thanks guys. I rejected the deal 2 days ago. Like cookie, well explained " too much risk from many different angles". Actually few weeks ago I was offerred a similar deal (different agent, different area) for a whole 3 storey building, but I did not post here, since that price was above 5 million. So I guess such Unscrupulous agents / home owners are becoming a little extra desperate.


I was in one village last week, where the mini bus runs from 9 to 9 only, I have to be in the office by 9 and the journey was expected to take an hour an half at least... The house was cheap, but I don't yet have a driving license, so had to give up on it.


The point of telling you this HKLEV is that there are some village houses in my budget, but how can one know about the village itself? which villages are good / bad? generally I prefer Taipo, Fanling, this side of the MTR, but not many properties and the few there are not good quality and expensive.


Another issue is that properties that are available and in my price range are almost all those that are in middle level. Locals have dislike for such properties, so these go cheaply (no garden or roof top) I dislike them for the noise from both below / and above, but I have a feeling that if I ever move into one of these mid levels, with my naughty boy, either the guys living below or above us will be moving out soon. : )

Since this thread has kind of been "resolved" - can I hijack it to be about villages in general?


Anyone able to give a general rundown of the whole village system, such as:


- why are there villages

- what is the difference between living in a village vs living in Kowloon / HKI

- are there any legal differences related to living in a village (is it policed / governed differently)?

- does the Heung Yee Kuk have legal power or just power via their ability to stir up riots?

- what is the general history of the Kuk?

- why do some villagers have the full three story house whereas others only get 1 story each? For example Ma Wan villagers only have one story each (is that from their negotiations with SHK?)

- why do city dwellers tolerate the villagers' "right" to build a 3 story house (a "right" that is not granted to Kowloon or HKI'ers)


etc

"but how can one know about the village itself? which villages are good / bad? "


How about renting for a year or so first - Then you will know if it suits you, and you may also find it easier to spot a true bargain.

Good Idea, OffThePeak, but I seem to have used up my will to move, lived in HK for 20+ years and have moved close to 15 times. Hoping the next move will be final, but somehow I doubt it, afterall the only final move is towards one's grave. :)


Lucane, good on the hijacking attempt:

can only answer one of your questions:

- what is the difference between living in a village vs living in Kowloon / HKI:

HKI is too expensive and I think the only villages that one might find are in Chi fu area and stanley perhaps. Would be interesting to know if HK island has got villages houses as well and what's the deal with them? pricing? e.t.c.

Kowloon is well, just kowloon, never liked it, it's just soul-less, old concrete crap. Most front / harbour side HK I is also like that, but HKI does have it's good bits. I have yet to find something to like about kowloon, (oh yes the Monkeys at Ma Lau Shan, near Cheung Sha Wan) except perhaps convenience for travelling to China / airport / Macau e.t.c.


As for living in Village, raised on a village, but HK villages are different, so can't comment. usually you can grow your own veggies and have access to fresh water and air, all of which are priceless commodities these days, in most countries and even in most villages of the so called developed world.

"Kowloon is well, just kowloon, never liked it, it's just soul-less, old concrete crap. Most front / harbour side HK I is also like that, but HKI does have it's good bits"


That's not true for ALL parts of Kowloon.


You might explore West Kowloon, which is improving all the time, and places like Kowloon Tong.