More Cancellations By Academia Property Buyers

Cancellation of property purchases continue to pour in for Academia Extension 1 erven sold on auction late last year by the City of Windhoek, prompting questions on the success of the municipality’s last land sale.

The recent cancellations were prompted by realisation of a hidden clause in the purchase contract that demands the successful bidder pays the purchase amount in full within 30 days of the auction, after which the amount starts attracting monthly interest. The auction took place on October 16.

Many of the successful bidders are now sitting with interest ranging between N$60 000 and N$120 000, in addition to the purchase price of N$990 000 and above.

The highly publicised auction saw the municipality selling erven for an average price of N$1 million, for property that initially had an upset price of between N$420 000 and N$450 000 per plot.

Those who cancelled said they could barely afford to pay the bond on the plots let alone the additional interest on the bond.

The municipality was expecting the cancellations and the municipal executive already warned the city council in the February 2 minutes that: ” … more cancellations must be expected because of the shorter time frame that is provided in the auction conditions to provide guarantees to the City and perhaps the stringent financial … requirements for the said erven.”

The municipality’s spokesperson, Lydia Amutenya, told New Era that the cancelled plots would “revert to the City of Windhoek and will be sold through methods of sale in place as per Local Authority Act such as auction, tender or offer to purchase”. Amutenya could not say when the next auction would took place, adding that the date has not yet been set.

In February this year the municipality noted that many people were cancelling the erven purchased on auction, with people citing excessive prices compared to the bank valuation.

Asked whether or not the municipality would consider amending its auction conditions, given what happened at the last auction, Amutenya said: “All auctions are the same. The purchase prices are determined by the bidders themselves.

“The bidders decide on how much they intend to pay for the plots. The City does not have control over the intention of the bidders.”

According to the municipal minutes some of those who cancelled – and they submitted their reasons in writing – said the price was just too high.

Some said the time frame was too short to get architectural drawings. Others said the bank valuation of the plot was less than the bid, which required the purchasers to raise the difference on their own.

In one interesting case one bidder cancelled the purchase because the price was too high and the wife refused to sign the contract.

One resident wrote to the municipality: ” … the bank would only fund 70 percent of the bank valuation of the erf, which is less than what I bought [the erf] for. I will be required to pay the remaining 30 percent which is in excess of N$500 000 from my own pocket.

Unfortunately I do not have such money available. Due to these reasons I would be cancelling the purchase of the erf.”

Source : New Era