SOMETIMES consumers come to us with landlord and tenant problems or regarding the purchase of houselots or other real estate; and though such matters are not strictly within the remit of the Guyana Consumers Association, or for that matter of consumerism, we do, with the help of our pro bono legal adviser, try to give them guidance. In today’s offering, we would give some basic guidance as to the purchase of landed property.

In Guyana, there are three avenues open to ordinary folk for saving. There are the various saving accounts in the banks which bear interest, and the endowment policies of Insurance. At this moment, the saving rates interest which the banks pay are much less than the inflation rate, and the present inflation rate would greatly erode the value of the amount to be paid at the maturity of an endowment policy. In other words, keeping money in the banks and in Insurance endowment policies at this time actually eat into a saver’s capital.
The other avenue of saving is the Stock Market; but in Guyana it is so small with only five or six companies actively trading, that this avenue could be discounted. The third avenue of saving is buying real estate.
Buying or investing in real estate is the safest and easiest way of saving for ordinary folk. Real estate (“properties”) tends to increase in real value with the effluxion of time or at least tend to keep up with inflation.
The various public and private housing schemes have been offering fairly affordable properties which grow in monetary value with time, as well as the houselots distributed by government, such as those, for example, distributed at Diamond, EBD. Many would like to take advantage of those offerings, but are inhibited from so doing because they are not quite clear as to how to begin the process, many thinking that they have to have the full purchase price in their possession before making the purchase.
In buying a property, the first thing to do is to inspect the property, taking into account such factors as location, condition of the building and type and quality of the building materials used. With regard to the houselots distributed by government, one has to take what one is allotted, and though some lots in a scheme may be more valuable than others, any lot allotted does give one value for money.
The next step is raising the money to pay for the purchase price and legal expenses. This part of the transaction tends to scare many prospective buyers because they do not have all of the purchase price. But they could obtain the purchase price by means of a mortgage on the property. A mortgage is a loan to pay for the property, the collateral being the property itself. For this loan, the borrower, that is the purchaser of the property, must pay the lending institution interest.
The government has been able to negotiate with the commercial banks and other lending institutions, such as the New Building Society, their willingness to offer loans to first-time property owners at much cheaper rates of interest than they would ordinarily have to pay. This, of course, is a great relief to buyers when paying their installments on the loan. And the time of repayment of the loan is often up to 20 years.
In buying a property, in addition to raising the money for the price, there are some legal requirements which have to be satisfied. The first of these is that an Agreement of Sale has to be made between purchaser and vendor. That Agreement identifies the purchaser and vendor; accurately describes the property being purchased; price is stated and the down-payment made; terms of payment of the rest of the price; and the time the transport is to be passed, that is the time the legal title to the property is to be transferred.
The next step after the Agreement of Sale is for the vendor and purchaser’s lawyers to file the necessary legal documents to effectuate the transfer of ownership and the award of the title of ownership, the transport, to the purchaser.
The Deeds Registry is the government agency which transfers ownership and keeps the records of the transaction. On receiving transport, the purchaser becomes the full owner and is then able to do whatever he wishes with the property.
There is a common myth that lawyers’ fees and the cost of transporting a property are oppressively expensive. This is not so. The total fees paid to the Deeds Registry is 2 1/2 % of the purchase price and the lawyer’s fees is 1% of the purchase price.
All this may appear complicated, but once one begins the process of purchasing a property, one would find that one action follows the other in logical sequence without confusion.
Above, we mentioned that the acquisition of real estate was a hedge against inflation and also a means of saving and increasing the value of one’s savings. But holding a transport has many other advantages, such as using it as a collateral for loans or prove to foreign embassies when applying for visitor’s visa that one has ties to the country.