Risks in buying in older buildings?

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  1. #1

    Join Date
    Sep 2009
    Posts
    16

    Post Risks in buying in older buildings?

    Hello everyone,

    We've been renting for the past 2.5 years, and we're now looking to buy a flat in an old building and renovate from top to bottom. This is because we will die a slow death if we had to live in a 450 sqft apartment.

    The flat we're interested in is in a 43 yr old building and in Wan Chai. This doesn't bother us but it bothers the banks very much. We have been told the bank valuation is close to the asking price so that's one good thing, because so many banks value older buildings for much less than the asking price. But we are trying to get our heads around this whole thing of building age plus mortgage tenure not being more than 40 (or 60) years.

    Our fear is more to do with selling the place, in time. If we live in it for a few years, the building will be closer to 50 years old. We're not buying it so much for investment as for ourselves to live in, but even so, could anyone give us any advice about buying into older buildings? Do banks stop lending money to buy buildings of 50 years and above? If this is the case, am I right to assume we will have problems selling the place in time because people can't get the loan for it, even if it's been nicely renovated?

    How do people sell flats that are older than 50 years (or do they even exist in HK)?

    We love the space and the potential it offers. Any help and advice on what we can do to get this place and the options of selling it in future would be greatly appreciated. Many thanks in advance.


  2. #2

    Join Date
    Mar 2009
    Location
    Hong Kong
    Posts
    2,113

    you have already noted the problems with selling old flats. that is another reason that flats in hk depreciate with age whereas some houses elsewhere can even appreciate.

    there is no way around it... just hope that you can find a buyer who can afford the flat outright or wait for a company to buy the whole block, knock it down and rebuild the whole building.

    some banks offer longer mortgages, but not many. its good you are not expecting investment, but be aware that the price you can sell it at will be proportional to the smaller market who can afford it.


  3. #3

    Join Date
    Sep 2009
    Posts
    16

    Thanks UK/HKboy, appreciate the thought. We have so little opinion about this right now, any feedback is helpful.

    Cheers.