Hurdles in owning tenement flat

PUBLISHED : Wednesday, 14 January, 2009, 12:00am
UPDATED : Wednesday, 14 January, 2009, 12:00am

Flats in old Chinese walk-up buildings may provide a refurbishment opportunity for owners seeking to live in a stylish, low density and architecturally unique environment.

But buyers would have to be financially strong because in the present risk-averse credit environment it could prove difficult to secure a mortgage to finance the purchase of such flats.

'Lenders would need to sell the units if buyers defaulted on their payments, and since the market for such units is relatively illiquid they may prefer not to make loans on these properties,' said Hendrick Leung Lee-chung, a director and general manager at Centaline Finance.

Me Leung said that many Chinese walk-up buildings were more than 30 years old and had been poorly maintained and managed because of the absence of owners' corporations. This had dragged down the value of the buildings and therefore further limited their appeal to potential buyers.

Agents also warned that buyers of such flats would have to be prepared to finance major renovations and the upgrade of facilities such as replacing ageing electric wiring and water pipes and even fixing exterior walls of the buildings to make the unit water-proof.