Can you afford not to buy property?
Although many buyers are eager to take advantage of the favourable market conditions such as the low interest rates and competitive market prices, some still err on the side of caution.
This is according to Adrian Goslett, CEO of RE/MAX of Southern Africa, who says while the majority of first-time home buyers acknowledge that the market they are currently in is an ideal time to take the step toward home ownership, the biggest concern which has kept many of them on the fence is simply whether or not they will be able to afford to buy a property.
Goslett says this is a valid concern that can be laid to rest by consulting with a real estate professional or a bank.
A buyer can speak to a credible mortgage originator to establish the home loan amount they would potentially qualify for first, he says.
He explains that they will be able to list and explain all the costs involved in buying a property, and will be able to assist the buyer in calculating how much they can afford.
HOA penalty levies for not building
While buying a piece of land to build your home on in a security estate or gated community may seem like a dream come true to many people, make sure that you read all of the Home Owners Association (HOA) rules and regulations before signing on the dotted line.
With soaring building costs and the economic climate still unstable, be sure you know exactly what you are getting yourself into when buying a piece of land to build your dream home on in a gated community or security estate, says Johann le Roux, Executive Director of Propell.
HOA’s have strict penalties in their rules and regulations with regards to building on purchased plots, he says.
The property boom, he says saw many people buying spec plots hoping to make a quick buck, then finding they were either not able to build at all or not able to complete building that had started when the economic crisis hit.
How to screen tenants properly
It is essential that landlords screen prospective tenants to avoid getting lumped with a 'bad deal' that could end up becoming annoying and costly.
At a training session held recently, David Beattie, principal of Chorus Letting, a Cape Town agency that specialises in residential letting, stressed the importance of letting agents screening potential tenants properly.
There is a step by step process that Beattie uses and advises all letting agents to use this to qualify tenants and, thereby, reduce the landlord’s risk.
“It is my experience, and I may be biased here, but many problem tenants are usually placed by the landlords themselves who often do not screen tenants thoroughly enough."
Beattie says if all the checks are done properly, it does reduce the risk of bad tenants moving in.
Tenant rights when property is sold
In South African law, provision has been made to protect a tenant in the event of an owner selling his property while a lease is still in place.
“Huur gaat voor koop” comes into effect to protect the tenant’s right to the property while his lease still stands. This was done to protect tenants from eviction if a property was sold and they can exercise their right to remain on the property for the full duration of their lease.
Lanice Steward, MD of Anne Porter Knight Frank, has drawn attention to the issues that may arise in these cases.
She says it is often said that the purchaser steps into the “shoes” of the landlord, there is no need to draw up a new lease, all the conditions will remain the same and it will automatically transfer to the new owner - but to what extent?
SA courts say (as upheld in the court case Spearhead Property Holdings v E & D Motors, in a recent law update provided by Smith Tabata Buchanan Boyes) that an option to purchase clause in the lease does not form an integral part of this relationship, i.e. if the home is on the market and the tenant decides that he wants to buy the property, in the conditions of the lease he might get an option to purchase but he cannot exercise this right once the property has already been transferred to a new owner. If he does want to buy the property he must make his intentions known as soon as the property comes onto the market.
Stealing body corporate funds
Despite countrywide publicity given to the dangers of sectional title body corporate property funds and trust monies being misappropriated, cases still crop up where “basic rules” of good internal control measures are overlooked.
This is according to Michael Bauer, general manager of the property management company IHFM, who defines what he sees as the basic rules:
In any small to medium-sized sectional title scheme or homeowners’ association, any payments made by the managing agent (if there is one) must be approved by two authorised signatories. Larger sectional title schemes or homeowners’ associations should operate their own independent accounts where several trustees should have signing powers.
As a corollary to this, however, non-trustees should not have the power to authorise a payment without at least one other (preferably two) co-authorising the payment. In many cases the managing agent can be a co-signatory, but at least “four eyes” should check every payment.
Can the property sale be cancelled?
A Property24 reader asks:
I'm an estate agent and I met someone who asked me to advise her on a property matter.
They made an offer to purchase on a property in Kempton Park three days ago via an unnamed agency for an amount of R750 000. However, they have subsequently changed their minds and want to back out of the deal, as they feel that they have made an error and would like to look closer to the schools that their children are in. Apparently the estate agent is trying to hold them to the contract, due to obvious reasons.
I had a chat to my manager hoping that he could confirm the 5-day cooling off period, and he said that they cannot use the cooling off period as the value of the contract is over R250 000. I beg to differ as when I completed my NQF4 course last year the CPA was brought up in-depth and the cooling off period of 5 days was mentioned by the lecturer.
The new CPA (Consumer Protection Act) now protects consumers more than ever before - and rightly so as we are all consumers at some time or other.
An unexpected offer to buy your home
As more and more buyers enter the market and the demand for property increases, there is a good chance that demand could soon outweigh the current market’s supply of homes.
This is according to Adrian Goslett, CEO of RE/MAX of Southern Africa, who says if homes that are currently on the market do not meet buyers’ criteria, South Africa could soon follow the trend in the US, where frustrated house hunters are making offers on homes that are not on the market.
Goslett says although this is usually in the top-end sector of the market, unexpected offers on lower-priced properties have become more popular as supply wanes.
The trend has come about because the inventory of property on the market is shrinking, he says.
While consumer confidence and the desire to take advantage of favourable buying conditions increases, Goslett says, some regions in South Africa have already reported seeing a shortage of certain types of properties.