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1 November 2012

Commercial property - highs and lows
According to the South African Property Owners Association and Investment Property Databank South African Biannual Property Indicator, there was a moderate improvement in the property market over the past six months.

The report reveals that overall property investment returns recorded at 5.9 percent comprised of 1.5 percent capital growth and 4.4 percent income return for the first six months of 2012.

Operating costs were cited as an obstacle outstripping income growth and pushing cost ratios to unattractive levels.

Electricity costs continue to increase and now make up one third of the total operating cost bill for property owners while rates and taxes constitute a further 20 percent of the total, according to the report.

As of June 2012, the office market vacancies reached 15.0 percent from 12.1 percent in December 2011, with rental growth of 0.1 percent.
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Hiked and backdated levies - my rights
A Property24 reader asks:

I just moved into an apartment I bought in a block of flats. I am the first owner of this apartment as it is a new development. At first our monthly levy was estimated at R700, however, when we moved in and after our first meeting, it went up to R932. 

Then they added an additional R1 800 which must be paid over 3 months. This is a backdated levy that accumulated since the building was already using resources before we started occupying it. Now we are required to recover the cost even if the apartments have not been registered on our names yet. 

Can we be held liable for the expenses of the building prior to the handover? 

Phil Calothi, owner and Managing Director of a leading Cape Town based managing agent company, Land and Sea Development Services (Pty) Ltd, advises:
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Smart strategies for first time home buyers
Young people are daily being urged to become homeowners and get onto the “property ladder” but it also needs to be said that most first-time buyers will probably have to take a much closer look at smaller homes, cheaper commutes and properties in need of renovation if they are to realise this goal.  This is according to Berry Everitt, MD of the Chas Everitt International property group, who says that while affordability is of course the major concern of all those entering the market for the first time, there is often quite a serious disconnect between this concern and the size of home they would like to buy.

“However, rather than becoming discouraged, they need to understand that bigger isn’t necessarily better these days, and not only when considering the purchase price or monthly bond repayments.
 
“A smaller freehold home or a townhouse also means lower property taxes, maintenance costs, insurance premiums and electricity and water bills - and being able to enjoy a better lifestyle at the same time as becoming a homeowner.”
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Paying my home loan early - penalties?
A Property24 reader asks:
We intend to settle our home loan shortly but I need some advice in order to avoid penalties. Can we settle the major part of the amount owed and leave a minimal amount like R500 in our bond until the 20-year term expires?

Gustav Zwiegelaar, Regional Manager at SA Home Loans in the Western Cape, advises:

When an outstanding loan amount is settled in full prior to the contractually agreed to date, some financial institutions apply interest that would have accrued against the outstanding amount for a certain period, usually 90 days, as part of the settlement figure.

It is important to understand the difference between a bond that is registered in the Deeds Office and the actual financial loan that it is registered for.

A bond is registered in the Deeds Office as a legal vehicle to allow for borrowing against something of value, in most cases immovable property.

The explanation that I use most often is that a bond is like a suitcase that allows you to carry the finance. Let us use an example of a bond registered for R1 million.
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Property prices and income after 8 years
Property prices, relative to income, are back to levels last seen around 2004.  That’s according to Ewald Kellerman, property analyst at FNB Homeloans and guest speaker at Harcourts’ Power Rally series, which took place around the country recently.  

Commenting on current trends within the South African property market, Kellerman said house prices, which had shown year-on-year growth of 5% for the 12 month period September 2011 to September 2012, were rising more or less in line with inflation, which was recorded at 5% in August this year. This, along with improving selling times in the major metropolitan areas, improving affordability on the back of salary increases and an increase in bond grants by the banks, indicated that the market was recovering, albeit mildly.  

“There’s a better balance between buyers and sellers,” he said, adding that in some areas, agents were reporting stock constraints for the first time in years. He also pointed out that the high cost of building material and labour, along with limited growth in property prices, had seen very little building activity in the last few years. “The building industry is under huge pressure as a result of reduced profitability,” he commented, adding that the boom period had seen a large amount of new stock being offloaded on to the market, to the point that there was an over-supply in some areas. This was now being corrected, which he said was good news in terms of correcting the balance between supply and demand. 
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Protection of Personal Information
The passage into law of the Protection of Personal Information Bill (POPI) is imminent and, when it does come into effect, it will have significant implications, says Zaid Gardner, senior associate at Edward Nathan Sonnenbergs (ENS).  Gardener says this will affect both the citizens whose information is processed by any number of companies and public bodies, and for the companies and public bodies that are doing the processing.

He explains that one of the most significant effects of POPI will be the introduction of comprehensive and dedicated data protection legislation to South Africa.

This is likely to impose significant compliance burdens on South African companies and public bodies.

“Data protection has been around for some time in the developed world, but it’s a relatively new concept for South Africa and will take some getting used to.”
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