5 improvements to increase home value
Home loans are difficult to get with the new credit rules and many existing homeowners who have thought about upgrading are staying put because they are worried they might not qualify for another home loan if they were to sell their property and buy again. This is putting a completely different complexion on home renovations and alterations, says Berry Everitt, MD of the Chas Everitt International property group.
He says those who are upgrading with the idea of increasing their home value prior to selling need to consider which ‘fixes’ are likely to deliver the best immediate return on expenditure. Those with longer term plans to stay put have more freedom to make changes that will improve their own lifestyles.
Everitt says this doesn’t mean they can go overboard and create a mansion in an area of starter homes which they could never sell for what they’ve spent on it. However, it does mean that they can undertake projects that might take a bit longer to become cost-effective.
Landlords beware of dodgy tenants
As a landlord, you may or may not realise just how vulnerable you are to the ploys of con artists parading as reliable tenants. Cases of tenants scamming their landlords abound and the only real way for property owners to protect themselves is to ensure they are thorough in their tenant screening processes.
Michelle Dickens, Managing Director of TPN, illustrates just how easy it is for landlords to fall victim to a rent scam by recalling the story of one particular landlord who was approached by a tenant who said that she had seen the landlord’s property advert and was interested in renting from him. She added that she would be upfront with him that she had a poor credit history, and as such there wasn’t really any point in running the credit check. Thinking that she demonstrated honesty and integrity in her forthrightness, the landlord decided a credit check was redundant.
“During her first month of payment she issued a fraudulent proof of payment, then during months two and three, she paid but was considerably late with payment, month four saw a slight improvement in this, but by months five and six she was neglecting payment altogether,” relates Dickens.
Can we pull out after buying property?
A Property24 reader asks:
I need advice regarding a land purchase and whether we pull out of this purchase without claim ramifications from the seller.
A friend and I have put down a deposit on a plot and signed the agreement of sale with the seller. However, we now wish to withdraw from the sale. The question is, are there any legal grounds for any form of claim against us should we now withdraw from this purchase and can we get the deposit money back (which is held in a trust account by the selling agent)?
Jaco Rademeyer, from Jaco Rademeyer Estates, responds:
This matter deals with cancellation of an offer to purchase land.
Rental disputes - get it in writing!
When it comes to landlord-tenant disputes, interpreting legal obligations can be tricky. The varying nature of issues that might arise is endless in possibility, which means that there is no well-defined guideline on how to handle a highly specific set of circumstances.
“The majority of disputes that will occur between a tenant and landlord concern the landlord’s fulfilment of his maintenance duties,” says Michelle Dickens, Managing Director of TPN. “In such cases, tenants are often inclined to withhold rent to force the landlord to act.”
She explains that the law which concerns disputes of this nature leaves a significant amount of grey areas, as it stipulates that the landlord has a responsibility to maintain the property such that it is fit for purpose it was let – but in practical terms what exactly does this mean?
“Maintenance responsibilities that fall to the landlord are things such as broken stoves, toilets that are not flushing and damp,” Dickens elaborates. “Issues such as doors not locking or light bulbs not working are matters for the tenant to resolve.”
Commercial property: rent vs. buy
Many small to medium-sized businesses could be creating wealth in a separate entity by paying off an appreciating asset if they chose to buy their office space instead of rent for a period of more than eight years.
This is according to Mike Walters, divisional head of Renprop Commercial, a company specialising in both the leasing, sales and development of commercial property.
He says while renting office space allows businesses the freedom of moving to another location without too much hassle, if a business is in the financial position to do so, purchasing the building or office space will provide an inflation-hedged investment that will either match inflation or outstrip it in terms of growth.
After an eight year period, the money spent on rent could essentially go towards ownership of an office building over time and be an asset.
As the capital value of the property increases, so will the company’s investment and asset base, explains Walters.
Low mortgage advances growth in 2013
The year-on-year (y/y) growth in the value of outstanding credit balances was 9.9 percent in January 2013 and growth is expected to remain low in 2013, according to Absa.
Jacques du Toit, property analyst at Absa Home Loans attribute growth to continued strong growth in the components of instalment sales and unsecured credit, with growth in mortgage balances marginally lower in January from December.
Growth in instalment sales balances (15.4 percent share in total household credit balances) was 19.5 percent y/y in January, with growth in unsecured credit balances (23.1 percent share) at 28.4 percent y/y.
Du Toit says the private sector mortgage balances including both commercial and residential mortgage loans grew to 1.8 percent noting that commercial mortgage balances continued to contract by 0.8 percent y/y in January.
Ins & outs of compliance certificates
New laws have recently been passed affecting the selling of a home. Municipal laws now require homeowners to obtain additional certificates before a transfer of ownership takes place.
In previous years, only Electrical and Beetle Certificates were required, now the new laws also stipulate that you need to obtain a Gas Certificate, Electric Fencing Certificate as well as Plumbing/Water Certificates.
Engel & Völkers shares a brief overview of the certificates required...
Beetles infest the timber of your home, especially roof trusses or wooden floors and skirtings if you have them.
The Beetle infestation certificate guarantees the absence of beetles from any timber on the property.
Budget 2013 and the property market
Budget 2013 presented by Minister of Finance Pravin Gordhan has been given the thumbs up even though in his presentation, he says the 2013 Budget is presented in challenging times, pointing out that this is a budget in which there is limited room for expansion, yet there are significant opportunities for change. Gordhan says the economy shows signs of improvement although global outlook remains troubled.
He notes that South Africa’s economy has continued to grow, but at a slower rate than projected at the time of the 2012 Budget.
“The 2013 Budget takes the National Development Plan as its point of departure and the strategic plans of government and the medium-term expenditure plans will be aligned to realise our objectives.”
Among other things, he says Government has taken measures to control growth in spending and plans are in place to reduce spending by R10.4 billion through reprioritisation, savings and a draw-down on the contingency reserve.
It is misleading to say that all these certicates are required by law and that the absence of such certificates will prevent transfer being registered. Electrical and electric fence certificates and gas certificates are a legal requirement but the absence of such certificates will not prevent transfer being registered as they are not required to be provided to the Deeds Office or the local authority. Plumbing certificates are a requirement of the bye-laws in Cape Town and possibly in other cities, and the lack of such a certificate in Cape Town will result in no rates clearance being issued and the rates clearance certificate is a prerequisite for a transfer to be registered.
Beetle certificates are simply a contractual or customary requirement and the absence of a beetle certificate will never prevent a transfer from being registered. If the contract requires a beetle certificate the conveyancer who does not make sure that one is issued will be negligent but the transfer can be registered without one.