Buy-to-let property market trends
For those wanting to make money from property, it is good idea to look at buy-to-let investments because when you buy right, your home will always find a tenant. According to Martin Goodman, director of Torus Capital, property is always going to be a good investment in the long run, so if you take a long-term view, you cannot go wrong.
Goodman notes that the prospects of the rental industry are good and the trends are pointing in the right direction.
Read the 10 reasons why you should buy property for tips and insights into property investments.
A case for investment
A recent survey by Torus Capital reveals that 60 percent of property owners were selling in order to rent due to challenging economic conditions, 82 percent believe the rental stock available does not meet demand in South Africa, 85 percent say 2014 will see growth in the rental property market.
“An increasing number of people are choosing to rent rather than buy – so much so that the rental stock available does not meet this demand, as such, there has never been a better time to be a landlord,” says Goodman.
Top tips on buying property off-plan
Buying property off-plan can be daunting, particularly if it’s something you’ve never done before. We’ve all heard stories of shoddy workmanship, people being left in the lurch by inexperienced developers who fail to project the overall figures correctly, or those unfortunate buyers who are faced with the liquidation of the developer before the project is completed. So what do you look out for when buying property off-plan in order to avoid pitfalls?
Brendan O’Brien, CEO of Urban Space, a Cape-based property developer specialising in the development of top-end security estates in prime locations which are predominately sold off-plan, has the following tips for would-be buyers:
Thoroughly research the reputation of the property developer. You need to be able to trust that they can deliver on their promises and that you won’t be left with a sub-standard home – or worse, an unfinished or non-existent property. Make sure that your developer has a good track record of delivering properties that have been sold off-plan. Talk to some of his previous buyers. If he is reluctant to put you in touch with them, that should be a warning bell for you.
Home loans for affordable housing
When independent mortgage provider, SA Home Loans launched back in 1999, taking on the established banks that had until then dominated the home loans market, it quickly earned a reputation as a consumer champion, thanks to its competitive interest rates and excellent service. Sixteen years later, the upstart has grown into South Africa’s biggest non-bank specialist home loan provider and it is making waves again, this time with its entry into the affordable housing market.
SA Home Loans Chief Executive, Kevin Penwarden, says the move was welcome news for house hunters earning less than R18 000 per month and showed that the company hadn't lost sight of its origins as a customer-focused alternative to the big banks.
He says they’re delighted to announce their entry into this fast growing market. “Now, lower income earners have access to the same innovative, consumer-friendly approach to mortgage lending that's helped more than 150 000 individuals and families purchase their own homes.”
Title deeds' restrictive conditions
A recent judgement is a reminder to property owners of their obligation to ensure that they comply with conditions of title and of the potential consequences of not doing so,according to Fritz Schulz, director in the real estate department at Norton Rose Fulbright South Africa. Schulz was referring to the ruling made in the case of the Mossel Bay Municipality versus the Evangelical Lutheran Church.
Sale agreements of land normally contain a condition stipulating that the purchaser acquires the property subject to the existing conditions of title.
In most cases, buyers never see the conditions of title before, or even after, taking transfer because title deeds are almost always retained by the mortgagees, explains Schulz.
“Buyers should therefore always be advised to familiarise themselves with the conditions of title when acquiring a property and to ensure compliance therewith.”
What landlords need to know
Owning a property and leasing it to a tenant can be a mutually beneficial arrangement provided that the landlord adheres to a few key principles from the start when selecting a suitable tenant. Once all the checks have been completed and a tenant has been selected, Goslett says, it is important that the landlord draws up a comprehensive and legally sound lease agreement with all conditions specified.
This is according toAdrian Goslett, CEO of RE/MAX of Southern Africa, who says due to South African legislation, selecting the right tenant can be a rather complex process. However, there are various ways that landlords can ensure that they are protected from the risk of delinquent tenants and choose the best possible tenant to occupy their property.
Goslett says the first thing that a landlord should do before they advertise their property is to determine the conditions of the rental agreement. “It is important that the landlord is specific about what they want when it comes to the conditions, such as no pets or that a tenant is a non-smoker.”
Don't avoid going to sect. title AGMs
Most owners in sectional title schemes do whatever they can to avoid sitting through the annual general meeting of their building’s body corporate. Andrew Schaefer, managing director of the Trafalgar Group, warns that this could be a big mistake.
“Attending the AGM is the sectional title owners’ only real chance of influencing how their scheme is run,” he says.
The decisions made at an AGM directly affect the owners' lifestyles and finances, so it’s worth the time taken to attend and take part in these decisions.
Most serious disputes in schemes are about money, says Schaefer. The AGM is where members get the chance to hear how their money is being spent. Approval of the budget for the coming year is another critical point of discussion. At the AGM, members have the opportunity to discuss, and have explained to them, if necessary, how their money was spent, and if any special levies are likely to be necessary.
Foreign home buyers and house prices
South Africa is increasingly being seen as an investment location in which to buy property and the weak Rand is encouraging global investors to buy homes, says Lanice Steward, managing director of Knight Frank Anne Porter. Steward says in their experience, these property investors are not necessarily from the traditional western countries, but from other African countries, Russia and Eastern European countries.
The weak Rand can work for South Africans, to attract buyers into the market as foreign buyers will bring everything with them, create employment and invest in South Africa quite heavily, according to Steward.
According to bank surveys, house price growth improved in May, however, this growth is expected to remain in single digits for the remainder of 2013.
Pam Golding Properties (PGP) reports that after six years of subdued property sales and global economic turmoil, the residential property market in the Western Cape appears to be consolidating into an upward trend.