Buying ST property – know the rules
Many security-minded South African homeowners have taken to living in sectional title homes due to the certain level of safety that this type of property provides, along with the fact that they are generally low maintenance. However, Adrian Goslett, CEO of RE/MAX of Southern Africa, says while there are benefits to living in these kinds of properties, problems can arise if homeowners are not aware of the fine print in the body corporate rules or don’t ensure that the sectional title scheme is in sound financial order.
He says since its inception in South Africa, the sectional title model has proven to be popular, often outselling freehold homes in various regions throughout the country. “Aside from the fact that there is an increased security element within this type of property, other benefits of living within a sectional title environment include the shared cost of basic charges such as water and electricity. This usually means that these costs are lower than what a homeowner would pay in a freehold property.”
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Top tips for buy-to-let investments
For many investors, buy-to-let property is still a great way to invest money, as indicated by recent reports. According to the FNB Home Loans quarterly report, buy-to-let accounts for 8 percent of total residential property buying with More buy-to-let investors choosing KwaZulu-Natal (11 percent) followed by the Western Cape (8 percent) and Gauteng (6 percent).
Ewald Kellerman, head of sales at FNB Home Loans, says Home loans for buy-to-let property as with primary properties are hard to get as banks are strict on lending following the global financial crisis of 2008/2009.
Property returns
Kellerman explains that capital growth or price appreciation of the property encourages buyers to invest for a potential future increase in property prices.
“This was a great motivating factor driving high levels of investment prior to 2007 when property prices growth contributed a large portion of the total return.”
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What buyers need to ask estate agents
South Africans spend an estimated R500 million a month on estate agent commissions and home buyers need to therefore ask the right questions to get their money’s worth. This is according to John Graham, CEO of House Check, who has the following advice regarding questions to ask agents for would-be buyers:
1. How long has this house been on the market?
This is an important question and one that will indicate how desirable the property is. If it’s been on for more than six months, you need to ask yourself what’s stopping it from selling.
2. Is there room for price negotiation?
This helps if you are on a tight budget, but it is also a question which could highlight potential problems.
If the seller is quick to meet your demands and accept a lower price, then listen for those alarm bells. If the seller is desperate to get rid of the property, there may be a hidden reason which could later affect you as the buyer.
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A good time to buy commercial property
According to Quagga Property Brokers director, Len Pears, now is the best time to invest in commercial and industrial properties. “People are concerned about the economy, similarly to how it was in 1994, but now is the time to buy as prices are still on the low side, compared with when the economy was in its prime.”
He explains that those who invested in 1994, when many felt uncertain about the future, have enjoyed exceptional growth in their property investments.
“Now is the time to do this again before the property market turns significantly and booms again, and it surely will,” he says.
He notes that they have experienced phenomenal growth in sales in 2012 ranging from investors looking for new stock along with owner occupiers looking for new properties, and this is still the same trend they are seeing.
“We are currently running out of investment stock for our investors – proving the economy is definitely nudging towards an upturn.”
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Loan approvals and property transfers
You’ve found your dream home, made an offer, it’s been accepted and your bond has been approved. It’s all extremely exciting, but there’s still a lot that has to happen before you can collect the keys and move in.
The first thing that you need to prepare yourself for is that the next part of the process takes some time.
“There is lots of paperwork and much communication between various intermediaries,” says Careen McKinon, direct sales manager at mortgage originator, ooba.
McKinon says the good news is that you’ll have lawyers acting on your behalf, so all you really have to do is wait.
According to ooba’s statistics, it takes an average of 69 working days for your bond to go from granted to registered.
The only action that should be required on your part is to pay the relevant costs, and sign the transfer documents and the bond documents.
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Buyers may pay seller’s council debts
Prospective buyers and mortgagees of property must ensure that all arrear municipal charges are paid by the seller before purchasing, taking transfer of or bonding the property, says Fritz Schulz, director at Norton Rose Fulbright South Africa. He says in the appeal court matter between Tshwane vs Mathabathe and Nedbank, the court concluded that the Local Government: Municipal Systems Act contains two principal elements that assist municipalities with the collection of municipal charges.
Firstly, the act provides that a registrar of deeds may not register the transfer of property unless a certificate is produced that all amounts due in connection with that property for municipal service fees, surcharges on fees, property rates and other municipal taxes, levies and duties during the two preceding years have been paid in full.
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What Generation Y home buyers want
There is no doubt that today’s Generation Y home buyer is not like their older counterparts, says Adrian Goslett, chief executive officer of RE/MAX of Southern Africa. He explains that in today’s market, Generation Y buyers or those under the age of 30 are tech savvy and always on the go, and so when it comes to buying a home, they have different expectations and wants when compared to older buyers in the market.
These millennial buyers are often at different life stages to their predecessors with many still unmarried and without children and this changes their needs and what they are looking for in a property he points out.
Goslett lists a few interesting features that Generation Y home buyers add to their want list when looking for a perfect home:
Green features
Homes with energy-saving eco features such as solar panels and gas appliances are high on the list of essentials for today’s younger buyers, who are looking to reduce their carbon footprint, while saving on utility costs.
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Extensions in sectional title schemes
You’ve installed a new deck, but suddenly you are faced with complaints from other owners in your complex and legal threats from the trustees of the body corporate. David Schaefer, regional manager of Trafalgar KwaZulu-Natal, says the problem often arises from a misconception that permission from the chairman or a trustee of the body corporate is sufficient to authorise an addition or alteration to a sectional title unit.
He says this is not the case and unless you follow the correct procedure you could be forced to remove the structure and make good, at your own expense.
Building a deck, for instance, is considered an extension of your section. In order for this to be done, an owner should ideally approach their managing agent, usually via the trustees, to determine the correct procedure to be followed before commencing the project.
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