How to avoid buyer's remorse
Worldwide, in good and bad economic times, financial consultants have always advocated investing a significant portion of their clients’ portfolio in property. This is according to Tony Clarke, Managing Director of the Rawson Property Group, who says in South Africa certain commentators have been advising people to stay away from property assets, which has led to ongoing debates with, as yet, no firm conclusion.
Clarke says the impression he gets is that those who have come out so firmly against property as an asset class have in some cases invested unwisely in property and are now damning the whole sector on account of their own mistakes. "Such people will often point to the probability that, in the next two or three years, residential house price growth is likely to be no higher than three percent in real terms."
He says there are, however, many others who, having done their research before buying, are happy with their purchases and are not suffering from buyer’s remorse.
Why you need a home loan deposit
Prospective homeowners that save for a deposit are not only more likely to obtain a loan, but can also benefit from a better interest rate, which will save them considerable amounts over the term of their bond. “For many owners your home will be your biggest asset, so the more it can work for you and help you create wealth, the better. This starts as early as when considering buying a property and saving for a deposit,” says Ewald Kellerman, Head of Sales at FNB Home Loans.
Around half of all new home loan applicants are for 100% loans, which means that the applicant does not have the intention of putting a deposit down. First-time buyers are least likely to have a deposit available and they are increasing in prominence. According to the FNB 2013 Q2 Estate Agent Survey 22% of new buyers are first-time home buyers.
Student accommodation and zoning laws
In the case, Stellenbosch Municipality v Van Wyk and Others (1549/2012)  ZAWCHC 18 (8 February 2013), the court granted the Stellenbosch Municipality’s application for an interdict to prohibit a property owner from offering student accommodation if the property zoning only allows for a dwelling house to be occupied by one family. The owner must obtain the required permission from the municipality or face the penalties.
According to Smith Tabata Buchanan Boyes (STTB), this is an important judgment to anyone offering accommodation to students.
View the judgement here.
STTB explains that this matter deals with an application by the Stellenbosch Municipality for an order interdicting Ms Van Wyk from providing student accommodation on her residential property in Stellenbosch, as it is contrary to the provisions of the applicable zoning scheme.
The relevant facts are that Ms Van Wyk and her two daughters live on an erf zoned residential.
According to the relevant zoning provisions, the dwelling house on the erf may only be occupied by a single person or family.
Landlords liable for tenants’ conduct
Sectional title units tend to be favoured by buy-to-let investors, often resulting in a high percentage of tenanted properties in these developments, which can lead to problems if there are unruly tenants. Johann le Roux, executive director of Propell, says it is important that the landlords in sectional title schemes know that they are responsible for the behaviour of their tenants.
He says serious problems can be created by tenants who behave in a way that is unacceptable to the other occupants, and the trustees of the scheme are entitled to impose fines for misdemeanours.
Fines charged can sometimes be R1 000 or more per offence, says le Roux. The problem here is that it is the landlord who will be fined, and not the tenant. The landlord could try and get the money back from the tenant but chances are high that if the tenant is not co-operating, he won’t be likely to pay the fines.
Once fines are charged, the body corporate can then also add interest on the unpaid amounts, and the legal fees attached if an attorney is hired to deal with the matter.
Buyers don't overlook municipal rates
When it comes to buying property most buyers are aware of the costs of obtaining a bond (and being able to repay it), transfer duties and lawyers' fees. However, many new homeowners haven’t reckoned with paying municipal rates. Of course everyone knows that they have to pay water and lights but, do they know how much these cost? And what about property rates based on a home’s valuation? Did you factor these amounts into your budget when applying to buy a home? Do you keep an eye on these rates in order to know if you’re being charged accurately?
Jan le Roux, CEO of Leapfrog Property Group, says many property owners have been caught unaware by the property rates determined by the municipality. He says while it is possible to object to the valuation, it takes time and could be rejected.
He says it is essential that buyers find out what their municipal rates will be before putting pen to paper.
Property valuations for 2013
Every municipality across the country possesses a General Valuation Roll, which contains the municipal valuations of all the properties within its purview. This valuation roll is used to determine what property rates homeowners will pay based on the properties they own.
What to ask if buying in an estate
While living in a gated community or private estate is very attractive to many because of the secure lifestyle and added benefits of amenities the estate might offer, there are some things that need to be checked before buying, as it is likely to be run by an Homeowners’ Association (HOA), which will have its own set of rules and regulations. This is advice from Johann le Roux, executive director of Propell, who says HOAs are sometimes confused with bodies corporate or sectional title schemes, but they do have differences.
If you’re considering buying a home in a gated estate, there are important questions to ask beforehand, he says. "It is best to do this upfront as you do not want to have the nasty surprise of discovering later that what you thought would be a perfect option for you, no longer is because of one of the rules that was overlooked.”
Ask for a copy of the rules and regulations of the estate. This will include things such as the colour schemes allowed or styles of the exteriors of the homes, whether pets are allowed and where they are allowed on the common grounds of the estate. The rules will also stipulate whether the owners are allowed to run businesses from their homes or whether they are allowed to sub-let rooms to earn an extra income.
Electricity charges: ST versus houses
The electricity charges that are put out by various municipalities in the Free State now have extensive Time Of Use (TOU) meters where charges are based on whether you use electricity during the summer or winter period (May to August) and what part of the day (peak/off peak/standard) as an example. More importantly these tariffs include an access charge (like the old basic charge) but more importantly a Peak Demand Charge, which is effectively a very high rate charged on the peak for the complex for the month, explains Mike Spencer from Platinum Global.
“These tariffs are definitely much higher than the normal disc meter charges and while the intention is to have everyone on a TOU meter, the differences currently in place are causing much of the unhappiness.”
Spencer says the Peak Demand Tariff is being charged not only for the current month but for 12 months into the future or until a higher peak is reached.
As this is a large portion of the account this does not help the situation.
In addition, he says many people still do not understand that these charges are not aimed at Sectional Title Schemes but at all bulk users irrespective of whether they are residential or commercial or a combination of both.
4 rules for buying a renovator's dream
Purchasing a fixer-upper can be a highly profitable endeavour, providing that a few golden rules are adhered to. This is according to Adrian Goslett, CEO of RE/MAX of Southern Africa, who says as with all property investments, buyers need to be sure that they are well versed and have completed the necessary groundwork before signing on the bottom line. "This is particularly true when investing in houses that require vast amounts of renovation. Knowing what to buy and what to walk away from is a key element to success with this kind of property purchase.”
He says there are a couple of reasons why certain investors specifically opt for homes that are in need of attention. Many buy fixer-uppers to turn a profit by selling them at a later stage. The fact that there is less competition in the market for these kinds of homes means that they generally sell for lower prices than most of the homes in the area. Another advantage is their potential for return on investment - especially if they were bought at a good price.
Cape Town CBD’s building refurbishment
A steady stream of building refurbishments continues to add commercial value to Cape Town’s Central Business District (CBD), ensuring that it remains a quality environment in which to do business. From subtle interior revamps to major overhauls of existing buildings, developers are keeping up-to-date with the evolving needs of a world class business destination.
Unlike Dubai, not every world-class city can bring its aesthetic and functionality into the 21st century through ground development, explains Rob Kane, chairperson of the Central City Improvement District.
However, he says developers and property owners in the CBD, like many of their counterparts around the world, recognise the commercial importance of refurbishing buildings.
“It is no secret that a defaced property brings down its value and can taint the value of an entire street or whole sections of a city.”
The importance of maintaining and refurbishing buildings in attracting and retaining tenants cannot be overstated.