Ins and outs of occupational rent
Whether buying or selling property, it is vital to know what the conditions in the offer to buy specify.
This is according to Adrian Goslett, CEO of RE/MAX of Southern Africa, who notes thataccording to the law which governs property transactions in South Africa, those who want to sell or purchase a property are legally required to reduce all contractual agreements to writing.
The aim of this is to lessen the possibility of any ambiguity and to have a clear guideline as to what each party is entitled to and what they are responsible for. Since the introduction of the Consumer Protection Act, contractual language has become easier to understand, however, he says it is crucial that each party ensures they have read and agreed with all the conditions and provisions in a contract before they sign it, particularly when dealing with issues such as occupational rent.
He says that the occupational rent clause is essential as it is intended to protect the buyer and seller. Goslett says that the clause in essence will allow financial compensation for the seller should the buyer move into the home before transfer has taken place. It also provides equal financial compensation to the buyer should the seller still reside in the home after transfer.
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10 pointers before you house hunt
When you decide to start looking for a property, you may feel overwhelmed by the different property types, locations, prices and conditions. So it's best to do a little homework before you start the process and make your journey to homeownership a whole lot easier.
Kevin Mountjoy, national sales manager at ooba, South Africa’s biggest bond originator, gives the following checklist that will help you make your first step onto the property ladder with that much more confidence.
1. Affordability
Of course, the first thing that you need to know is what you can afford. An online affordability calculator will help you to work out how much disposable monthly income you have. Bear in mind that most banks generally won’t grant a bond for which the repayments will be more than 30% of your gross income.
You can also get a preapproval certificate from ooba so that you know exactly what you can afford, are familiar with the documentation that you need for the applications process, and can show the seller or estate agent that you mean business.
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Low credit and mortgage balances
Year-on-year (y/y) growth in outstanding credit balances in the South African private sector (households and the corporate sector) was 8.9 percent at the end of June 2013 from 9.1 percent in May.
According to Absa Home Loans, the value of private sector credit balances came to a level of R2 506.1 billion in June.
The value of outstanding credit balances in the household sector (R1 333 billion in June), which includes instalment sales, leasing finance, mortgage loans, overdrafts, credit card debt, and general loans and advances (mainly personal loans and micro finance), showed growth of 8.8 percent y/y in June with growth still slowing down after peaking at 10.4 percent y/y in November 2012, explains Jacques du Toit, Absa Home Loans property analyst.
He says the component of household secured credit balances (instalment sales, leasing finance and mortgage loans) recorded growth of 5.1 percent y/y to R1 021.1 billion (76.6 percent of total household credit balances) up to the end of the first six months of 2013.
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Is tenant liable for special levy?
A Property24 reader asks:
In a dispute with a former landlady aspecial levy was instituted by the body corporate for a shortfall due to monies being pilfered by the previous complex management. My landlady has now stipulated that I am liable for these payments. Is this legal? My contract stipulates that I am liable for increases in rates, taxes and levies, but surely a special levy is not my responsibility?
Yusuf Boda, legal manager at Legal & Tax, advises:
Generally the clause as it stands, refers to the normal levy that a landlord would pay to a body corporate, which levy is generally increased annually. In this instance, the lease stipulates very clearly that the tenant will be liable for the increase in levies.
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IEA to hold PDE preparatory workshops
Estate agents who have registered to write their level four or five PDE in September might need some help preparing for the exam.
This is according to Annette Evans, regional manager for the Institute of Estate Agents, Western Cape, who says there have been many questions as to what to expect and some have battled with the content.
Preparatory workshops will be held at the IEA Western Cape offices in Sheldon Way, Pinelands. These workshops will give estate agents an idea on more or less what time allocation will be needed for each question, they will receive coaching from an assessor as to what to expect in the interview and how to tackle the open book aspect of the exam.
The PDE level 4 workshop will be held on 23 August and will cost R550 for members and R650 for non-members.
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Advantages of investing in property
While the majority tend to focus on the negatives in South Africa, our European counterparts have to face far bigger woes and appear to be managing these challenges.
South Africans too, need to focus on fixing the future, says Shiraaz Hassan, commercial director for Asrin Property Developers.
“We have found that throughout the economic recession, compounded by the fact that South Africa is 1 percent behind our target economic growth rate, the one constant factor is property investment and home ownership – this asset class has seen constant appreciation, despite ups and downs,” says Hassan.
For example, he says if we look at the SA property industry there are many positives to investing and working within this sector today.
“In our experience, property values between R600 000 and R1.5 million have been escalating at a fair appreciation value, at anything between 6 to 11 percent.
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