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Who is responsible for prepaid meters
Prepaid meters are usually installed in sectional title schemes because the body corporate of that scheme has deemed it to be necessary.

It is usually paid for out of the funds that the body corporate has put aside for this purpose or they will have raised a special levy to do so.

But what happens when these units need some form of maintenance?

Michael Bauer says the body corporate is responsible for arranging the maintenance of the prepaid meters and for ensuring that the payment for this is made.

Prescribed Management Rule 33 (3) says that “Notwithstanding the provisions of sub-rules (1) and (2), the trustees shall, if so required in writing by a majority of owners, procure the installation and maintenance in good working order, at the body corporate's cost, of separate meters to record the consumption of electricity, water and gas in respect of each individual section and the common property.”
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My geyser burst - who's responsible
A Property24 reader asks:
I live in a sectional title and two and a half months ago there was a problem with my geyser. Luckily there was no damage to the ceiling. However, it turned out that my unit does not have a stop valve and therefore I cannot turn the water off to my unit. The body corporate claimed from their insurance for the geyser and I just had to pay the excess. The stop valve has not been installed, even though they promised that it would be done.

Last week, due to a faulty part on the geyser, my whole unit was flooded, causing considerable damage to my ceiling and laminated wooden floors. Which party is liable to fix these? How will the insurance work this time around? Should the geyser and parts not still be under warranty?

Phil Calothi, owner and Managing Director of a leading Cape Town based managing agent company, Land and Sea Development Services (Pty) Ltd, advises:
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Home buying: From townships to suburbs
The areas formerly classified as “Black Areas” under the Apartheid Era classifications have outperformed the former "White suburbs” in terms of house price growth for much of the period since 2006, playing catch up off a very low price base.

The Q2 2013 FNB Former Black Township House Price Index for Major Metro regions rose by 8.4 percent year-on-year (y/y) (5.7 percent in Q1 2013) - mildly higher than the 6.3 percent recorded for the entire market in the six major metros (eThekwini, Cape Town, Nelson Mandela Bay, Ekurhuleni, Joburg and Tshwane).

According to John Loos, FNB household and property sector strategist, township markets have shown to be a bit more cyclical than the overall metro residential market, and this probably has much to do with a greater dependence on credit-driven home purchases amongst lower income groups.

Loos explains that during the 2008/9 recession and interest rate peak, the Township House Price Index saw a more significant house price deflation trough, reaching -15.1 percent y/y decline by Q2 2009 (compared to the more mild overall Metro low point of -4.5 percent decline).
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Make or break for sectional title
The success or failure of sectional title schemes today is dependent, to a large extent, on the body corporate trustees and their managing agents.

However, this is often forgotten by the developers who appoint the managing agents for the first year and by the body corporate members/owners who have to elect the trustees who will run the development going forward.

Paul Henry, Managing Director of Rawson Developers, says the biggest cause of failure in sectional title developments is ignorance. “Trustees are seldom aware of their responsibilities towards the members of their body corporate as determined in the Sectional Title Act. They may be experienced business men and women in their own right but they have never properly studied the Sectional Title Act.”
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Why sectional title offers best value
The value for money and the standard of design in most new sectional title property developments around South Africa has improved dramatically in recent years.

This is according to Paul Henry, Managing Director of Rawson Developers, who says this is a result of the recession and the huge slow-down in new unit delivery, which caused two-thirds of South Africa’s developers to put their schemes on hold.

Henry says that in the boom era of 2003 to 2008 the demand for sectional title units was so great that almost all developments, good and bad, sold fast. "However, once the economic crunch began to make itself felt, buyers were less in evidence – and a great deal slower to commit themselves.”

They had also learned to be more discerning, comparing, for example, the values per square metre of the different developments on offer and the values of the different areas where they were situated, and certain buyers became adept at analysing the performance of all properties in that area. "Research via the Deeds Office and other surveys began to be done not just by agents but by the general public too.”

What effect did this have? Henry lists the following points as having been most transformative and evident in the last ten years.
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Help for struggling mortgage holders
Activity in the property market over the past year has been encouraging with most agencies reporting increased buyer activity and sales.

However, Seeff’s chief executive officer, Stuart Manning, says the renewed economic uncertainty and downward pressure is concerning for many homeowners. Especially for those that are already struggling to make ends meet, meeting their monthly bond repayments could be worrisome.

Already, he says more than a quarter of bond holders are in arrears and in view of the economic climate, the numbers are growing. The worsening economic outlook, shrinking employment, continuing petrol price hikes, municipal rates and electricity increases and rising cost of food and basic necessities, often above the average inflation rate, means that financial difficulty is inevitably mounting for homeowners, he says.
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Listed property investment prospects
Although volatility in the bonds market may have caused suffering for South Africa’s listed property sector weeks ago, there are still opportunities for investors thanks to higher yields and sound market fundamentals.

According to the SA Real Estate Investment Trust (REIT), listed property prices decreased by 19 percent between 17 May and 24 June this year, something analysts say was a re-pricing in the face of changing global market dynamics.

The appeal of listed property is that it provides both a steady income stream and capital growth over time, says the organisation.

Keillen Ndlovu, head of listed property funds at STANLIB, says listed property prices have changed but the fundamental story hasn’t.

“We are still comfortable with our income growth outlook of about 7 percent over the next two years.”

Ndlovu notes that the listed property sector has seen this type of volatility before - with a decrease of 26 percent between May and July 2006 and a 37 percent decrease between November 2007 and June 2008.
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Damage deposits & final rental payment
In residential property rentals, the Rental Housing Act states that the landlord may hold a deposit from the tenant to be used as security against damage that the tenant may cause to the property during the tenancy.

Louw Liebenberg, CEO of PayProp, says unfortunately many tenants are under the impression that having a deposit means that they do not have to pay their final month’s rent, and can elect to have it paid from the damage deposit held by the landlord.

Although this practice is tolerated by landlords, it is not strictly legal, as the purpose of the deposit is to provide surety against damages.Liebenberg says the unfortunate reality is that most landlords accept this type of settlement as at the very least it protects the last month of income. He says what it doesn’t cover is any damage to the property, outstanding utility bills or even legal fees to attempt to recover outstanding amounts from the tenant.
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