Renting property in the city centre
The ongoing revitalisation of CBDs in SA’s big cities is being hastened by the increasing number of people seeking to live in these areas rather than the suburbs or former townships.
According to Shaun Rademeyer, chief executive officer of BetterBond Home Loans, the big attraction is being within walking distance of their jobs or places of study, as well as a variety of food and clothing shops, restaurants and coffee bars, galleries, nightspots, the gym, service businesses such as laundries, copy shops and locksmiths.
“Proximity to public transport hubs like the Gautrain stations and Bus Rapid Transport stations is also important to an increasing number of young home buyers and tenants and in this they are following the lead of their US counterparts, according to the latest national housing survey by the Urban Land Institute,” he says.
Rademeyer says this poll also showed that 62 percent of Generation Y respondents prefer to live in mixed-use developments – that is, buildings that may house shops, restaurants and offices as well as their apartments.
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Tips for building a new home
It is unlikely that a home built for a client today, will be cheaper than one built several years ago.
This is according to Bill Rawson, Chairman of the Rawson Property Group, who says the reason for this is fairly obvious - while the majority of existing homes took a knock in the recession and at one stage lost anything between 10 and 50 percent of their original values, building materials and building labour costs continued to rise.
Today, a 20-year old, three bedroom home in Plumstead, Cape Town, might cost R1 million to R1.2 million. Buying the stand, building the same home and equipping it with modern materials would probably result in a price of at least 35 percent more.
However, Rawson says the satisfaction and pleasure of helping an architect design exactly the home you want and then seeing it take shape are so great that there will always be certain discerning individuals who will go this route despite the difficulties of finding a suitable site.
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Sapoa withdraws appeal against COJ
After 18 months and much negotiation between the City of Johannesburg and property owners, the SA Property Owners' Association (Sapoa) has decided to withdraw its appeal against the Johannesburg Consolidated Town Planning Scheme 2011.
“Thanks to persistent discussion and negotiation, Sapoa is satisfied there has been sufficient progress to warrant withdrawing our appeal,” says Sapoa chief executive officer, Neil Gopal.
The draft scheme, published for comment in 2011, consolidates separate town planning schemes that were promulgated as far back as 1975, for a slew of former municipal areas.
Its aim is to focus on enhanced land use management, coordination of urban growth, integrated transport planning, and innovative urban regeneration strategies.
At the time of its publication, Sapoa called the draft scheme unworkable and argued strongly that the document did not reflect any of the extensive input submitted by the commercial and industrial property sector.
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First-time home buyer subsidy
There is still much ignorance about first-time home buyer’s subsidies, not just among the previously disadvantaged (at whom the subsidies are targeted) but also among many industry and community leaders who have indicated a willingness to help their own people in applying for these subsidies.
This is according to Mike van Alphen, National Manager of Rawson Finance, the Rawson Property Group’s bond origination division, who says there is still doubt as to exactly who qualifies and what income levels are considered suitable for this type of subsidy.
“FLISP (Finance Linked Individual Subsidy Programme), which was launched in May this year by the Department of Human Settlements, was widely accepted as a big step forward because it raised the affordability levels of bond applicants, provided they qualified for loans from recognised banks.
However, mitigating against success in this particular subsidy, says van Alphen, is the fact that there appear to be very lengthy delays (sometimes up to 12 months) in the application process. “In addition, the funding in the provincial coffers, despite national funds having been allocated, is very often lacking or already spent.”
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Tax & garden flat - what can I claim?
A Property24 reader asks:
I have a granny cottage on my property that I have recently started renting out and get a rental income of R5 500 per month. Must I declare my income to the taxman and will they find out if I don't? What expenses can I claim? The cottage is partly furnished with new appliances like fridge, stove/oven, microwave, kettle, toaster and a bed, TV, old couches from my house and a coffee table. Also, it did cost about R30 000 to renovate and get it up to scratch to rent out.
Johan Swart, tax manager at Legal & Tax, replies:
All income must be declared to SARS, therefore the R 5 500 rental you receive for a granny cottage must be included on your annual tax return. It should not be a question whether SARS will find out. All too often any rental dispute or problems with the neighbours, leads to complaints laid with SARS.
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Investors urged to look beyond bonds
High volatility in SA’s listed property sector over the past year has largely been blamed on rising bond yields, which conventional wisdom says is bad for property returns.
But more and more research shows that there is little empirical support for this thinking and that in some cases, rising bond yields and improving property returns can take place in parallel.
The SA REIT Association (SAREIT), a local umbrella body that works to promote REITs as an investment class, also strives to educate investors about the opportunities and challenges in the listed property sector.
“It's important for investors to realise that there are many different outcomes for property returns, even as bond yields rise," explains SA REIT marketing committee chairman and chief executive officer of Vukile Property Fund, Laurence Rapp.
Rising bond yields are just one of a host of factors that impact property returns.
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Should you sign a sole mandate?
Many sellers shy away from signing a sole mandate as they are worried that putting all their eggs into one basket may reduce the odds of finding a buyer for their home in the shortest time possible.
However, says Adrian Goslett, CEO of RE/MAX of Southern Africa, this may not necessarily be the case as sole mandates definitely have their benefits.
He says a mandate is an instruction or authority from a seller to one exclusive estate agent to provide the services involved in selling a specific property. “It’s a business contract, an agreement between the seller and their estate agent, allowing the agent to market the seller’s home in order to procure the right buyer for the property."
Additionally, says Goslett, the seller is also agreeing to allow the agent to handle all the legalities involved in a property sales transaction.,
He says sellers have the option of an open mandate, which means that a number of agents may be working to find a suitable buyer for the property. This does not restrict the seller to using one specific real estate company; however, it can leave the seller open to a possible double commission claim.
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First-time home buyers’ guide
Buying property is undoubtedly one of the biggest financial commitments anyone will make in their lifetime. But being a first-time home buyer can sometimes be a daunting experience, especially when you are uninformed about the various steps and legal requirements that go hand in hand with the buying process.
Tony Ketcher, Seeff MD in Randburg says first-time buyers’ judgement can easily be clouded by excitement and therefore it is extremely important to undertake comprehensive research and make fundamental decisions long before you start viewing show houses.
He says the most important thing to keep in mind is affordability. "Ask yourself repeatedly what you can realistically afford and establish your true affordability with a mortgage originator. As a guideline your monthly bond instalment should not exceed 25 percent to 30 percent of your regular household income, before tax and deductions.”
Ketcher says banks today are granting fewer 100 percent home loans and therefore you should also ensure that you will be in the financial position to make a 10 percent down payment if necessary - and still have enough money for transfer fees and bond costs over and above the home price.
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