Home loans only for ‘right’ borrowers
The banks’ greater willingness to lend into the residential property market over the past 12 months, as well as the extent of the recovery in that market, is evident in the latest statistics released by BetterBond Home Loans, which accounts for more than 25 percent of all residential mortgages registered in the Deeds Office and is SA’s leading bond origination group.
“The figures show that our average home loan approval rate for the past 12 months was 77 percent, compared with 69 percent in the previous 12 months, and that the value of home loans approved through BetterBond showed a year-on-year increase at the end of April of 9.5 percent, to a total of almost R39 billion,” says BetterBond CEO Shaun Rademeyer.
What is more, he says, much of this value increase came from year-on-year growth of almost 7 percent in the actual number of home loans approved, despite a slower rate of growth in the number of home loans applications being submitted since the interest rate increase in January.
SA estate agent commission - too high?
South African estate agents have been asked why they feel justified in charging commission at a ‘high’ level – this question is often backed by the statement that UK and European estate agents work on far lower commissions.
This is according to Bill Rawson, Chairman of the Rawson Property Group, who says the first point to be clarified on this subject is that the service provided by South African estate agents is far more comprehensive and thorough than that of overseas agents working on two or three percent commissions.
He says quite often, such overseas agents do not even accompany the buyer to the property for sale – they simply hand over a set of keys or arrange a date for them to meet the seller. He says then, too, they may place minimal or no advertising, and insist that the seller funds it all. He says this is a common practice, even among the most reputable, high profile UK companies.
Bank valuations and bond applications
While it is true that those South Africans hoping to buy a home - or are simply investing in residential property - these days tend to have a better understanding of how the banks’ loan criteria work when they apply for a bond, they are often surprised by the banks’ valuation procedures and the figures they arrive at.
This is according to Mike van Alphen, National Manager of the Rawson Property Group’s bond origination division, Rawson Finance, who says although it is generally accepted that bank valuers are carefully trained and work to internationally accredited criteria, this does not mean that they will all come up with the same valuations. Neither does it mean that they will agree with the valuations of highly professional estate agents with many years of experience operating in that particular market.
Van Alphen says the important point to grasp about bank valuations, is that their aim is to assess whether the property is worth the price being paid for it, so that should the bond borrower default on his bond payments they will be able to recover the full value of the money outstanding by selling the home.
Leaking balconies in ST schemes
In many sectional title schemes, owners of units with balconies often want to maximise on the space by enclosing the balcony.
This is according to Michael Bauer, general manager of IHFM, who says the resulting damage to electrical equipment, furniture, carpets or wooden flooring and other goods has to be added to the problem that must be dealt with.
He says before any action is taken, it is essential to find out who owns the balcony in question. It could be part of a member’s section, common property or an exclusive use area. This can be ascertained by studying the plans for the scheme, as these areas should be clearly marked.
Tenant won't pay water bill - help!
A Property24 reader asks:
I am renting out my flat through a rental agent who collects rent from the tenant. For the past few months the average water bill has been R1 800. The rental agent has promised to ask the tenant to pay for the excessive water bill, but they have not been successful. I am paying this amount to the body corporate monthly.
What can I do to force the tenant to pay for the water? Is it possible to switch off or control their water supply? Please advise what to do in this situation.
ChantelCronje, legal advisor at Legal & Tax, says:
The Rental Housing Act provides that a landlord is obligated by law or terms of the lease agreement to provide electricity and water services to a tenant and must not cause the supply thereof to be interrupted or cut off without a court order. Such actions by a landlord would be deemed illegal and this includes Body Corporates.
Your 'longevity risk' and retiremen
One of the biggest risks South Africans face when saving for retirement is living longer than expected. In financial circles this is called "longevity risk" and it refers to the very real risk of living longer than your retirement capital can produce a retirement income, explains Dr Koos du Toit, chief executive officer of P3 Investment Group.
It is a growing risk, given that medical technology continues to evolve apace, allowing people to live ever longer. In fact, it is believed that the first person to live to 150 years has already been born. And it is expected that children who are born 20 years from now could live beyond 400 years old.
So how can ordinary South Africans ensure that their retirement savings will last long enough? Even the small minority of just 5 percent of those who have a retirement fund and who will be able to retire financially independent, face the risk that their retirement savings may not be sufficient to produce an income beyond the normal life expectancy, he points out.