Property 24/10 - 112

Levies and special levies - my rights?
A Property24 reader asks:
I would like to know what my rights as an owner of a sectional title property in Paarl, Western Cape are regarding levies and special levies. 

Our Body Corporate had a general annual meeting in January and our levies got backdated to November 2011, so we had to pay in the excess of that. We also were said to be painting the building which is great, but the levies have now more than doubled. I am already paying R987 for a flat and the extra levy is now a additional R1600, apparently for painting. 

They cannot give us a time when this special levy will come into effect, all they say is that it is estimated to be by the end of the year, maybe beginning next year, being 2013. They also cannot say by how much my levy will be increased. I am aware that they had only one meeting and claimed to have had a second, but I have proof that there was no second meeting around this increased levy. 

So they falsified a second meeting to “prove” that more than half the owners were at this claimed second meeting 'cause not enough were present at the first. I was not even made aware of the second meeting, but I was made aware of the first - is this allowed? 

I cannot afford to pay a special levy for an unlimited amount, never mind for a small period of time. We were also told the rates and taxes were to be paid separately by the owners and that they will keep the money; our levies will remain unchanged, so they can save up for the painting. 
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House prices continue to grow - ooba
South African home prices grew by 6.5 percent year-on-year (y/y) in May, according to the latest statistics released by mortgage originator ooba.

The May oobarometer report reveals that the average house price rose to R 869 088 from R 816 317 a year ago.

The average purchase price among first-time buyers grew 5.4 percent y/y t  to R 645 458 from R 612 489 recorded in May 2011.

Saul Geffen, chief executive officer of ooba, says house prices have continued the positive momentum supported by positive consumer sentiment in the residential market.

“This is the 13th consecutive month of positive y/y property price growth for first-time buyers,” he says.
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Tips to get a bank home loan approved 
While it is common to have many home loan applications declined for various reasons, there are other ways to increase one’s chances of approval.

This is according to Peter Jones, group general manager of the Integrated Property Group of companies and developers of Bardale Village.

Jones explains that Integrated Housing Development’s (IHD) customers have over the past two years experienced an insignificant 40 percent success rate when applying for loans at IHD’s Bardale Village development in Blue Downs, Cape Town. 

Word has it that other developments have experienced similar and even worse rates of success in other parts of South Africa, he notes.

Why are so few home buyers successful? The banks are by all accounts very enthusiastic to grow their property loan business, but why is growth so slow?

With so few applications succeeding, business could have grown by more than double if most applications were accepted.

Analysing the reasons for the declines by the banks reveal that by far the major reason is that buyers fail to qualify due to a low credit score, he says. 
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SA Retired Persons Act - good or bad?
The Retired Persons Act’s over-zealous demands on property developers result in South African retirees losing tens of millions of rands every year.

Despite its best intentions, the Retired Persons Act architected by the South African government is failing to protect the very people it is written to protect – our country’s senior citizens, says Dan Brown, head of retirement projects at Century Property Developments.  

Collectively, retired investors in South Africa lose money annually to unscrupulous (or poorly financed) developers whose estates fail to materialise or where the retirement village promised doesn’t materialise in its promised form.

Brown explains in the last five years the number of mature lifestyle estates under development has grown exponentially to meet an ever increasing demand. 
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Banks to scrutinise body corporates 
The proper financial management of sectional title body corporates in South Africa is likely to come under increasing scrutiny by mortgage lenders.

This will make it difficult for home buyers to raise finance to buy into badly managed complexes, says Kim Pistor, conveyancing manager of Rabie Property Group.

“Some banks are already doing so with buyers finding it difficult to raise a mortgage if the financial affairs of the body corporate are not in order and other banks are likely to follow suit,” she says.

Pistor says it is therefore more important now than ever before that owners in sectional title developments ensure that the financial affairs of their body corporates are in order, so that they will be able to sell their units when and if they wish to do so and do not find themselves locked into a scheme.

She explains that the management of body corporates' financial affairs is going to be more regulated under the new Sectional Title Schemes Management Act, which was signed in June 2011 and will come into operation on a date still to be gazetted.
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Be savvy about rates on home loans
Life could be easier for agents if buyers secured 100 percent home loans, but this might not be a good thing for homebuyers.

According to Rudi Botha, chief executive officer of BetterBond, lenders seldom grant interest rate concessions on 100 percent loans.

Even a 1 percent concession on the interest rate that homebuyers are charged can have a major effect on their financial future, especially when taken over the 20-year lifespan of most mortgages.

Botha says on a R1 million bond, for example, an interest rate of 8 percent instead of the current 9 percent standard rate would first of all automatically translate into interest savings of more than R151 886 over 20 years.

This is money that could come in handy when paying for a child’s tertiary education, he says.

A lower interest rate generally makes it easier for buyers to obtain a home loan to begin with, he notes.
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Avoid bond cancellation fees
In most cases, homeowners who want to sell their property are more than likely to have a bond that they need to cancel with the bank that financed the purchase of their home. 

This is according to George Henderson, Broker/Owner of RE/MAX By The Sea, who says once a homeowner has successfully sold their home, the existing bond will need to be cancelled on the transfer of the property. 

Henderson says that the costs and payment of the bond cancellation will be the responsibility of the seller, but most sellers are unaware that they need to give their bank notice of their intent to sell and in turn cancel their bond finance. 

According to legal advisers, the majority of financial institutions are now charging every seller who has a bond, a 90-day early termination charge if the seller wishes to cancel the bond prior to the completion of the term of the bond, which is usually a 20 year period, depending of the terms agreed upon. 

Banks are entitled to do this in terms of the legalisation of the National Credit Act. 
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