Property 24/10 - 119

Politics and the property market
Not only does South African politics influence the real estate market but neighbouring countries' political situation can easily spill over into SA.

Zimbabwe has for long had political problems and this directly influences any potential investments both locally and internationally, says Craig Hutchison chief executive officer of Engel & Völkers Southern Africa.

Hutchison says South Africa has never lagged behind any country when it comes to political turmoil.

This political situation has influenced everyone and almost everything in the country, so how has it and will it influence the real estate market.

Looking back to 1994, when the first democratic elections took place, the hype that was created on a social level ensured the emigration of thousands of South Africans.

Due to this the real estate market became a complete buyers' market, homes were sold for next to nothing as sellers just wanted to get rid of their homes and emigrate, he says.

Tenant’s municipal bill – your problem
A new policy took effect in a number of municipalities across the country, which stipulates that all municipal bills are in the proprietor’s name, not the tenant’s.  This strategy change comes on the back of a Constitutional Court judgement in the case of Mkontwana v Nelson Mandela Metropolitan Municipality 2005 (1) SA 530 (CC), which indicated that: “The basic reason for the accumulation of consumption charges due in connection with any property occupied by non-owners is non-payment by those occupiers.  However, it is ordinarily possible for both the municipality and the owner to guard against an unreasonable accumulation of outstanding consumption charges” (as quoted on the website).     

The new policy is an improvement on the situation over the last few years where tenants defaulted and the municipality made no moves to rectify the situation, resulting in massive municipal bills for the owner – often leaving them unable to obtain rates clearance certificates in the event that they wanted to sell.  

Adjust ST levies before AGM
It is often better to adjust the levies in a sectional title scheme before the Annual General Meeting (AGM), according to an expert.  Michael Bauer, general manager of IHFM, says many people might not be aware that since November 2008, according to Annexure 8, Management Rule 31 (4A) of the Sectional Title Act, the trustees of bodies corporate have been allowed to implement a new budget and levies from the beginning of the financial year and not wait for the AGM to be held.

The increase must not exceed 10 percent, he says.

PMR 31 (4A) states that “After the expiry of a financial year and until they become liable for contributions in respect of the ensuing financial year, owners are liable for contributions of the same amounts and this is payable in the same instalments as were due and payable by them during the expired financial year: provided that the trustees may, if they consider it necessary and by written notice to the owners, increase the contributions due by the owners by a maximum of 10 percent to take account of the anticipated increased liabilities of the body corporate.”

Ins and outs of beetle certificates
Prospective home buyers should insist on a beetle certificate that covers all types of wood destroying organisms. br> A worrying aspect of many types of certification is that they are not required to mention conditions like dry rot or other wood destroying insects and termites - including the common furniture beetle. 

This may leave the new owner with little or no claim for damage to wooden structures, carpets or furniture once the sale has gone through. 

Colin Jardine, vice-president of the South African Pest Control Association (SAPCA), advises homeowners to make use of a SAPCA-registered inspector to carry out full comprehensive inspections.   

Jardine says the practice of uninformed agents or attorneys accepting any form of ‘beetle free’ documentation, many times from individuals who present a ‘P number’ (registration number) issued by the Department of Agriculture, on the pretext that it qualifies these individuals to do beetle inspections is disturbing. 

Beware of buying incomplete buildings
Tough economic conditions, a large number of developers, entrepreneurs and home builders have been forced to stop work on buildings.

Sometimes, they leave these buildings incomplete, says Bill Rawson, Chairman of the Rawson Property Group.

He points out that such buildings can then come on the market at a fraction of the sum of money that was spent on them before work was stopped.

Potential entrepreneurs are always approaching the Rawson Property Group to ask them whether it would be a good idea for them to take over, complete and then sell such buildings, he says.

While many of these ventures have been successful, he stresses that no one should go this route unless they have checked the existing building very thoroughly indeed.

SA has equality in home ownership
Residential property ownership in South Africa is one of the few economic sectors that resembles the equality the country has aspired to since 1994.

This is according to Jan le Roux, chief executive officer of Leapfrog Property Group, who says this is so although no one can deny that there is still a lot of economic inequality in the country.

Le Roux notes that never one to shy away from the limelight President Jacob Zuma had many South Africans up in arms recently when he stated that “the ownership of the economy remains primarily in white hands as it has always been” during his opening speech at the opening of the African National Congress’ policy conference.

Debating whether this statement is accurate when applied to the economy in general is an arduous task best left to economists and politicians.

FICA and the property sector
The Financial Intelligence Centre Act (FICA) 38 passed into law in 2011 is a mystery to some and a legal pain in the backside to others, says an agent. 

According to Gordon Battersby, director of Just Property Group Academy of Training, the Act was passed into law in 2011, in an attempt to join the major countries world-wide in combating money laundering.

He says HSBC, one of the biggest and best-known banks in the world, has just acknowledged to ‘most probably’ allowing money laundering from Mexican drug cartels. 

This is a very disturbing fact and affects everybody involved in any form of commercial transaction involving banks.

Money laundering is the biggest single industry in the world, where “dirty money” obtained from drug sales, prostitution, human trafficking, illegal gambling and a host of other criminal activities, is “laundered” through legitimate businesses and professions so as to appear to have been legally earned.

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