Property 24/10 - 145

Commercial property trouble spots
Commercial property this year will see continued pressure on commercial property owners and occupants from administered prices and municipal charges, according to Izak Petersen, chief executive officer of Dipula Income Fund.

“Slow economic growth will continue and as a result, rental growth will be modest,” says Petersen.

Petersen points out that companies in the listed property sector will continue to be well capitalised and take advantage of expansion opportunities.

However, he says the sector will keep its cautious stance on property development.

“We are unlikely to see many speculative developments, especially the office and industrial sectors, but there should be revamps in all three commercial sectors and the roll out of retail centres in both rural and urban areas.”

The limit to foreign land ownership
The proposal to limit foreign land ownership in South Africa to a leasehold of a minimum of 30 years is not a sign of antagonism to foreign investment, says the Minister of Rural Development and Land Reform, Gugile Nkwinti.  Nkwinti, who announced he will meet next month with ambassadors to explain the significance of the proposal which forms part of the new land tenure system introduced through the Green Paper on Land Reform, pointed out that foreigners could however not be excluded from playing a role in land transformation.

“If we are saying to South Africans we will limit the extent of your [tenure] holding in order to have land to redistribute, we can’t leave them out of that process, just because they are here and are investing,” he says.

Nkwinti says his department had already met with a delegation from Europe in 2011 and with a delegation from the Germany last year.

Cancelling lease and deposit refund?
We rented, stayed for 3 weeks and then unexpectedly had to move to East London for work reasons. 

There is a clause in our agreement saying we will only get our deposit back once the flat is let out again. 

It is now 5 weeks later and the estate agent is avoiding us. 

Please advise what action I can take if any? Also, the estate agent never mentioned interest on my deposit, plus I am still paying a cancellation fee. 

Michael Bauer, general manager of IHFM, a property management company with offices in Cape Town and Gauteng, advises:

The Consumer Protection Act states that 20 days' notice can be given to the landlord to cancel a lease, but there is a penalty fee to cancel a lease.  

The cancellation amount is not stipulated by law but it says a “reasonable” penalty can be charged to cancel the lease. 

Mismanaged complex - what remedies?
A Property24 reader asks:

I have a few questions following the levy question that was asked on Property24 recently i.e. Can levy double and non-paying owners?

Our complex was one of the victims of a fraud case of a property management company about 3 years ago and we lost all our funds due to this. Since then we have all been paying our normal levies, however, no maintenance was done to the common proper of the complex. Then, since our purchase of the property, there has not been any AGM or financial statements stating what our complex’s income and expenditure has been. Is there some law that forces them to do this which I can refer to? It seems like we are paying for levies and it is not being utilised in the manner it should be. 

They have now decided to do some maintenance, however, the trustees expect the owners to pay an additional R100 for the maintenance for the next 12 months. It is a bit concerning to me especially since levies are being paid and not used for expenditure. 

Buyers to focus on smaller homes
Statistics South Africa (Stats SA) reveals that the value of recorded building plans passed (at current prices) increased by 9.2 percent (R6 144 8 million) in 2012.  The biggest increase was reported for residential buildings (12.7 percent or R3 720 4 million), followed by non-residential buildings (8.2 percent or R1 317 3 million) and additions and alterations (5.2 percent or R1 107 1 million).

According to Stats SA, the increase in the value of building plans passed was dominated by Gauteng (contributing 7.0 percentage points or R4 632 9 million) and Western Cape (contributing 3.2 percentage points or R2 159 0 million).

A decrease was reported for KwaZulu-Natal (contributing -2.7 percentage points or -R1 804 5 million).

Stats SA says the real value of recorded building plans passed (at constant 2010 prices) increased year-on-year (y/y) by 3.2 percent (R2 034 5 million) in 2012 and the biggest increase was reported for residential buildings (6.5 percent or R1 814 3 million), followed by non-residential buildings (2.1 percent or R326.6 million).

Can I 'fine' a noisy tenant?
A Property24 reader asks: 
As a landlord, am I allowed to insert a 'Fine' clause in my lease agreement that would allow me to 'Fine' the tenant should I receive consecutive complaints (i.e. noise) from the body corporate? 

If not, then what are the legal principles behind implementing it at the body corporate level? Currently my body corporate is having problems with noisy tenants and is therefore trying to move to include a fining system in the body corporate rules at the next AGM. 

Marlon Shevelew, specialist rental and eviction attorney at Cape-based legal firm Marlon Shevelew and Associates, replies:

The issue of fines is not regulated by the model rules for Sectional Title Schemes. 

A difference of opinion exists about whether, in the absence of an amendment to the rules of the sectional title scheme, a fine may be imposed by the Body Corporate for a breach of the rules. 

Service to help buyers with home loans
Whether you’re a first-time buyer or you’ve been through the process before, waiting to see if your bond application will be approved can be one of the most stressful aspects of buying a new home.  But now, in a smart move that is bound to please banks and estate agents as well as prospective home buyers, mortgage originator, BetterBond and credit rehabilitation company, LUCIDClear Credit, have teamed up to offer a free service that will remove much of this anxiety. 

“What we are now able to do is provide prospective buyers with valuable information about their credit status and probable ability to qualify for a home loan before they even start looking for a property, or think about making an offer to purchase and applying for a bond,” says BetterBond CEO, Rudi Botha.

He says in addition, those making use of the service will be able to access expert and professional advice about how to repair damaged credit records and how to improve their credit score, which is a key element in bank decisions about home loan approvals, deposit requirements and interest rate charges.

Five pillars for land tenure system
Rural Development and Land Reform Minister Gugile Nkwinti says government will introduce five pillars as part of the new land tenure system.   The new principle of a ‘just and equitable’ redistribution – a shift from the ‘willing buyer, willing seller’ system (which forces the state to pay more for land than the actual value) – was announced by President Jacob Zuma in the State of the Nation Address (SONA). 

Addressing the National Assembly , during the debate on the 2013 SONA, Nkwinti said under the new land tenure system, the five new pillars would be structured as such: 

  • State and public land – leasehold (the right to hold or use property for a fixed period of time at a given price, without transfer of ownership, on the basis of a lease contract);
  • Private land – freehold (an interest in land - the duration of which is restricted to the life or lives of a particular person or persons holding it), with limited extent;
  • Foreign land ownership - leasehold; and,
  • Communal tenure - with institutionalised use-rights. 


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