Property 24/10 - 316

Commercial rental increases: How much is too much?
It is a rule of basic economics that along with petrol, food prices and everything else, rentals need to increase annually.

In the past, it was an accepted norm that the landlord would expect his eight to ten percent annual increase, irrespective of economic circumstances. This is according to Leon Breytenbach, National Manager of the Rawson Property Group’s commercial division, who says today, however, it is more frequently accepted that rent increases will be negotiated by the landlord and tenant to set a figure agreeable to both parties.

From the landlord’s viewpoint
Breytenbach says the landlord must cover his costs pertaining to the property. He cannot be expected to maintain the original rental indefinitely, as inflation, the prime lending rate, insurance, property maintenance and municipal rates, to name just a few, are never static.

Will Brexit affect your property investments?
Despite an initial rush of concern about the United Kingdom’s vote to leave the European Union, the impact on South Africa’s property market may turn out to be marginal, provided buyers maintain a long-term perspective according to David de Waal, CEO of Steeple, who says the rand took a pummeling when the UK voted, by a small margin, to leave the 28-member trading bloc last month.

He says fears of additional economic fallout for South Africa remain widespread. However, he says the rand has since recovered, and the South African Reserve Bank opted not to raise interest rates when its Monetary Policy Committee met the last time.

Ten tips for non-residents buying property in South Africa
At the moment, there are no restrictions on foreigners buying property in South Africa, unless they are illegal immigrants.

“There has been some confusion about this,” says the Rawson Property Group's Managing Director Tony Clarke, “because legislation currently under consideration may in the future impose some limits on foreign ownership of farms and agricultural land.”

However, he says there are no plans to change the current situation with regards to residential or commercial property, although actual purchase processes vary from country to country, so buyers from outside SA are advised to seek the assistance of a reputable real estate group to ensure the transaction goes smoothly.

Meanwhile, Clarke says the most important things that non-resident buyers need to know are the following:

"This is great news for property buyers," says De Waal.

Trekking across SA in search of a 'better life'
For a number of decades, South African citizens have been leaving the country in search of a perceived better life in other parts of the world. During the late 1990s, emigration reached a peak, with over 58 000 people leaving South Africa in the year 1999 alone.

Popular relocation destinations include Australia, New Zealand, Canada and the United Kingdom, and it just takes a visit to some of the popular areas in these countries to hear the familiar South African twang.

Over the past few years, a new trend has arisen, where South Africans searching for a better life aren’t leaving our shores in droves, but rather moving to other parts of the country to make a new life for themselves. This trend has been dubbed ‘semigration’, and has seen a number of middle-class or high-net-worth individuals pack up their homes and move their families to a new province or city.

Don't take on extra debt after home loan approval
Home loan customers are often not aware that some banks may continue to monitor their credit profiles and perform updated affordability checks up until bond registration. This means consumers taking on further debt after they have received a home loan approval may find that the approved home loan amount is reduced, repriced or declined all together.

“We have found that consumers are often unaware that taking out further debt after their home loan is approved will trigger a review on the home loan application,” says Tommy Nel, head of credit at FNB Home Loans. “We continually re-assess loans that we have approved in the window up until the bond registers in the Deeds Office and the property is transfer into the new owner’s name.”

Any new adverse information listed against any of the applicants in this bond registration window, such as missed payments or defaults or further debt taken on, triggers the review process. The reassessment will take into account this new information on the applicant’s credit profiles as well as any new debt obligations entered into.

Three questions to ask before putting your home on the market
Just as buyers need to do their research before taking on homeownership, sellers also need to spend some time contemplating certain aspects before they list their properties according to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who says in fact, there are three questions that every homeowner should ask themselves before placing their home on the market.

Question 1: Is it the right time to sell?
There are phases in the property market that will favour buyers, and there are phases that will favour sellers. It all depends on the economic environment and conditions that surround the market.

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