Property 24/10 - 82

Stubborn sellers meet playful buyers

Stubborn home sellers are said to dominate in the residential market with some still refusing to adjust their asking price in line with the market.

Lanice Steward, managing director of Anne Porter Knight Frank (APKF), the Cape Peninsula estate agency says just because there are occasional signs of an eventual recovery in the South Africa residential market home sellers should not think that higher prices are once again possible.

She says although they always try to achieve the highest price for their sellers, sellers tend to think estate agents can achieve the impossible.

“It is still a buyers’ market and those not prepared to price realistically should not put their homes up for sale,” she says.

Steward notes that according to the recent FNB Property Barometer report, 87 percent of homes sold in the second quarter of 2011 did not achieve their asking prices.

Buying a home?  Count the cost of fuel

It is estimated that almost three quarters of South Africans consider the price of petrol as a factor before making a property purchasing decision.

According to a recent poll conducted by ooba, a leading bond originator, 68 percent of respondents consider rising fuel prices when choosing a home. 

Jenny Rushin, provincial sales manager at ooba says petrol prices are definitely a consideration in households that are dependent on budgets.

She says the recent 40 cents per litre (c/l) petrol increase has resulted in the highest level recorded in three years and a double digit price tag per litre.

“The increasing price of petrol is resulting in home owners choosing to live as close as possible to their places of work in order to reduce monthly expenses,” she says.

Rushin explains that though improving, South Africa’s public transport systems are still relatively limited and many consumers still rely on personal transport.

Vat relief for property developers

SA residential property developers who lease units before intended use can be pleased with legislation that provides temporary relief from VAT.

This change is communicated by section 18A of the VAT Act as inserted by the Taxation Laws Amendment Bill of 2011, which allows for residential property developers to lease their units without being liable for VAT payments.

According to David Honeyball, tax partner at Grant Thornton Cape, residential property developers are subject to VAT on the sale of their units.

He explains that where developers are unable to sell their units and decide to find a tenant to rent the property in order to defray costs, currently VAT legislation provides that they are required to account for VAT output tax on the market value of the property as there is a change in use of the property.

“This has happened increasingly recently as the current economic environment has hurt the property market severely and many residential property developers have been forced to rent out some of their units.”

Why Fourways tenants aren't moving

Estate agents say property rentals are being pushed up by the shortage of new stock, lack of mortgage finance and the lack of buy-to-let investors.

Tony Clarke, managing director of Rawson Properties points out that since the passing of the National Credit Act (NCA) in 2007, would-be buyers are battling to secure home loans.

He says there are very few buy-to-let investors returning to the market under the current operating conditions.

The situation in sectional title properties is not different to what Clarke mentions, says Catherine Cockcroft, sales manager of Propell, the levy funding and collection company.

While the current situation will be welcomed by landlords it carries with it the danger that the proportion of tenants in sectional title schemes will rise exponentially, she says.

She explains that Propell’s experience has been that in many schemes with a high percentage of tenants, the upkeep of the units and the general conduct all too often are compromised.

How can I get trustees to perform?

A Property24 reader asks:

I read your article My body corporate refuses to fix lift! and although it laid out the responsibilities of trustees of a sectional title scheme, it did not answer my question: 

How do I get my Body Corporate Trustees to comply with the Management Rules? 

Phil Calothi, owner and Managing Director of theCape Town based Managing Agent Company, Land and Sea Development Services (Pty) Ltd, responds:

There are two ways to do this. The cheapest, but more time-consuming way,  is to get rid of the errant Trustees by way of an ordinary resolution at a special general meeting of the members convened for this purpose and to elect a new board of Trustees at the same meeting who you know will comply with the management rules.

It is a bit cumbersome but this procedure is clearly provided for in terms of Rule 13 of the Management Rules. 

In order to achieve this in practice, it would be preferable that a group of members serve a written notice of no confidence to the Trustees and ask them to agree to convene a general meeting at which they will stand down and an election is held to elect new Trustees. If they refuse to agree to stand down, the written notice to them should be that a resolution be tabled at a general meeting that all the Trustees should be removed from office and, if the resolution is adopted, for an election of new Trustees. Alternatively, if time is not of the essence, they could simply be voted off the board at the next Annual General Meeting. 

Landlord broke - what about my deposit?

A Property24 reader asks:

 I am really in dire straits as we have paid R2 800 security deposit for the renting of a property. 

We gave notice and everything was in order, the lessor promised the deposit back on the 14 October 2011. 

On Friday we were told that he does not have the money, so basically he is telling us –“tough, I don’t have it, you will just have to wait until I have the money”. We have no idea when this will be. He has in the mean time got a new tenant in the property and apparently he is waiting for that deposit so he can refund ours. Surely this is illegal? 

What can we do to get our deposit back? 

Your input would be highly appreciated as I have no idea how to handle this matter. 

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

Invest in property now for retirement

Research anticipates that close on 10 million South Africans will be retiring in the next 25 years.  The results of the Sanlam 2011 Benchmark Pensioner Survey indicate that 80% of pensioners have not completely achieved their pre-determined retirement goals. On average, 31% of the pensioners believe they have not saved enough for their capital to last for the rest of their lives and 33% of members currently have a monthly shortfall between their income and expenses.

Adrian Goslett, CEO of RE/MAX of Southern Africa, says that while it has been widely reported that the South African retirement industry is under constant pressure to deliver adequate and sustainable benefits to its pensioners, and local retirement reform is on the cards once more, it cannot be emphasised enough that people need to start working towards their retirement fund as soon as possible.

He points to research from the Sanlam 2011 Benchmark Pensioner Survey where pensioners were very clear in their advice to start investing and saving as early as possible, start planning for retirement at an early age and make more enquiries and learn more about investments, investment choices and retirement.

Student accommodation – the new black

The South African student accommodation property market is said to be buoyant and attracts investors, developers and private property buyers.

According to a research report by Auction Alliance, South Africa’s leading property auctioneers, the student accommodation market is one of the few property sectors that have successfully bucked the economic downturn.

“In the recent years, the student accommodation market has emerged as a key asset class, attracting a growing interest from investors, developers and private operators on auction floors countrywide”, says Auction Alliance chief executive officer, Rael Levitt. Levitt explains that the swift development of South Africa’s middle class, rapid urbanisation and the influx of approximately 72 000 foreign students, mainly from Africa, has resulted in a growing inability of tertiary institutions to house students.

Data from the Department of Education show that the current provision of student housing in residences is approximately 100 000 for a student population of 530 000.

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