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P R O P E R T Y HOW SELF-EMPLOYED CAN GET A BOND
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EING self-employed does not mean giving up the dream of owning a home, says Jenny Rushin, national development manager at BetterBond. It may just require a bit more paperwork and some expert guidance. “The perception that it’s difficult to
buy property when you’re self-employed isn’t really true any more. Even when you’re not permanently employed, and don’t have a regular, fixed income, it’s possible to submit a successful homeloan application.” Rushin says self-employed bond applicants should:
◆ Ensure their tax and financial affairs are in order. ◆ Check their credit record. ◆ Keep their personal and business income and expenses separate. ◆ Work with a bond originator. ◆ Save as much as possible towards a deposit.
It is not impossible for self-employed people to be granted a home loan. PICTURE: TAMARCUS BROWN
FEWER HOUSEHOLDS TO BE CREATED, THANKS TO RECESSION
W O R L D PANDEMIC EMBEDS COCOONING TREND THE GLOBAL cocooning trend has been accelerated by Covid-19 which has forced families to spend more time at home than ever before. “Most of us temporarily adapted our lives to self-isolate and work or study remotely during lockdown but it’s becoming increasingly apparent that this will, at least to some degree, now be the norm for many people in the future,” says Dawn Bloch, an area specialist for Lew Geffen Sotheby’s International Realty. This means most buyers are looking for move-in ready properties which offer the option to work from home and have access to fibre. Many buyers are also looking to upsize to accommodate home working and multi-generational living. “A second lounge or snug for kids and their games is also a popular request after many families have spent the past few months having to share a telly and confined communal space,” she says.
A second lounge is a popular buyer’s request. PICTURE: VICTORIA BORODINOVA
Tax claim possible for home offices THE 2020 tax filing season is here and homeowners are entitled to make certain claims if they are working from home, says Adrian Goslett, chief executive of Re/Max of Southern Africa. This is a simplified overview of what you could potentially claim back. If you work from a R1 mil-
lion home (purchase price) and use 20% of the property as a home office you will be entitled to a tax-deduction based on the interest charged on the remaining outstanding bond amount. If the interest on the bond is charged at 7%, you will be charged roughly R70 000 in interest for the year. Because 20% of the property is used as a
home office, you would be entitled to claim 20% of the R70 000 (R14 000) as a tax deduction. But there are other considerations to take into account such as whether you have withdrawn an amount from your bond to fund personal expenses or if you have made a substantial payment on the bond. Consult a tax consultant if in doubt.
The pace of household formation will slow as people share and merge homes. PICTURE: NATIONAL CANCER INSTITUTE THE PACE of new household formation is likely to slow during and shortly after the current recessionary period, constrained by a lack of job creation and widespread household financial pressure. This, says John Loos, FNB’s commercial property economist, is likely to dampen tenant demand for residential rental property. In addition, low interest rates may be working moderately in favour of home buying and against renting, further constraining growth in rental demand. Other reasons for the delay include young people hoping to get into the labour market having difficulty finding jobs due to declining job creation. This means instead of having a salary with which to enter the rental market, many could choose to remain in their parents’ home for longer. Even those who are working might continue living at home until the current highly uncertain times pass, Loos says. He adds that people might also merge their households to share living costs. More elderly people will also move into their children’s homes.
Homeowners who work from their house are entitled to certain tax claims. PICTURE: ERIKA WITTLIEB
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Letter from the editor MANY experts are talking about a 10-year recovery period for our economy. It seems the next decade
strong uptick after that in the property sector and the economy. While tough times have seen some locals consider leaving our shores, there are others who believe South Africa is a country full of potential and that if you’re willing to take the ride for the next decade you will be richly rewarded. For those with cash or access to bonds, buying property during these times makes sense, as history has shown as much as things go down they will most certainly go up again. The W scenario — or the rollercoaster scene — is the one most predicted for the next few years. Many a fortune has been made by the wise investor with guts (and some money) in recessionary times. On the other hand, there are those who are really struggling to hold onto a roof over their head, and this means some really innovative ways will have to be found to keep South Africans housed. Not only that but a growing housing issue, with more people
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Some gloom faces the sector say trend analysts, but the pandemic means people will have a different emphasis on what they seek in their homes BY BONNY FOURIE bronwyn.fourie@inl.co.za PROPERTY values in South Africa are at the start of a possible 10-year decline and the market is facing its most testing period ever, experts and trend analysts predict. But this gloominess will also lead to a massively transformed property sector to meet the needs of homeowners and tenants who have had their priorities changed by Covid-19. “Everything has changed because of Covid, especially property,” says Dion Chang, a futurist and trend analyst at Flux Trends. From the types of houses people will be living in to what (and who) the notion of “home” will encompass, change is inevitably on its way. The country’s struggling economy will also contribute to this altered property market. FNB property economist John Loos says property values are in decline in real terms and this will be the case for the next five to 10 years. “Values are high in the historical context and have to correct quite dramatically.” In the short-term the market will not be buoyant either, predicts trends analyst and futurist psychic medium Belinda Silbert. “This is the most testing time that the industry has ever faced and the resilience that is demonstrated by industry professionals right now will shape the timeline.” The government will be forced to monitor the housing market very carefully and be particularly careful about the timing of interest rate hikes. Premature hikes could intensify a downward trajectory that would be “very difficult to reverse”. “I foresee South Africa as a whole taking at least 10 years to recover from the economic mayhem caused by the coronavirus.” The nation will not have disposable income for a long time and high-end properties for sale will be adversely affected.
“Homeowners are going to demand value for money,” she says. Communal living At the end of 2019 Silbert predicted the property market in 2020 and beyond would see micro-economic challenges driving the average South African towards co-housing and tackling shared resources and communal living in “novel ways”. Fast-forward six months into Covid-19, she says this prediction has not changed. Chang agrees, saying that intergenerational living is a global trend which will continue gaining traction here too. “People’s family values have increased due to Covid and there is going to be more intergenerational living. Homes will have to be designed to cater for that.” Already youngsters are living at home for longer. “They are no longer moving out when they reach the age of 18. Now, people in their 20s, even up to the age of 28, are staying at home.” Migration away from main metropoles Much of the movement that is going to be seen will be a result of the pandemic and the impact it has had on people’s priorities, Chang says. People are moving away from main metropoles and are casting their eyes towards second-tier cities, such as Durban and Port Elizabeth, as opposed to staying in Cape Town or Joburg. “Moves like these will be made for lifestyle and affordability reasons.” The “Zoom boom” and remote working also encourage such movement, which includes migration to more rural locations, Loos says. “Even those who were working from home before Covid needed to live close to their company offices for the purposes of attending meetings. But now, if they only have to go in for a meeting once a week, for example, they will not mind a twohour drive from their homes.”
In Gauteng there is already a busy commuter corridor from Hartbeespoort Dam and Loos wonders whether the Vaal Dam area could be another location for such commuters. In the Western Cape, he says there are many rural options including the likes of Betty’s Bay and Darling. For Durbanites there could be more opportunities for employees to move up the North Coast. “There was also always a small market of people commuting to different provinces for work and this group may grow now.” Specific inclusion of home offices in property design It is well known that the remote working trend was not new pre-Covid but has now been accelerated by it and this “must have a significant impact on residential design”, Loos says. He is not sure exactly what this design change will entail but notes that homes are no longer places where people just go to daily to eat and sleep. “Homes fulfil a different role now, so we need more practical workplaces and furniture design. In developments this may even mean having communal workplaces.” Echoing this Chang says people are looking for dedicated home offices, not spare rooms or spaces that have been converted. “Working from home is going to be with us for a long time, so functional office spaces are needed. People are sorting out fibre and better wi-fi connections for efficient home offices.” Silbert adds that communal “smart buildings” – fully tech-enabled boardinghouses that allow singles to work from home – could also be on the cards. “The need to work remotely that has been emphasised by the pandemic and the desire for a greater quality of life, without the commitment of maintaining one’s own property, would make this a very attractive proposition for young, single people.”
without homes or access to homes, calls on the industry to assist with the promise of housing for all. Already we are seeing developers step up in the affordable housing scene. There are many big opportunities for doing things differently, and possibly better, in these unusual times — both for individuals and the property industry. I’m excited about the things we are yet to discover and create. Warm regards Vivian Warby vivian.warby@inl.co.za
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The possible future of property
will be tough going but optimists within the industry predict a
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Changed lifestyles and remote working could see more people migrating to rural towns. PICTURE: DAVID MARK
AFRICAN NEWS AGENCY
DISCLAIMER: The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding any goods or services advertised within this edition. Copyright ANA Publishing. All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from ANA Publishing. The publishers are not responsible for any unsolicited material. Executive Editor Vivian Warby vivian.warby@inl.co.za
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& EXPERTS ANSWER YOUR PROPERTY QUESTIONS ASKED
ANSWERED
A reader is concerned about marketing a home which is empty, but while this may mean it’s harder for a buyer to make an emotional connection, there are advantages Q: WE MOVED overseas a couple of years ago and have been letting our home. We have now decided to sell it, but as the tenants have already moved out, the house will be vacant. Is that a good or bad thing? Any tips? A: While it can be hard for viewers to make a critical emotional connection when the property is empty, there are several advantages to showing an empty home. Vacant homes allow for easy access for shortnotice viewings and allow a buyer to see the basics of what they are buying and also to plan any renovations. Fully staging a home is costly and timeconsuming. But a few inexpensive staging tricks will make a home seem more inviting. ◆ Leave the lights on during viewings to add warmth. ◆ Keep the lawn and exterior tidy. ◆ Put a fresh coat of paint on the front door, and use a pot plant or two, a new welcome mat and new house numbers. ◆ Strategically placed rugs will help define spaces and add a splash of colour. ◆ Paint walls in neutral colours. ◆ Well-placed mirrors will brighten and lighten a room. ◆ Soften cold, hard surfaces of a bathroom with neatly folded, fluffy towels. ◆ Arrange a couple of accessories on the kitchen counter. ◆ A vase or two of fresh flowers will add colour and make the home more inviting. – Steve Thomas, secure estate specialist for
There are several tricks to making a small kitchen appear more spacious and a neutral colour scheme is a good place to start. PICTURE: EVY PRENTICE
Lew Geffen Sotheby’s International Realty Q: Our home was recently valued and the price was lower than we had expected. The agents say it is because we have a small kitchen. We really do not have money or time to upgrade it, so how can we still achieve the best price possible? A: There are a variety of ways to get your quaint kitchen looking spacious and organised.
◆ If you don’t have many kitchen cupboards, display your pots and cutting boards in an eye-catching way by hanging them on the wall. ◆ Switch all your cabinets to drawers to gain maximum usability of the area. Drawers allow easy access to every item and also look chic and organised. ◆ If you have no room for a kitchen table, consider sacrificing a couple of cabinets to squeeze in a small breakfast bar. ◆ You can make a small kitchen feel airy by choosing a neutral colour scheme, such as white, beige, duck egg blue, mint green, soft yellow or light grey. The aim of a neutral colours is for light to bounce around the room, making it appear more spacious. ◆ Using a combined induction/extractor hob is a great space saver in a tiny kitchen. If you do not require an extra cupboard or set of shelves, consider leaving the area above the hob empty to give the illusion of a larger kitchen. – Mike Greeff, chief executive of Greeff Christie’s International Real Estate
Q: We are thinking of upgrading our home, in terms of both size and price, simply because the low interest rates allow us to. Is this a good idea? A: Additional affordability due to lower interest rates has led many to believe that now is the time to upgrade, especially if they have owned their current home for a few years and built up a healthy amount of equity. However, there are a few things you need to check first. One of the most important is what sort of deal you can get on a new home loan. You may qualify for a much bigger bond now, or a lower interest rate than when you bought your current home, especially if your earnings have increased and you have a strong credit record. Still, be realistic about how much more you can really afford to pay for your home each month, especially if your family has grown since your last home purchase and you now have additional monthly expenses, such as school fees and higher food, transport, insurance and medical bills. Remember, just because a bank agrees to lend you a certain amount, you don’t have to spend that much or stretch your monthly budget to the limit. You also need to factor in your other debt repayments and expenses, as well as long and short-term savings goals, like university for the children and your own retirement, and then still leave yourself some leeway to cope with emergencies. – Berry Everitt, chief executive of the Chas
Everitt International property group. Q: Conditions for buyers seem to be great – but not so much for sellers. With the market more challenging, we are worried about listing our home. But we have no choice and are seeking advice as to how to put our best foot forward. A: Professional photographs paired with detailed descriptions are essential for online listings but the virtual experience now has to go at least one step further. For health and safety reasons, show houses are being replaced by virtual show houses, and so without these services, sellers are going to struggle to capture buyers’ attention. Sellers should contact an experienced agent to provide an updated valuation – or even virtual valuation – on their home. This is an opportunity to pick an expert’s brain on sales prices and how best to market your property to appeal to the right kind of buyers. Sales strategy is essential – you can’t just list a property and hope for the best. You need to maximise online exposure and have a plan for converting casual interest into actual buyer inquiries. How you do this varies depending on property type, condition, location and price point. It’s not something I’d advise your average homeowner to attempt on their own in the challenging market conditions we have today. Favourable sales are still happening if the price is right. – Tony Clarke, managing director of the Rawson Property Group
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What’s new in the
Western Cape The view from Table Bay looking towards Cape Town Stadium in Green Point with Signal Hill and Table Mountain behind. PICTURE: KIM STONE
TO ADVERTISE HERE Margi Marsland 084 591 9122
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Green Point Stadium at night. Picture: Mujahid Safodien
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AUCTIONS There is a commonly held belief that property auctions are a good place to pick up a bargain because auctioneers often handle sales in execution / property reposessions / liquidations. Our dedicated auction section allows auctioneers to showcase their properties to buyers looking for these bargains. THE AUCTION SECTION OF THE PORTAL OFFERS: • Advice to buyers • Auction news • Recommended auctioneers to deal with • Diary of upcoming auctions Contact LEIGH to get your listings visible 074 991 3373 or leigh@property360.co.za
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PICTURE: KEENAN CONSTANCE
TO ADVERTISE HERE Margi Marsland 084 591 9122 Shevon Philander 078 422 4925 Anne Reddy
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Green Point Mouille PointStadium lighthouse at night. Picture: Mujahid Safodien
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