Property360 - National Digital Magazine - 5 March 2021

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When buying a plot of land on which to build, size is not the only consideration.

The importance of a title deed Experts give advice to people entering the property market with questions about deeds, buying land to build on and setting appropriate rents for tenants BY BONNY FOURIE bronwyn.fourie@inl.co.za

Q: The property market was brought to a standstill with the Deeds Office closure last year but I am not completely sure why. What exactly is a title deed and why is it so important? A: A title deed is a document which proves legal ownership of a property in South Africa and the Deeds Office is where copies of these documents are held. When these offices close, no properties can be bought or sold as the title deeds cannot be transferred into the new owner’s name. Anyone who purchases a home will need to have the title deed transferred into their name as proof they own the property. The office closest to the property will keep a copy of the home’s title deed in the Deeds Registry. Usually, the original title deed will be held by the bank or financial institution from which the buyer has borrowed the funds to buy. The owner of the property will receive the original title deed once the home loan is repaid in full. In addition to declaring legal ownership, the document contains important information about the property, including a comprehensive description and exact size of the erf as well as the rules and restrictions surrounding the property, such as servitudes. The document also shares some insight into a property’s history, including the name of the registered owner and previous owners, and the purchase price paid by the current owner. – Adrian Goslett, chief executive of Re/Max of Southern Africa Q: I plan to build my own property and am looking for a plot of land to buy. Are there any

specific aspects I should look out for or bear in mind? A: Choose the site location carefully. Size is definitely not the only consideration. It is worth buying a somewhat smaller stand, for example, if it is already connected to the main water, electricity and waste networks in the area, as it is very costly to secure these connections yourself. If the stand already has a fibre or cable connection to the internet, so much the better. Then you also need to think about the location of the stand in relation to work, schools, shops, public transport hubs and sports or entertainment venues. Land on the outskirts of town may be much cheaper but living there will almost certainly mean high transport costs. – Gerhard Kotzé, managing director of RealNet Q: This year, for the first time, I will be letting my property. I have an idea of the rent I need to charge but how do I know that my asking price is fair? A: To set your rent realistically, it is important to understand how the different brackets were impacted economically during the past year. This will help you understand how cost-sensitive your tenants are. You need to understand your tenants’ spending habits so that when a crisis hits, you can prepare for and understand their distress. Tenants renting in the under-R3 000 bracket were the hardest hit last year, indicating little or no savings to tide them over in the hard lockdown. Similarly, those in the highest bracket (over R25 000) are also showing distress as they deal with

substantial pay cuts and larger overheads. The R7 000 and R12 000 bracket proved its stability last year and is set to remain relatively constant this year. – Shanaaz Trethewey, chief executive of RentMaster Q: I am planning to buy my first home. What other financial outlay can I expect, apart from the purchase price? A: There are a plethora of related expenses of which first-time buyers are often unaware. These expenses take the form of upfront, once-off fees, such as bond registration and transfer costs, as well as ongoing monthly expenses, such as life and disability cover, levies and municipal rates and taxes. Life cover is a mandatory monthly expense that most financial institutions require in order to grant buyers a home loan. All the other costs involved during the bond registration and transfer process are labelled as “post, petties, Fica, other fees”. These include things such as the cost of telephone calls, postage, couriers, administrative costs and bank charges. – Adrian Goslett, Re/Max of Southern Africa Q: My husband and I are planning to retire in an estate. What should we know or consider when making this move and choosing where to move to? A: First, choose an all-inclusive levy option. A retirement estate that offers an all-inclusive levy – covering aspects like security, insurance, home and garden maintenance, as well as a fibre-optic internet connection – gives you a realistic

idea of what is affordable and budgeting can be arranged accordingly. You should also consider a life-rights model as this allows for lower entry costs, meaning your retirement savings will continue growing while you benefit from quality of life now. It’s also beneficial in that the developer is invested in the maintenance of the estate, offsetting monthly costs for the retiree. More retirement estates are implementing a levy stabilisation fund, which is a once-off contribution paid upon disposal of the unit, as a way to ensure levies remain at a fixed rate and the increases are kept below the inflation rate. This is because most retirees will be living off a fixed income and a sudden special levy might push the budget. It is also important to factor in health care when considering retirement. Many retirement estates offer some form of health care, whether it’s an on-site frail-care centre, or the increasingly popular home-based care. This is where a specialist home-care provider will operate within the retirement estate, providing retirees with personalised health care in the comfort of their own homes. Home-based care also mitigates the need for maintenance costs related to a frail-care facility. A high rate of inflation can quickly diminish a retiree’s purchasing power over time, even if the inflation rate is relatively low, which it often is not. It is, therefore, important to consult financial experts who provide solid investment advice that will keep up with the rate of inflation, preferably across a diversified portfolio. – Phil Barker, Renishaw Property Developments


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