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Learn the Laws of
Compensation You get what you give
A
s we approach the end of another year and head towards 2016 it’s always a time to reflect on what worked and what we can improve on. It is also an opportunity to change things and make a new start. One of the areas where you can improve the quality of your life is your finances and the amount of money you have in your life. Real estate still remains the cornerstone and fundamental pillars of an individual’s finances and wealth. Carl Icahn, an American business magnate, investor, activist shareholder and philanthropist, say there is danger ahead in global markets. He says a large part of the growth we are seeing in the US economy today is because of low interest rates. Business and investors has access to cheap money and once the Federal Reserve rises, interest rates businesses will no longer have access to cheap money, which will start showing up in the stock markets. Almost 80% of people in the world today are in financial stress and the majority of baby boomers don’t have enough money to retire simply because they are getting the wrong education and information. The financial system is rigged against us and yet we all fall
in the trap of handing our finances over to someone who is a so-called ‘expert’ in expectation that they are going to create miracle results with our money that you have entrusted to them. The law of compensation says the more you learn and practice the more your investment intelligence and experience grows. There are two ways to learn, either by simulation or by doing the real thing. If you want to become wealthy, successful and financially free, then practice making mistakes and do the real thing yourself. If someone else invests for you and you hand the responsibility to them, you take away the best opportunity for yourself to grow and learn. Don’t fall prey to those players with the experience of doing that. Sage advice is to continue investing into cash flow positive real estate long term, whether residential or commercial in South Africa or offshore. Just keep moving forward despite the fluctuations in world economies, the frenzy, the bad news, the negativity, the chaos, the uncertainty and the hype. Successful investing.
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MASTER QUOTE “There’s some real dark days where you just feel like the story is falling apart in every one. Just keep moving forward, even when you are bluffing, even when you don’t quite know what is going to happen next.”
DAN SCANLON www.reimag.co.za
DEC/JAN 2016 SA Real Estate Investor
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14
19
30
UPFRONT 7 Editors Letter 8 Ask the experts 19 Master Investor Bronwyn Corbett of Delta Property Fund takes us through her journey into Property Investment 14 Student Accommodations New investment opportunities arising for investors into the South Africa Student Accomodation field 18 Property Coach The benefits of mentorship programs 2
DEC/JAN 2016 SA Real Estate Investor
RESIDENTIAL
LIFESTYLE
22 What is a Bond? Part of South African ‘property-speak’ “I need a bond” or “I’m getting a bond”; but what do these phrases mean?
36 DIY Tips 38 Colour Spectrums 39 Home Improvements
28 Buy-to-Let Buy-to-let property owners must be able to manage the growing risk they face with regard to utility costs
42 My Story Legendary auctioneer Julius Buchinsky is making his way back into the local auctioneering spotlight.
30 Trust Funds under Threat? Understanding and applying the Conduit-Principle is a specialist field, and if applied correctly, can result in an extremely tax-efficient structure
44 Auctioneers To be successful and professional auctioneers people, you need to be much more than just a bid caller, counting numbers.
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CONTENTS
DEC / JAN 2016
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46 Parking Overseas parking management trends are being picked up by local developers 47 Commercial Property Corporate Real Estate aligns property strategy to business strategy, creating opportunities for innovation within a real estate portfolio 50 Blok Architecture Jacques van Embden, the managing director of Blok, is strongly focused on innovating Cape Town’s urban landscape through property development 52 Spatial Planning SPLUMA aims to develop a new framewww.reimag.co.za
work to govern planning permissions and approvals in SA
OFFSHORE 56 Mozambique Nampula is rapidly becoming a hub of modern development and a major attraction for business opportunities 60 UK Investment If you haven’t already used your annual offshore allowances for 2015, now might be a good time
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64 Events 65 Lessons DEC/JAN 2016 SA Real Estate Investor
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GERT VAN STADEN Gert van Staden started his professional career as a public prosecutor in 1988 and was appointed to the office of the Attorney General, Johannesburg, six months later. He is the founding partner of Van Staden GC Attorneys and specializes in Commercial law, Conveyancing and Tax & Estate Planning. Gert and his wife, Bianca, own and manage the P3 Investment Group MICHAEL DRYDEN Michael Dryden is the Managing Director of the FinServe Group and is a specialist Trust Accountant and Tax Advisor, General Accountant and Tax Practitioner, Property Investor and Strategist, Business Strategist and Advisor.
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MEYER DE WAAL The Rent2buy concept and My Bond Fitness is the brain child of practicing attorney, Meyer de Waal. His inspiration came from his company’s participation in raising funds and constructing houses in the Mfuleni Township Project in Cape Town. www.reimag.co.za
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FROM THE EDITOR
Recognising Opportunities and Winning Back your Financial Freedom
T
he South Africa Property Sector has been facing a number of challenges over the past few years (such as legislations and restrictions hampering new developments, huge operating expenses). But often the best opportunities can be found in tough times. The right mindset is key to spotting these opportunities. A positive attitude is the first step to tackling any challenge. It is useful to stand back from a challenge and try to see it from a different perspective. How would an opportunist, entrepreneur, dreamer or optimist interpret the situation? The right mindset and ability to think without limits (where others see only challenges and difficulties) is the key to any investment endeavour. Bronwyn Corbett, Chief Operating Officer and Chief Investment Officer for Delta Property Fund is our Master Investor for December. We sit down with her and discuss Delta’s move into the African Market. Also in this issue we examine the Investment opportunities open in the Student Accommodation market The use of properly structured, well-managed Trusts provides for a legal separation between an individual’s personal wealth and the wealth he or she jointly
controls in a particular Trust, one of the reasons well informed property investors and businessmen make extensive use of Trust structures. We also investigate the Spatial Planning and Land Use Management Act, which aims to develop a new framework to govern planning permissions and approvals, sets parameters for new developments and provides for different lawful land uses in South Africa as well as providing clarity on how planning law interacts with differing laws and policies. The December Issue sees the launch of our new lifestyle section, which includes advice on DIY renovations, tips on maximizing your properties potential and worth and a host of interesting ideas and features. Enjoy the read and have a pleasant and festive holiday. We look forward to seeing you again in 2016
DREW HOOK
EDITOR
“I buy on the assumption they could close the market the next day and not reopen it for five years” and “Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly
WARREN BUFFETT www.reimag.co.za
DEC/JAN 2016 SA Real Estate Investor
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Q&A
ASK THE EXPERTS
Question I own three properties, including then one I live in. I want to register a Trust and transfer the other two properties into it. What factors must be considered when planning on transferring fixed properties into a Trust?
What is the legal position regarding trustee rule making? What can property owners in a sectional title scheme do about trustees making unpopular rules?
Hein Klokow
Anton Kelly
Director at Klokow & Viljoen Attorneys answers:
W
hen planning to transfer your fixed property into a trust, one should consider, inter alia, the transfer costs, existing bonds and capital gains tax (CGT) implications To transfer fixed property, you will be liable to pay transfer duty to SARS and conveyancing costs to the transferring attorney assisting you in the transfer of the property into the Trust. The transfer costs are calculated as detailed below Rate: Value of Property R0.00 – R600,000 0% R600,000 – R 1M 3% on the value above R600,000 R1M – R1.5M R12,000 plus 5%on the value above R1M
Ask The
Property Experts click here 8
of Paddocks answers:
A
sectional title scheme must be run in accordance with the provisions of the Sectional Titles Act and the set of management and conduct rules prescribed in the regulations, unless the developer at the opening of the register for the scheme changes these rules. Once the scheme is up and running, only the body corporate can change the rules or make new rules, through unanimous resolution for management rules and by specific resolution for conduct rules. Two basic principles can be applied to trustee policies; they must be reasonable and made to achieve an appropriate end; and owners can give directions to trustees and restrict their activities. So if enough owners don’t like a trustee policy, they can get it changed at a general meeting.
DO YOU HAVE A PROPERTY QUESTION YOU WOULD LIKE ANSWERED BY OUR EXPERTS? If so, post it on ASK THE EXPERTS on www.reimag.co.za or email editorial@reimag.co.za
DEC/JAN 2016 SA Real Estate Investor
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PROPERTY ALERTS
The Bad
The Good
Thely Ug
Entering the property market is more affordable now
Durban N2 upgrades rouse toll road fears
Landlords beware homeowner evicted from own property
T
P
I
he average home purchase price among first-time buyers has climbed steadily over the past two years from R612 000 to R652 000, and yet, it has become more affordable to enter the property market according to Shaun Rademeyer, CEO of BetterLife Home Loans, who says for one, the average percentage of the purchase price required by the banks as a deposit on first-time purchases has shrunk from 8.4% to 6.8%. He says this translates to a cash saving of around R9 000. “Secondly, the transfer duty threshold was raised earlier this year from R600 000 to R750 000, which translates into further savings for most first-time buyers of up to R4 500. And thirdly, wages have generally risen faster than house prices over the past two years, so monthly home loan instalments as a percentage of income have grown
smaller.”
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lans to upgrade two major interchanges on the N2 south of Durban have raised suspicions that Sanral still hopes to toll local motorists and commuters to subsidise the stalled N2 Wild Coast Toll Highway Project. Environmental consultants acting for Sanral held two “public open days” in Durban recently to outline plans to upgrade the Isipingo and Adams Road (eManzimtoti) interchanges. The projects involve increasing the height and width of two overhead interchange bridges to allow for future widening of the N2 south of the city. Sanral has denied there is any link between the Durban upgrades and the Wild Coast toll plan, while the eThekwini Municipality has confirmed that it has been in talks with Sanral, which would fund the bulk of the project, with some financial contribution by the city. The toll plan is on ice pending a court challenge by Wild Coast residents and behind-the-scenes government discussions on how to fund a new, shorter route between Durban and East London.
n a bizarre twist of events, a homeowner has been evicted from her own property, in terms of order of eviction handed down in the Springs Magistrate’s Court on 28 August in favour of the tenant who had occupied the property during the previous year. Landlords faced with non-paying tenants are sometimes deeply frustrated and feel further financial pressure due to the accumulating expenses of the property. The law is very clear, however: a landlord must follow due process through the courts to secure an eviction order. Understandably, landlords are frustrated due to the average three month process and the cost of an eviction order. The landlord took it upon herself to boot the tenant out of the property. Notably, this was not the first time he had defaulted on his rental, partially paid or paid late. On top of that, the electricity meter had been tampered with on three different occasions, resulting in a bill of R12 675.20 in municipal reinstatement fees. The landlord accessed the property on 28 August and promptly moved the tenant’s belongings into the garage and moved her own possessions back.
DEC/JAN 2016 SA Real Estate Investor
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MASTER INVESTOR
From 0 to
R10 billion
in 6 years
How Delta did it... and is doing it now in Africa
S
ix years ago, Bronwyn Anne Corbett joined Motseng Investment Holdings, a property management, facilities management and industrial investment firm founded in 1998, as Chief Financial Officer. During her tenure, she co-founded Tuffsan 89 Investment Holdings (“Tuffsan”) to establish and grow the company’s portfolio of mostly government-tenanted assets. In just over 12 months, Corbett and her team grew the portfolio to over R1 billion. Owing to major challenges with funding of government-tenanted assets, they decided to list the portfolio on the JSE. After six months of roadshows and educating investors on the perceived risks associated with government tenants, the portfolio listed on 2 November 2012 as Delta Property Fund Limited with 20 assets valued at R2.1 billion in an oversubscribed offer. Today, just three years later, the fund has property assets valued at almost R10 billion. This staggering growth has extended beyond the borders of the country into
10
DEC/JAN 2016 SA Real Estate Investor
www.reimag.co.za
the African continent, through Delta Africa Property Fund – the only listed company on the JSE to offer investors direct exposure to property investment on the continent outside of South Africa. Subject to shareholder approval, Delta Africa will be renamed Mara Delta, following a recently announced unique strategic relationship with The Pivotal Fund Limited (“Pivotal”), which will see the enlarged company increasing its assets under management from a current $200 million to approximately $500 million. Where it began Born and raised in KwaZulu-Natal, Corbett is married to Murray Corbett and mom to two beautiful children. Qualified with a B.Com Honours degree from the University of Natal and articled at BDO, the fifth largest accountancy network in the world, Corbett qualified as a Chartered Accountant. She was appointed as a financial manager at Universal Property Professionals in 2005. It was during this time that Corbett worked on an intensive audit spanning 20 years of operation of a property developer, providing her with an intimate knowledge of the commercial property sector business. Her role was subsequently extended to include asset and development management, which further sparked a passion for the operational side of the business, backed up by a solid financial background. After joining Motseng Investment Holdings, Corbett could apply her in-depth knowledge of the property sector with her experience in optimal funding strategies and her deal-making abilities. Corbett fondly recounts the very first property acquisition of the fund back in 2009. “We acquired our ‘Grand Old Lady’, which Delta still owns today, six years ago for R175 million from Growthpoint and renovated her. The Forum building in Pretoria became the head office of the Department of Transport, securing a long-term lease. The property is currently valued at R400 million,” she says. From there the Fund grew to its current 85 properties valued in excess of R106 million each, employing 70 staff across the country, with Corbett currently serving as Delta’s Chief Operating Officer and Chief Investment Officer. The Fund is expected to maintain its market-beating distributions on the back of its investment approach: manage and buy single-tenanted commercial assets in key strategic nodes attractive to government and other blue chip companies; and mitigate leasing risk through long-term leases by leveraging its empowerment credentials and proven track record of upgrading strategic assets to A- and B-grade status. Into Africa While remaining a JSE-listed landlord of reference for government and other empowerment-driven tenants, Delta will maintain a significant interest in Delta Africa (to be renamed Mara Delta Property Holdings Limited subject to shareholder approval) to benefit from exposure to the high growth opportunities on the African continent. Delta Africa is a pan-African property income fund focusing on African (excluding South Africa) real estate assets, underpinned by US Dollar denominated long-term leases with high quality tenants, delivering strong sustainable income. The Fund listed on the Stock Exchange of Mauritius (“SEM”) and migrated to the JSE main board on 30 March 2015 and 10 July 2015 www.reimag.co.za
MASTER INVESTOR
PERSONAL STATISTICS FAMILY: I am married
with two beautiful daughters. My family provides me with incredible support.
MENTORS: I admire and
have learnt a great deal from Jorge Goncalves Da Costa, independent non-executive director of Delta, who brings a balanced business perspective, harmonising the need for business growth with the imperative to solidify the business foundation.
BOOKS: I most recently
read “Thrive: The Third Metric to Redefining Success and Creating a Life of WellBeing, Wisdom, and Wonder” by Arianna Huffington, cofounder and editor-in-chief of The Huffington Post.
YOUR LIFE MOTTO?
“Never say die!” Being resilient is crucial in the property industry: it is not a place for those who are easily discouraged. DEC/JAN 2016 SA Real Estate Investor
11
MASTER INVESTOR
respectively. It is the first multi-listed property fund to offer international property investors direct access to immediate high growth opportunities on the African continent outside of South Africa. This has attracted a diverse shareholder base, including the likes of Africa’s largest pension fund, the Public Investment Corporation (PIC), who currently holds 25.87% of the company. “During our first year, we successfully bolstered our asset base in Mozambique, migrated to the JSE main board and concluded, among others, the acquisition of Anfa Place retail centre in Casablanca, Morocco,” said Corbett, who is the CEO of Delta Africa. On 16 November 2015, Delta Africa and Pivotal, a JSE listed development focused investment fund, announced the forming of a new strategic relationship that will create a property powerhouse on the African continent. The conclusion of the strategic framework agreement is subject to the confirmation of due diligences and Delta Africa shareholder approval. Once concluded, Pivotal will be a substantial shareholder with board representation in Mara Delta. “Mara Delta will be uniquely positioned with economies of scale to consolidate a number of opportunities on the continent,” commented Corbett. Highlights The over-subscribed listing of Delta Limited on the JSE was a significant highlight, given the Fund’s sovereign focus, says Corbett. “But our expansion into Africa has certainly been a watershed move, given the many challenges involved in investing in property in a foreign country with very different customs, laws and regulations. The sheer complexity of the acquisition of the mall in Cassablanca, for example, is proof of the persistence and resilience required to invest in African real estate. However, Delta Africa is pioneering direct property investment into Africa’s high-growth economies and bringing the opportunities these markets offer to South African investors.” She notes that South African investors are increasingly seeking consistent high yielding, dollar-based returns and exposure to the burgeoning real estate market on the continent. In addition to the rand hedge, which is crucial to local investors given the value of the local currency, investors also pay a lower marginal tax rate on foreign dividends. 12
DEC/JAN 2016 SA Real Estate Investor
While the power of focused property investment to generate wealth is clear from the results achieved by Delta and Delta Africa, the work is not always glamorous: investors need an unflinching long-term commitment and solid support from financiers and shareholders, while upholding the highest standards of governance and being flexible enough to make fast decisions. “I have found that the key is maintaining razor-sharp focus, resilience and a strong support structure, knowing that there will be challenges that must be overcome each step of the way,” says Corbett. “However, I remain driven by a passion for property itself, for the property investment business and for the people in the business. The property business shows what can be accomplished by a determined team in a short time and the recognition of the industry is inspiring. The property industry offers so many opportunities. Many of our staff started at entry-level positions and now hold senior positions. Delta has also been able to establish a bursary fund for women who want to enter the property industry. As such, the fund has become more than just a property fund, it has become a platform to leverage other important objectives.”
TOP 10 INVESTMENT TIPS FROM DELTA’S CHIEF INVESTMENT OFFICER 1. Partnerships are key. Choose the right partners. 2. A strategic financier is crucial to success. Build a solid relationship with the right financier. 3. At times, you have to put your personal balance sheet on the line to demonstrates your commitment to success. 4. Give preference to single-tenanted properties, which are easier to manage. 5. Look for properties that will be suited to a tenant willing to sign a long-term lease. 6. Good cash flow should always underpin a property investment. 7. Keep a watchful eye on the interest rate market. Interest rates are likely to go up further, so stress test your numbers.
RESOURCES www.deltafund.co.za www.reimag.co.za
Investor Talk with
Bronwyn Anne Corbett Bronwyn Corbett of Delta Property Fund Discusses the Company’s Future Prospects across the African Continent. Visit REIM TV for more in depth investment insights.
www.reimag.co.za
COVER STORY
Student Accommodation Increased Demand to Increasing Opportunity BY DREW HOOK
T
he increasing demand for student accommodation in South Africa over the last few years has opened up a number of new opportunities for investors, both locally and abroad. With over one million students registered at private and public universities in South Africa, opportunities for property investors are seemingly infinite. A survey by The Times of nine South African universities found: • There are only 68419 spaces for the 140000 residence applications for 2015 countrywide. • Wits received 34000 applications; it can accommodate 6000 students; • The University of Cape Town received 21469 applications; it can accommodate 6600; • Stellenbosch University received 13600 accommodation applications; it can accommodate 6200; 14
DEC/JAN 2016 SA Real Estate Investor
• The University of Pretoria can accommodate 9470 of its 49000 students on campus; and • The University of KwaZulu-Natal is one of the institutions that can almost meet the demand for accommodation. It will house 12088 of 12727 applicants Before investing in a student housing property certain key factors must be taken into consideration. The location where a student accommodation is situated must be easily accessible and within walking distance to their institutions and other places of interest. As most students do not own cars and rely on public transport to get around, the property where they reside needs to be close to main routes for access to public transport. A secure residential property is of paramount importance so that student tenants can be assured of a safe environment. Because of an ongoing shortage in student accommodation, especially close to campus, and limited www.reimag.co.za
COVER STORY
possibilities for further developments close to campus, these properties are extremely popular. With safety an issue and parking a huge problem, parents prefer their children to rent close to campus and are willing to pay a competitive rate to get their children into these properties. Annual increases in rent is a given, and with the cost of official university accommodation always increasing, I believe it will remain this way. There is also continuous capital growth, mainly because of the activity in this market. Many parents prefer not to rent, but to buy a sectional title, only to sell after the last child has completed his/her studies. The result is an annual selling and buying process, with constant new and willing buyers to start the next cycle of ownership. Increased Demand and Investment Opportunities Universities throughout the country are faced with an ever-increasing problem as their students struggle to find suitable accommodation. Students come from www.reimag.co.za
all over the country to attend universities and find themselves faced with a chronic shortage of safe, secure and affordable accommodation. Academic institutions have identified the problem as being one of great concern. Often the accommodations in question are too far from the campus, offer little in the way of transport to and from campus and tolerate unsafe, overcrowded, unhygienic accommodation, which is not conducive to studying. The lack of student housing has become one of the primary causes for poor performance and the high dropout rates at many universities in South Africa. Rising maintenance costs, ageing residences and other problems have limited the growth options for on campus student housing, despite increased allocations for upgrades. Many universities do not have sufficient space for new developments and some have resorted to outsourcing their accommodation needs to private developers and building managers. Academic and teaching facilities are also prioritsed ahead of DEC/JAN 2016 SA Real Estate Investor
15
accommodation, as universities face major constraints and budget cuts. Thus, as the demand for student accommodation far outweighs the supply, there are excellent investment opportunities available in this market. Although the buy-to-let market is currently depressed, student accommodation is one section of this market that is proving to be an excellent buy-to-let option, usually for a relatively small capital outlay. There are essentially two types of student accommodation in the residential property market. The designated apartment blocks purposely built and used for student accommodation (some blocks allow owner occupation by non-students) and normal investment properties located in university precincts, which are often rented to students on a room-by-room basis. A number of visionary property developers are rejuvenating city centres across the country by turning old office blocks into modern one-bedroom or studio apartments for rental to university students. Buildings are within walking distance of the universities and are safe, clean, well controlled in terms of management, noise and respect for property, and they provide excellent accommodation for students at a reasonable price. Once such new development is the Green Meadows Apartments, which is situated within walking distance to the Potchefstroom Campus, the town centre and the local FET College. The development is easily accessed by bicycle and car, and transport to campus is also available with the campus shuttle passing by close to the site. Construction started in February 2015 with a completion date of December 2018 planned. Students often prefer off-campus residencies as they offer more privacy than those located on-campus. In recent years, astute parents have realized that rather than merely paying rent for their children’s accommodation, they can invest in an asset that can yield good rental returns given the current ongoing demand. With student blocks, investors often get a great yield and there is usually on-site management to handle the day-to-day chores – thus reducing the workload for the investor. With normal residential investment properties located in university precincts, you’ll pay a regular market price to purchase them but you can then enhance your yield significantly by renting room-by-room and fully furnished. 16
DEC/JAN 2016 SA Real Estate Investor
WHEN INVESTING IN STUDENT ACCOMMODATION CONSIDER THE FOLLOWING • Shorter Leasing Cycle: Most student housing is leased during a narrow window of time from Fall to Spring, which puts pressure on early marketing and leasing efforts to ensure a fully rented building when classes commence in the fall term. • Higher Turnover Rate: Unit turnover is low during the academic year, but less than half of the students typically renew, creating high annual turnover that occurs in a concentrated period of time • Development/Redevelopment: Development or redevelopment projects have a very narrow delivery window (the fall semester). If a project misses the beginning of the new school year, it could potentially experience high vacancy until the next school year. • Management Intensive: Compared to conventional apartments, student housing presents significant operational challenges, including high turnover, risk management issues and intense marketing, which require a highly experienced operator. Often students are hired as on-site assistants to facilitate property management. Maintenance costs are normally greater for student housing.
RESOURCES timeslive.co.za, moneyweb.co.za www.reimag.co.za
GREEN MEADOWS
STUDENT, YOUNG PROFESSIONALS & FAMILY ACCOMMODATION CORNER OF PIET BOSMAN, AND PIET RETIEF STREET, POTCHEFSTROOM
For more info email: info@reimag.co.za SOLE & EXCLUSIVE MANDATE GOOGLE MAPS: 26°42’20.0”S 27°05’11.8”ET WWW.GREENMEADOWS.CO.ZA
MENTORSHIP
Getting the Right
Information and Partners Opening your mind to new investment possibilities BY NEALE PETERSEN
T
he new economy demands more of investors today than ever before. Investing in any type of real estate category is generally forgiving provided you don’t over leverage yourself and you don’t get the timing wrong. Today we are now moving into a more competitive and sluggish market where investors must think, do and create far more as well as create more value on their investments and not just aim at acquiring and leveraging for pure windfall gains for themselves. Selling investment education At Real Estate Investor Magazine we have taken an aversion to most real estate education gurus. Many have taken a dislike to the fact that we publish a magazine for investors, getting between them and the people who sign up with them. We discovered that many were not selling much value other than old recycled ideas disguised as new. The old ‘get rich quick’ methods promoted and dominated by them over the last decade are dated. Instead they have become property agents earning commission on property sales and the imminent property sale they offer you becomes more important than the investment and education process itself. The hype and promise of making you into an overnight millionaire is distasteful when in 18
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fact it is about practically learning to invest hands on, understanding the fundamentals using checklists with simple executable steps. Also you have to ask how accessible they are. Google your education sources and partners to verify their credentials and to see if they are acting in your interests. Many investors and professionals in the real estate industry that I engage with say they should not invest in the current market or even if they want to, say it is not possible to get finance. I am not talking about buying a house to live in using traditional methods but rather investing in cash flow positive real estate. Psychology has a lot to do with the success of long-term investors. You have to take 100% control over your investments and more importantly you need to be empowered to make your own decisions and not just let others advise you and make decisions on your behalf. Listen to all advisors and then make your own decisions for yourself. After all it is your money and your wealth plan not theirs. There is lots of advice out there but offers very little guidance and hand holding in the process to get you there. Mentorship is a game changer in that department, as you can understand the reason behind why you are investing every step of the way. If you start learning from those that have been there, www.reimag.co.za
Neale Petersen
.COM
Neale Petersen addresses the Wealth Masterclass crowd
www.nealepetersen.com
done it and who can get you to start thinking bigger in terms of what you can achieve and get the necessary guidance and map to get them there and then you can open yourself to possibilities that you never thought you can achieve. Yes, it is possible to fast track yourself to incredible success quickly but it can only be done through sheer persistence, hard work and dedication using fundamental principles which have helped multiple wealthy real estate investors achieve their success. It is only when you open up your thoughts, horizons and your own potential that you will become more successful in building long term wealth for yourself. It a process mastered over a period of time, not just overnight. The one big game changer you could discover could be investing into your own large commercial transaction with high cash flows instead of going through the process of investing into multiple residential properties with one source of cash flow - rent. New opportunities await you if you choose the right mentoring partners. The Master Mentorship and Property Coach programme guides investors in a strategic process using real life case studies available to you that you cannot get from any university or business school, it is called real life experience. www.reimag.co.za
For more info contact
0861 ACT NOW 021 761 3848
YOU WILL LEARN HOW TO: • • • • • • • • • • • •
Develop new skills and psychology to succeed in investing Think and act like an entrepreneur Make money in real estate in any market up or down Find the information needed to invest and close a deal Create instant equity in any investment Use and access financing to create more cash flow and acquire more deals Maximize leverage on your investments Increase the value of an existing property by creating new uses Protect your investments from financial predators Use your options to buy and sell properties Find the right partners to invest and work with in the process Interact in mastermind groups to achieve more DEC/JAN 2016 SA Real Estate Investor
19
REI RESIDENTIAL
EXPERT Q&A
INCREASE IN RESIDENTIAL PRICES DESPITE WEAK ECONOMY
R.J. Palano
O
ctober property statistics released by ooba, South Africa’s largest bond originator, show an increase in residential property prices, despite current weak economic growth. ooba’s Average Purchase Price rose by 7.6% year-on-year price to R1,024,953 in comparison to the price growth of 5.7% recorded in the third quarter of 2015. First-time Buyers’ Purchase Price showed a milder year-on-year increase of 3.4% to R 787,789. “The moderate acceleration in house price growth is primarily due to demand for residential property exceeding supply, as a result of stock constraints. However, home buyers are under increased financial duress which is evident by the 2.7% drop in Approval Rates and the higher percentage of applications that ooba is receiving for 100% bond finance,” says Rhys Dyer, ooba CEO. First-time Buyers continue to drive the market, with 54% of all ooba’s applications received in October from this segment. “As this segment of home buyers generally do not have access to deposits, increased First-time Buyer activity accounts for ooba’s statistics showing a 2% year-on-year increased demand for 100% bonds,” adds Dyer. Despite lower approval rates, lenders are continuing to compete for the home loans market, evidenced by the 18 basis point year on year improvement in the Average Interest Rate recorded in October at prime plus 0.28% compared to prime plus 0.46% a year ago.
Q
Are there any downsides to a Self-Directed IRA? Yes. Inactivity. There is no reason to have a SelfDirected IRA if you don’t use it. The ability to get involved in a high yielding, creative transaction is what a Self-Directed IRA is all about.
Q
What investments can I make with an IRA LLC? Anything you can invest in with a regular LLC, with the exception of collectibles and insurance contracts.
Q
Is real estate a good investment for my IRA? Yes. Real estate offers a tangible value with excellent returns. As investors become aware of this, many are gradually moving some or all of their retirement capital into the real estate market.
Q
Can I use my IRA to purchase property I already own? No. This is considered a prohibited transaction.
Q
Is investing my IRA in real estate against the law? IRA law does not prohibit investment in real estate.
Q
What is the most effective way to buy Real Estate using my IRA? There is no question the Self-Directed IRA LLC is a good choice for investing in real estate. This option gives you the most control over the IRA’s finances. However, using Equity Participation Notes, Options and the beneficial shares in a Land Trust are also simple strategies that are easily implemented.
Q §
What happens to the rental income if I buy an income generating rental property? The investment will retain it’s tax deferred or tax-free status. Any income generated by the IRA owned property, goes right back into the IRA.
Infographs courtesy of Pam Golding Properties Research 2015/16
www.reimag.co.za
DEC/JAN 2016 SA Real Estate Investor
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BONDS
What is a Mortgage Bond And how does it help you? BY HARRY FRIEDLAND
I
t’s part of South African “property-speak”: “I need a bond”; “I’m getting a bond”; “I got a bond” – we all know what we mean by that, but when we say these things, what is actually going on? A “bond” is a burden placed on land to secure a debt owed by the owner of the land. It ensures that the owner cannot do anything that affects the land without the cooperation of the “bond holder” (usually, but not exclusively, a lending bank). The bond itself is the end result of a loan agreement between a borrower and a lender – it is not the loan agreement itself. The loan agreement is a separate contract whereby a lender lends money to a borrower. The loan agreement and the bond are usually signed simultaneously and it may happen that the person who supervises the signing on behalf of the lender may not point out the distinction between the two, so just bear that in mind. So: •“I need a bond” = “I need money”; •“I’m getting a bond” = “I am applying for a loan which will be secured by immovable property” •“I got a bond” = “I am borrowing money (usually, but not exclusively, from a lending bank)... Lenders assess the risk of lending to their borrowers very carefully and that risk is made up of various factors beyond merely the borrower’s age, income and prior commercial
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behaviour, including, most importantly, the borrower’s ability to disappear with the security for the loan – but in the case of immovable property, no borrower has ever managed to disappear with the security! Furthermore, the lender’s attitude to and assessment of the risk reflects in the interest charged on the loan – so of all the types credit agreements, mortgage bonds always have the lowest interest rate: the interest rate is always a gauge which shows the lender’s attitude to the level of risk of the transaction. You will even find that within the spectrum of interest rates charged by lenders to different borrowers at any given time, first time borrowers, lowerincome borrowers and borrowers with a lower level of education are invariably charged a higher interest rate than buyers with a lower risk profile. Of course, the ratio of debt to the value of the property also affects the interest rate. Where a borrower goes back to his lender in a series of successive loan arrangements, all secured by the same property, the rate of interest charged on the overall loan may go up as the relative amount of equity in the property goes down. This calculation is complicated by the fact that the value of the property fluctuates according to inflation, changing usage and the nature of its location over the years – but these factors do not necessarily cancel each other out (witnessed by the fact that there is a different CPI for properties, separated out from an overall CPI for the national economy as a whole). We witnessed the effect of an incorrect assessment www.reimag.co.za
of the ratio of debt to equity in 2008 in what became known as the subprime mortgage crisis in America, at the tail-end of the last property boom, when lenders were competing with each other so strenuously to do business that they got closer and closer to a 1:1 ratio between debt and equity until they were lending more than the value of the security. The fact that, to add insult to injury, the value of the property then tumbled, created a real disaster: as the chasm between these values really opened up not only the debtors and their properties were swallowed, but even the lenders fell into the void. As a conveyancer who registers a high volume of mortgage bond cancellations on a regular basis, I also tend to see some patterns in the way banks relate to their borrowers: very often borrowers take a first bond to acquire a property, a further bond to renovate or extend it, and further bonds to consolidate debt, secure overdrafts, pay taxes and cover unexpected exigencies. In most cases the borrower thinks that he has “extended” his bond in fact, he has extended his loan, but from a legal point of view the bank has instructed that another bond be registered - so someone who thinks that he has had his bond “extended” five times, actually has an original and five further bonds over his property. Hence the costs of each “extension” have been quite high. But what one notices about these subsequent bonds is that often they get smaller and smaller as the value of the bond starts to approach the value of the property possibly even the frequency of the bonds is increasing, www.reimag.co.za
and now you know that your borrower is getting into deeper financial water and it’s getting to be time to ease up on the credit, if possible. There is another variable that the lender will consider with older buyers, namely life expectancy: a buyer over 60 years of age will find it harder to get a 20-year loan. Whereas lenders do not always insist that younger borrowers must cede a life insurance policy as additional security, that requirement becomes more essential where the loan applicant is older – and if such an applicant does not already have a life insurance policy to cede, he may find it harder – possibly even quite impossible – to procure such a policy, due to his or her medical history. A word about “paid-up” bonds: quite often a property owner will say, “There’s no bond over the property - I paid it back years ago”. This is a classic confusion between a bond and a loan: what was paid up years ago was the loan - but the bond was probably not cancelled: it’s been there all along, and the bank might even have been happy to let them use that bond for a re-advance, except that the property owner never thought to ask about it. A perfect example of the difference between the two things.
RESOURCES Smith Tabata Buchanan Boyes DEC/JAN 2016 SA Real Estate Investor
23
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4
TOP
GREEN
TIPS
for home energy savings Swap out all incandescent and CFL bulbs for LEDs as they are 90% more efficient, contain no harmful gases, and can last up to 20 years! Compact fluorescent light bulbs (CFLs) use 80% less electricity than ordinary light bulbs
Physically turn off appliance switches or at the wall (e.g. a TV or Hi-Fi), instead of leaving them on stand-by
Cold water short wash cycles and rinse-only cycles on dishwashers and washing machines are designed for energy and water conservation. Thick frost on chilling panels reduces a fridge and freezer’s cooling ability. If you do not have a frost-free model, defrost your fridge or freezer when frost is between 0.6 cm and 1.3 cm thick.
LEGAL
Rates Clearance
Certificates on Transfer of Subdivisions BY DYLAN BRADFORD
T
he recent case of EM and EM Engineering (Pty) Limited v KwaDukuza Municipality and Others (9349/2014) [2015] ZAKZDHC 55 (26 June 2015) concerned the liability for rates over newly subdivided land. The property owner and developer EM and EM Engineering (“developer”) registered a general plan which subdivided their property (“the mother property”) into ninety-one subdivisions. A dispute arose between the developer and the KwaDukuza Municipality (the “Municipality”) when the developer applied for a rates clearance certificate from the Municipality in order to transfer two subdivisions from the mother property to a third party. The developer, through its interpretation of section 118(1) of the Local Government: Municipal Systems Act 32 of 2000 (“the Act”), contended that a rates clearance certificate is required only in respect of the two subdivisions of the mother property being transferred. The Municipality was of the view that on the basis that the two subdivisions still formed part of the mother property, the rates and charges payable before a rates clearance certificate can be issued are those rates and charges relevant to the mother property as a whole. The developer submitted that if the Municipality’s view was adopted, all rates and charges due in respect of the mother property must be paid on each occasion before any transfer of any individual subdivision was allowed. The court when considering arguments from the developer and Municipality held that:
1. there had been no change of ownership by the creation of subdivisions through the registration of the general plan over the mother property. 2. future transfers of the subdivisions from the mother property would be recorded in the Deeds Office in a dedicated register. Until such time that the subdivisions have been transferred to a new owner or a certificate of registered title has been issued in respect of the subdivisions, the subdivisions will be held by the same title deed as the Mother Property. 3. section 118(1) of the Act prohibits the registration of transfer of property without the production of a rates clearance certificate with regard to “that property”; and 4. the reference to “that property” in section 118(1) of the Act refers to the subdivision concerned and not the mother property which has, by virtue of the registration of the general plan. Therefore the court held that a rates clearance certificate need only be issued in respect of the subdivision/s being transferred and not the mother property as a whole. This article has been written by Dylan Bradford a Junior Associate in the Commercial Department at Garlicke & Bousfield Inc. For more information contact Dylan on tel : 031 570 5439, email : dylan.bradford@gb.co.za. NOTE: This information should not be regarded as legal advice and is merely provided for information purposes on various aspects of property law
RESOURCES Garlicke & Bousfield
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DEC/JAN 2016 SA Real Estate Investor
www.reimag.co.za
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books, workshops and purpose built software
JOIN THE P3 INVESTMENT CLUB! Attend a free P3 Property Wealth Seminar. Book at: www.hope.co.za or phone 086 100 7729
RENTING
Buy-To-Let
Risk Management Investigating the Nuances of the Agent/Tenant Relationship BY GERT VAN STADEN
G
iven that the sky-rocketing cost of electricity in South Africa, compounded by increases in other costs related to property ownership, including municipal services such as water, refuse removal and sanitation, buy-to-let property owners must manage the growing risk they face with regard to utility costs. Legally the owner of a property is responsible for the payment of utilities, including water and electricity consumption. The risk, of course, for buy-to-let investors is that the tenant does not pay the utilities bill, leaving the investor liable for the account. And the risk of late payment or non-payment of utilities
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is dramatically increased as utility costs escalate – increasing the possibility of tenants running up water and electricity accounts they cannot pay. Disputes, late payments and non-payments of utilities pose a significant risk and a cash flow burden on the property owner. Fortunately there are ways to mitigate this risk. The agreement The starting point to managing this risk is to formally stipulate the responsibility of the tenant with regard to utilities costs in the lease agreement. A specific deposit for utilities should also be collected. www.reimag.co.za
professional rental agents prefer to take control of this aspect to protect the owner and the tenant. Rental agents will provide statements to the owner and the tenants, collect the amounts outstanding and ensure that all utility accounts are settled correctly and in time, to prevent a disruption of the supply. Investors must clearly communicate the instruction to manage these accounts to the rental manager and retain proof in writing. Rental guarantee Certain rental insurance or rental guarantee products offer an option to include utility payments. This means the property owner is assured of receiving the full utility payment on time, regardless of whether or not the tenant has paid. The product provider will then take proactive measures to collect the outstanding amount from the tenant, but the owner’s cash flow will not be impacted by the late or non-payment of the utility account.
However, it is recommended that a separate agreement is entered into between the property owner and the tenant for the supply of water and electricity to the premises. The agreement must be clear in stipulating the payment arrangements and a pro-active approach to immediately address arrear amounts is essential. Rental management If a responsible rental agent is appointed to manage the tenant and the property, utilities payments should not be a risk. Usually there is no cost, or only a small charge, for managing these accounts, since most www.reimag.co.za
Prepaid meters Prepaid meters for water and electricity are another solution to consider. The latest state-of-the art prepaid meters, which record all consumption, can be recharged via the Internet or SMS. It completely removes the responsibility from the owner and the management agent, while tenants can monitor their usage, eradicating the possibility of unexpectedly high accounts. This ultimately eliminates the risk of disputes, late payments and non-payments. Whichever solution is selected, property owners must not lose sight of the fact that they remain ultimately responsible for the payment of the utilities accounts for the property. It is all about managing the risk, and where this management role is delegated to a third party, it is important to clearly stipulate in writing exactly how the delegated control will exercised to minimise the risk.
RESOURCES P3 Investment Group DEC/JAN 2016 SA Real Estate Investor
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FINANCE
Trust Funds
Under Threat?
Understanding and Applying the Conduit-Principle BY MICHAEL DRYDEN
T
he use of properly structured, well-managed Trusts provides for a legal separation between an individual’s personal wealth and the wealth he or she jointly controls in a particular Trust. This legal separation affords an individual or family a lot of advantages related to protecting their hard-earned wealth, such as reduced tax erosion on death and reduced exposure to losses through litigation. For the above reasons, and many more, well informed property investors and businessmen make extensive use of Trust structures. In depth knowledge of Trusts though opens up other advantages of using a Trust, which include the use of the so-called ‘Conduit Principle’. The Conduit-Principle relates to Tax Law that allows for a unique way of applying Income Tax to Taxable Income generated in a Trust, whereby such Taxable Income can taxed in the Trust, or in the hands of the Beneficiaries – the ability to choose is subject to a myriad of anti-avoidance provisions in Tax Law, therefore only the most experienced Trust Specialists can take advantage of this effectively. The tax advantage of having the option to choose where income is taxed, lies in the differences between the tax rates applicable to Trusts (40%) compared to tax rates applicable to individuals (0 – 41%). Individuals also enjoy several tax exemptions and exclusions, which a Trust would not and therefore having the option to have income taxed in the individual’s capacity, quite often is more 30
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favorable than having it taxed in the Trust where the income originated. Understanding and applying the Conduit-Principle is a specialist field, and if applied correctly, can result in an extremely tax-efficient structure. Unfortunately, with the general insatiable desire to reduce taxation, many taxpayers and tax advisors alike have veered from the true purpose of Trusts (see first paragraph) and blindly pursue the Conduit-Principle as the sole or primary reason for using Trusts. This trend has continued for many years, and has resulted in gross abuse of the Conduit-Principle which has unfortunately aroused the interest of the tax authorities. Simply put, the tax authorities continuously seek to limit losses in tax revenue for obvious reasons, and where a system or structure used by taxpayers undermines this objective, it is inevitable that the tax authorities will seek ways to either limit or eliminate such systems/structures. In this light, the Conduit-Principle has been brought into the limelight several times in the past, and now, more than ever, the threat to eliminate the ConduitPrinciple seems real and imminent. In Mid-2013, under a directive implemented by Mr Pravin Gordhan, the Davis Tax Committee (‘DTC’) was created to assess various components of the current tax framework, which included the manner in which tax was calculated in Trusts (with specific reference to the Conduit-Principle). Recommendations by the DTC ultimately included the revision or complete www.reimag.co.za
abolishment of the Conduit-Principle. The initial report from the DTC toward the end of 2014 stated that a change in the Conduit-Principle would result in a huge impact, and therefore any intended changes would have to be announced in the 2015 Budget Speech, and would only be effective from the following tax year. The 2015 Budget Speech included many references and changes based on the DTC recommendations, but interestingly, no reference or changes were made to the Conduit Principle. However, the Conduit Principle abuse continues, SARS continues to lose revenue, and therefore change will be coming soon.
Understanding and applying the Conduit-Principle is a specialist field, and if applied correctly, can result in an extremely tax-efficient structure. Well-informed advisors consider the impact of such changes, and therefore it should be noted that if the Conduit Principle is completely abolished, the end result would be as follows: • In terms of using Trusts to reduce Estate Duty, Capital Gains Tax, Executors Fees and other www.reimag.co.za
related costs upon death – this would remain intact (unaffected) • In terms of using Trusts to provide for a virtually seamless transition of wealth upon death to the next generation by avoiding frozen Estate issues and bureaucratic delays – this would remain intact (unaffected) • In terms of using Trusts to reduce exposure to asset loss through litigation/divorce and so on – this would remain intact (unaffected) • In terms of using Trusts to reduce Income Tax using the ‘Conduit Principle’ – this would not be possible any longer, but there are several other methods that can be used to reduce Income Tax. Essentially, for Specialist Trust Advisors, eliminating the ConduitPrinciple will only frustrate the ability to reduce taxation in a Trust, not eliminate it. For those who setup Trusts with the sole purpose to avoid tax using the Conduit Principle, the abolishment thereof would result in an extremely frustrating tax situation and possibly an obsolete structure. But, for those who created Trusts to protect their hard-earned wealth, the Trusts remain the ideal tool to achieve effective Risk (Exposure) Management and Estate Planning.
RESOURCES www.finservegroup.co.za DEC/JAN 2016 SA Real Estate Investor
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ACQUIRING
Property Ownership
The Many Pitfalls of first time Property Buying BY MEYER DE WAAL
W
hen Angile [real name withheld] recently bought her first property, she encountered a number of pitfalls that very few property buyers are prepared for. The estate agent put her under significant pressure to submit an offer, saying there were many other potential buyers waiting to submit offers on the property. Angile liked the particular area, so even though she had visited the property only once, and had only verbal information provided by the estate agent and a one page flyer with a picture and a few sketchy details about the property, Angile signed up for the biggest debt she had ever incurred in her life – a debt that will most likely take her 20 years to repay. But this was just the beginning... Although Angile was able to put down a reasonable deposit, she still struggled to raise a home loan. So, when the bank finally approved her home loan, she gladly accepted the home loan offer with an interest rate 2% higher than 32
DEC/JAN 2016 SA Real Estate Investor
the prime lending rate. Little did Angile know that this extra 2% on her interest rate means that she would pay almost 32% more for the property she had just bought. Would Angile accepted a home loan that resulted in her overpaying 32% for a property if she had access to a comparative market analysis (CMA) and time to do proper research? Even a novice would not have done so, but Angile was so battered and worn down by the purchase process and home loan application, that she put in an offer and accepted the home loan offered by the bank, without understanding the real consequences. But Angile’s struggle was not yet over... As most buyers do, Angile assumed that the registration of the property on her name would be a straight-forward process. In reality, she could not comprehend why she had to visit two sets of attorneys to sign documents she did not understand and, to her great dismay, had to pay each attorney a hefty sum of money before they would register the property and the bond. www.reimag.co.za
As the date of transfer drew near, Angile sold some furniture, packed up the rest and made arrangements to move it. After numerous phone calls the week before the removal truck was due to arrive, she learnt that the transfer would most likely be delayed, as the municipality was behind with the issuing of rates clearance certificates. Now homeless, with all her belongings packed away in boxes, Angile had no way of knowing when she would be able to move into her new home. Interestingly, Angile is a financial consultant with two degrees behind her name. One would have thought she would understand the process of buying a property, applying for a home loan and registering ownership better than most. Unfortunately, the reality is that most property buyers do not understand the process, because they do more research when buying a mobile phone or a car than when buying a property, which will most likely be their biggest investment and the biggest debt they will incur in their lifetime.
and taxes are paid. In reality, however, the municipality may have overlooked outstanding rates and taxes bills that are older than two years. As outstanding rates and taxes does not prescribe, but remain a debt to the property (not the previous property owner), new property owners may well be held responsible for old rates and taxes that precedes their ownership. When investing in a sectional title scheme, information about the financial situation of the body corporate must be obtained before the sale agreement is signed. In Angile’s case, for example, the estate agent verbally confirmed that the financials affairs of the body corporate are sound. However, despite various requests to obtain a copy of the financials, Angile had still not received these four months after signature of the sale agreement and a month after date of transfer. Little did Angile know that trustees of a body corporate can decide to raise additional or special levies. Within one month after she became the owner of her new apartment, she was faced with a special levy to repair and replace the outside windows of the entire complex.
Do your research The one page information marketing brochure provided by an estate agent is not comprehensive research. Buyers should insist on a comparative market analysis (CMA) and should also do their own research on the Internet to ensure the property is not overpriced. Before signing an Offer to Purchase, buyers should first consult with their attorneys. The attorneys should at least to go through the sale agreement before it is signed. We have seen countless sale agreements with open or blank spaces, no provision for vacant occupation on transfer or a specific date of occupation. This could result in buyers ending up with tenants with a long-term lease occupying their new home. Buyers should also ask their attorney to scrutinize the title deeds for onerous conditions and investigate the diagram of the property prepared by the Surveyor General’s office as these documents may contain servitudes or rights in favour of third parties over the property. The attorneys should also verify on the sectional title register whether there is a right to develop further and the status quo of the exclusive use areas. Often mistakes are made regarding how the exclusive use areas are owned, as some exclusive use areas are formally demarcated and a title deed issued for such right while other exclusive use areas are allocated according to the rules of the body corporate, which may have changed.
Protect yourself Had Angile known better and had she been under less pressure, she would have made her offer subject to the condition that a reputable company perform a house inspection. Although she was in a hurry to submit her offer, she could have made the offer subject to the condition that she had the opportunity to obtain a house inspection report within 7 days after signature of the agreement, and that she is satisfied with the outcome of the report. In one recent case, a buyer was able to renegotiate and reduce the purchase price by R50,000 after the house inspection report revealed some serious defects in the property. The R4,000 spent to obtain the house inspection report was one of the better investments the buyer had made.
Investigate potential liabilities Buyers often assume that when the local municipality issues a rates clearance certificate it means that all rates www.reimag.co.za
Get the right finance Remember that a bank will evaluate your credit profile and debt exposure when evaluating the risk of granting a home loan. The bigger the risk, the higher the interest rate. Before applying for a home loan, obtain a copy of your credit profile, and first repair mistakes and negative information such as late or non- payments. A 1% higher interest rate can increase your repayments by more than 15% and a 2% higher interest rate will cost you up to 32%.
RESOURCES Oosthuizen & Co Meyer de Waalt DEC/JAN 2016 SA Real Estate Investor
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LEGAL
Huur Gaat Voor Koop The Tenant’s Right to Stay Put BY MARLON SHEVELEW
I
n simple terms Huur Gaat Voor Koop means that a tenant, who has a lease, is protected, even if the property is sold to another person. The sale does not impact on the rights of the tenant to continue its lease until its expiration date. The exception to this is that of a sale in execution by a bank (this is when the bank sells the property because the owner does not pay his bond). If a purchaser at the sale in execution makes an offer to buy this property, for a price that is less than what the bank requires, the property may be sold without the lease. This is the exception to Huur Gaat Voor Koop. However, Huur Gaat Voor Koop should not simply be confined to sales in execution. In our law, one may always curtail one’s common law (rights which are created by case law) rights by way of a contractual agreement unless such an agreement is contra bonis mores (against good morals). I can see no reason why a clause that entitles a landlord, on reasonable notice, to cancel a lease with a tenant – even if the tenant was not in breach, to be against good morals. It would, in fact, be more difficult for a tenant to argue same after having initially agreed to the clause in the lease. There is also no harm in inserting such a clause as the landlord will only be gaining extra rights and if the clause is successfully challenged, the landlord will be in no better or worse position than he would be had he not inserted the clause in the first place. In this case of a lease with my clause mentioned above, the landlord would, in accordance with his contractual right, be able to terminate the lease agreement, prior to the sale of the property.
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As such there would be no rights and/or obligations that would be passed onto the new owner. This would of course be different if the sale of the property and passing of rights took place before the landlord cancelled the lease in accordance with the cancellation clause. The only concern that I have is that the Consumer Protection Act recognises that an injustice may be done to a tenant in such a situation – after all, a tenant that pays and does not breach should not simply have his lease terminated, should he? One must accept that if the landlord cancels a lease agreement, the tenant may suffer ancillary damages such as movers’ costs and any costs pertaining to the conclusion of a new lease. Perhaps the clause should seek to prevent such an argument by stating that, in the event of the landlord cancelling the agreement in accordance with the cancellation clause that he will be liable to pay the tenant a reasonable cancellation fee and specify that amount which the tenant should specifically agree to a reasonable amount. I would also ensure that this clause is highlighted and that the tenant’s attention is drawn thereto specifically, and perhaps leave space for an initial of the tenant next to the clause itself. The lease should also contain a clause that should state that each clause is severable and the remainder thereof will continue to exist and be binding in the event that any clause is held to be otherwise.
RESOURCES Marlon Shevelew and Associates Inc. www.reimag.co.za
REI LIFESTYLE
Lifestyle
IMPROVING
Smart tips
for a stress free DIY Renovation
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1. Create a plan It’s always helpful to do a little online research prior to rolling up your sleeves and seek out how-to videos or step-by-step tutorials that will help you create a DIY plan and nail every step.
out of motivation or money part way through. At the end of the day, your time is valuable too, and some grueling or more specialized tasks may be well worth your investment in dollars to hire a pro rather than your investment of blood, sweat and tears.
3. Determine your budget One of the motivating factors for many DIY-ers is the potential to save money. Although sweat equity may be free, it’s still important to create a realistic estimate of required materials and compile a complete project budget. The last thing any homeowner wants is to run
4. Estimate your time Regardless of how big or small a project is, most DIYers fail to create realistic timelines to complete the work. It’s important to sit down before you begin a project and write out every step in sequence, then make a list of materials and costs associated with each step, and
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finally apply an estimate of time to each phase of the project. Accounting for things like dry time for paint is important to keeping your project on schedule. After all, there’s nothing worse than a project taking longer than you expected and then leaving it incomplete. 5. Safety first Having safety gear on-hand and taking extra precautions to protect yourself and your home from a potential DIY disaster is more important than the actual home improvement project itself. Invest in appropriate personal safeguards such as goggles, work gloves, a hard hat and steel toe boots. When it comes to your work environment, make sure your surroundings are clutterfree and valuables are packed away and protected. 6. Don’t skimp on the prep work The anticipation of refreshing kitchen cabinets with a new coat of paint can make it tempting to skimp on the ever-important steps of sanding and priming, but keep in mind that the prep work is arguably 90 percent of the DIY battle. Using prep essentials, such as the proper grit of sand paper and high quality primers to ensure optimal paint adhesion, will ensure that the end results will be successful and long lasting. 7. Pick the right product for the job Whether you’re painting a basement bathroom or a backyard shed, it’s important to investigate and invest in the products and finishes that are designed for the environment that they will be going. There’s a product out there for every situation and substrate — you just need to ensure that you choose the best one for your specific job. And when in doubt, seek advice and recommendations from your local home improvement store experts. Pick the right tools Knowledge and experience will certainly help with any do-it-yourself project, but one of the main factors to ensuring a quality end result is using the proper tools. Purchasing quality hand and power tools can actually save DIY-ers a lot of time to complete a project and can minimize material damages, therefore saving money and frustration. 9. Practice makes perfect If you’re treading into new DIY waters with a project or skill that you’ve never tried before, it’s important to take the time to practice first with scrap materials before you attempt to complete the finished product. Whether you’re learning how to cut crown moulding bevels with scrap wood, or testing out a faux finish treatment on a sample board, it’s helpful to perfect your technique prior to diving in to avoid costly mistakes and wasted resources. www.reimag.co.za
10. Know your limit, DIY within it! If you’re not 100 percent confident about using power tools or going up a ladder, then don’t! Accidents happen when people are nervous or intimidated by an unfamiliar or uncomfortable task. Luckily, there are many local workshops offered at home improvement centres that can help DIY-ers gain the hands-on experience and knowledge to successfully execute their next DIY project with confidence. DEC/JAN 2016 SA Real Estate Investor
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IMPROVING
Home Improvement
Ideas
Strip & Stain Wood Cabinets Stripping and staining cabinets takes only a weekend, and it will give your space a major facelift. Sealing cabinets with polyurethane will also increase durability. Begin by removing cabinet doors and hardware. Wipe cabinet fronts and doors with mineral spirits to remove any dirt, dust, and grease. Apply a gel-type stripper per manufacturer’s instructions, and then remove the stripper with a plastic putty knife. Next, sand the wood with sandpaper. Using a disposable sponge brush, apply stain in the direction of the cabinets’ wood grain. Allow the stain to dry thoroughly, and seal with polyurethane. Upgrade Your Flooring Installing a hardwood floor can take longer than a weekend, so choose a material that’s less timeconsuming. Start with anything that comes in a roll, such as sheet vinyl, which looks better and lasts longer than it used to. 38
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Add Storage to Your Entry If a traditional entry closet or a beautiful builtin shelving system is not an option in your home, refashioned furniture can achieve a look that’s equally stylish and storage-savvy. This small-scale table is a perfect size for beside the front door. Though compact, the table’s drawers and shelf make the piece super functional for busy drop-zone items. A wall-mount shelf above the table hangs keys within easy reach. Make Your Entrance Inviting A cheery front-door color and a touch of landscaping can do wonders for your home’s curb appeal -- and make a lasting impression on guests. Dress the door with new hardware, and add a welcome mat and potted plants near the entrance. Consider installing outdoor lighting to enhance your home’s architecture and illuminate the walkway. www.reimag.co.za
Recharge & Reorder Get creative with drawer space. Outfitted with divided storage (typically used in kitchen drawers) and a power strip, this drawer serves as a charging dock and daily organizer for cell phones, music players, and other electronics. Drill a hole through the back of the dresser and drawer to accommodate electrical cords. Light Up the Kitchen Dress up an eating area with a fresh light fixture. Replacing an existing fixture is your easiest option: Just turn off the power at the breaker box and connect the wires. Give Your Yard a Boost With flagstone, you can easily make an outdoor patio in a weekend -- no mortar required. Add potted plants and outdoor seating, such as a bistro set or an eclectic mix of colorful chairs, to create a quaint backyard escape. Paint or Paper a Wall Self-adhesive and repositionable wallpaper creates a romantic accent that’s easy to apply, remove, and reuse. It works like a giant sticker. Peel the decorative paper off the backing and adhere it to a primed and painted wall. To create a curvy top edge, use your mirror to inspire the outline of your design. Cut the shape from kraft paper and test the look. Tape the pattern on the decorative paper applied to the wall; use a crafts knife to cut around the template. Peel away the paper above the cut. Look Up Give your ceiling a little eye candy. Beautifully highlight a coffered ceiling with colorful paint, and keep the trim white for a bold visual effect. Placing a ceiling medallion around a fan or light fixture is another way to add architectural flair overhead. Decorative ceiling medallions are available in all shapes, sizes, and styles. Switch to Energy-Saving Windows If you have a window that faces the prevailing winter winds, replace it with a high-efficiency unit. If the window opening is a nonstandard size, you’ll probably have to order the new window. Patch Holes in Walls Whether an art-arranging project went awry or you’re tired of looking at dings around the house, concealing wall blemishes is a weekend-worthy project. With a putty knife and surfacing compound, you can easily repair nail holes and other minor wall imperfections. For larger holes, place an adhesive patch over the area and spread an all-purpose drywall compound over it www.reimag.co.za
with a trowel. Depending on the size of the wall hole, the compound may need to dry overnight. Paint over the patch when it is dry. Light Up a Corner With attic space above a dark corner, it’s easy to add a new light fixture, says Daryl Berg, a journeyman electrician in Longview, Washington: “Just cut the hole for the fixture and run the wires through the ceiling joists to a new circuit.” Replace Interior Doors Update these often-overlooked interior elements with form and function. Switch a blah door with a finely detailed antique. Or simply upgrade with solid-core doors, which dampen noise far more efficiently than the hollow-core doors common in new construction. DEC/JAN 2016 SA Real Estate Investor
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COLOUR SPECTRUM
GOLD, BUTTER, CREAM
This bathed-in-sunshine palette is cheerful, warm, and comforting. Golden tones are easier to work with than lemony tones, which can be too intense and have a ‘highlighter’ effect.
PALE BLUE, DARK GRAY, LIGHT GRAY
Light blue “lowers the temperature” of a space, imbuing it with a cool, sedate feeling. Blue makes an artful backdrop for neutrals, bringing sophistication to gray, taupe, or brown furniture
MOSS GREEN, PETAL PINK, OLIVE
We’re accustomed to the colors of nature so using them on walls is less chancy than you might think. The primary colour of nature, it corresponds with life’s riches. It is the colour of fresh start s and growth.
BERRY, PUTTY, BURGUNDY
Deep colors offer enormous payback, but because they’re so powerful, they should be handled with care. Red has strong associations so placing it with the right companions is especially important. Temper it with an even deeper red, plus a dark ceiling, and it calms down
REI COMMERCIAL
EXPERT Q&A
R13M INVESTMENT IN URBAN RENEWAL AND GROWTH FOR BROOKLYN, CAPE TOWN
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1 Koeberg Mall in Koeberg Road, Brooklyn, Cape Town, has opened its doors. Mrs Betty Olla, the investor in the new development, which is worth more than R13 million, was responsible for the planning phase and will oversee the leasing and long-term management of the shopping centre. The property is owned by the Olla Family Trust. Located in the centre of Brooklyn, 91 Koeberg Mall is a major urban renewal project that aims to strengthen the local Brooklyn economy by offering food, beauty, fashion, fragrances, internet, cell phone, music and other retail outlets, such as Lumiére Hair, Sound Select, Perfumes for Africa and French Confectionery Bakery that will complement the existing retail offerings on Koeberg Road. The children’s entertainment area in the entrance of the mall makes it a dynamic and trendy destination for shopping. The mall will serve approximately 3 732 households accommodating the 10 941 residents of Brooklyn. Benefitting from direct connections to Cape Town and the surrounding areas via the My Citi bus service, the new shopping centre, which spans 1 217 sq metres, offers a secure shopping environment with 24 hour security. Shoppers can relax in the knowledge that at 91 Koeberg Mall the safety and comfort of shoppers is a top priority. The official opening of the mall today was officiated by the chairman of the Brooklyn, Ysterplaat and Rugby Ratepayers’ Association (BYR RA) chairperson, Mr Rudi Wolter; and Mrs Betty Olla.
Mark Souris Managing Director Periscopic Masingita Q
Q
What is the latest trend in tenant mixes? Tenant mixes seem to be ever evolving, with a variety of tenants constantly coming and going. This is actually a benefit for shopping centres as there’s always something new on terms of tenant mix and as consumers tend to get bored quickly this draws people back
Q
What trends are evident regarding stand-alone stores? The stand-alone store, such as fast food chains, big brand convenience stores and supermarkets, as well as newcomers international brands like Burger King, is an area of significant growth. We’re seeing more and more opportunities for stand-alone developments – where one store occupies the entire building rather than being part of a larger centre – and we’re expecting to see a gain in momentum in this area.
Q
www.reimag.co.za
What current trends are evident in terms of largescale mall developments? There has been no slowdown in growth. Development in this sector has picked up significantly with quite a few large centres being completed over the course of 2014. Many of these are regional and superregional scale malls which can range anywhere from 50,000m2 to 80,000m2 and up
What should investors be looking at? Potential investors should pay close attention to the level of innovation a particular retail development demonstrates. Look for centres that are consistent in growth, evolution and refurbishment. This is the only way for large commercial retail centres to stay competitive in the current market. DEC/JAN 2016 SA Real Estate Investor
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MY STORY
Legendary Auctioneer
Bounces Back! BY NEALE PETERSEN
Julius “The Glasses” Buchinsky is making an impact!
Y
ou can’t keep a good man down. After retiring from the game a few years ago, Julius Buchinsky has thrown his hat back into the ring of Cape Town business and property. “You can only do so much gardening” says the man who brought auctioneering to the forefront of the market over the last forty years. “And your garden is only ever really for you, whereas in business, the seeds you plant can impact thousands.” With a career that started in retail, managing the family business in Maitland in the 40’s, Buchinsky moved onto the property and sales side in the 70’s, after forming a number of successful property investment syndicates. Seeing the need for alternative ways to buy and sell property and assets, he started auctioneering, initially out of the Barclays Bank building on the old Foreshore. His first deal was for a house in Muizenberg, where the reserve price was R11k, and the highest bid on auction day was R8500. Unable to get the buyer and seller closer together, he went home that weekend frustrated, and convinced the game wasn’t for him. That Monday, sitting at his desk refreshed and recharged, he got a call from an old business colleague who’d heard about the property, and who offered R11k on the spot. The bug had bitten! Over the years, his name became synonymous with property and auctioneering in Cape Town, and his famed glasses unintentionally became his trademark. “When my first pair broke, my optometrists had a new pair especially made up for me, and I ended up buying a few extra sets of frames. Why change what works?” After repeated requests from various attorneys and associates, he moved into stock liquidation work and business broking as well, using the network built up over the years to get good, quick sales for his clients.
“The hard part with building a business like this” explains Buchinsky “ias forming some kind of critical mass – getting enough suppliers to attract customers, but having enough customers to attract suppliers. Lessons in auctioneering But not everything was smooth sailing. Having lived through a good number of lulls in the property market, he recalls one instance where he was ready to throw in the towel. An accountant for a newspaper at the time, phoned him up, and asked about his outstanding account, and why he’d www.reimag.co.za
stopped advertising. “I don’t have the money to pay for it” lamented Buchinsky, “Nobody’s buying anything.” “You can’t stop advertising, Julius” said John. “I tell you what, if you keep an advert in with us, and pay as you go, I’ll write off your account.” Writing off a few hundred rands – a serious amount of money at the time – seemed like too good a gesture to turn down, and true as Bob, the week he put an advert back in, he closed another sale. In the past ten years, he’s also had a few instances of people taking advantage of his good nature, most notably with an assistant embezzling money on the sly. “I always try to see the best in people, and that’s unfortunately meant I’ve had to pay the price for it once or twice. But I still wouldn’t change my approach for anything.” A man who can’t sit still, even in ‘retirement’, he’s been busy building a new business. Called the Jay-Bee Executive Card, it’s an exclusive club for individuals wanting tasty discounts from topend suppliers – like VW, The Wild Fig, and Jenni Button, to name but a few – and for businesses wanting to access an established pool of keen customers. “The hard part with building a business like this” explains Buchinsky “is forming some kind of critical mass – getting enough suppliers to attract customers, but having enough customers to attract suppliers. The beauty of having been in various industries for the last 40+ years is that people recognise the name and face behind the business, and my reputation precedes me. Because of this, we’ve been able to ramp up to a good size (with hundreds of suppliers and customers already on board) in double-time.” The biggest name in the auctioneering game! He’s also cognisant of his own mortality, though. At 85, Buchinsky has teamed up with the CASA, who’ll inject some youthful energy and vigour into the various businesses. Excited at the prospect of new hands on deck, they’re re-launching into the arenas that Buchinsky is best known for – auctioneering, asset sales, and business broking. “With Julius’ name and reputation, and the modern marketing and management systems that I bring to the table, it’s going to be a wild ride” says the CA. “We’re looking to dial up the business-facing side of things in a big way, but we’re also extremely excited for the job-creation potential of the JayBee Executive Card, which has the means to create an income for vast swathes of the population.” The CA will be taking the primary reins of the business going forward – Buchinsky doesn’t intend to be swinging gavels himself – but instead to sell licenses to trade. DEC/JAN 2016 SA Real Estate Investor
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AUCTIONEERING
Auctioneering in
South Africa How do you start an auction business?
T
o be successful and professional auctioneers people, you need to be much more than just a bid caller, counting numbers.
AUCTION CAREER An Auctioneering profession offers you: • • • • •
High earning potential The work is enjoyable The hours are short Your territory is unlimited. Your income generated is proportional to your own ambition.
Auctioneering is a wide field that can take you in many directions, the skills taught on the course will provide you with an understanding of modern selling methods and the ability to publicly put them into practice. Opportunities in the auctioning industry. To start a business in the auctioneering you need to be qualified as an Auctioneer. It is not difficult to do. You can work for an auctioneer and learn the business while you are employed, or you can attend the South African College of Auctioneering. Here you will be equipped with the necessary skills required to be successful in the auctioneering business. Auctioneering provides many options Auctioneering is a wide field that can take you in many directions. Skills taught on the course will provide you 44
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with an understanding of modern selling methods. You will learn how to get started, voice control and effectiveness, and how to run any kind of auction including: • • • • • • • •
Real Estate Auctions General farm and machinery auctions Motor auctions Auction house sales Antique and general merchandise auctions Household furniture auctions Construction equipment auctions Bankruptcy auctions, estate and business liquidation’s
Qualifications Once you have the right qualification, apply for a job at an auction house so that you can get handson experience. This will give you the confidence and knowledge that you need to start your own company. Training information Contact the South African College of Auctioneering for training information and The South African Institute of Auctioneers for general information.
RESOURCES www.auctioneering.co.za www.reimag.co.za
AUCTION LICENSE
OPPORTUNITY Julius Buchinsky Auctioneers Become part of a reputable brand that is owned and run by the man who has built up over 30 years of auctioneering in the property industry REASONS TO JOIN - Strong brand in the property auctioneering sector - Opportunity to earn higher than market average industry commissions - Very low start-up costs - Be part of a powerful network with a valuable reputation
s u i l u J y k s n i h c Bu
The Biggest Name in the
Auctioneering Game FOR MORE INFORMATION SMS BUCHINSKY AUCTIONEERS to +27 83 448 2086 and we will phone you back or EMAIL julius@jay-bee.co.za
TECHNOLOGY
Commercial Parking
Technology
A World of Benefits for Landlords BY PHOEBE WILSON
R
ealising that the parking management industry in Southern Africa requires a new impetus, executives from Interpark and Excellerate Property Services undertook a fact finding visit to major cities which included Brussels, Rome and Frankfurt to view first-hand some of Europe’s most sophisticated parking facilities Centralised Technology ‘The emerging international trend for parking management operators is to invest in centralized technology’ says Kate Wolfaardt, MD of Interpark. ‘During our visit we focused on suppliers who are at the forefront of building centralized infrastructure, which offers significant advantage to both the parking manager and the property owner, including the reduction of operating costs’ Typically in South Africa, a car park is ring fenced from a technology point of view and the onsite parking control solution is installed and managed on the premises, operated by a parking management company. ‘By investigating across suppliers and our international parking management colleagues we were able to design a solution for Interpark which includes a centralized data warehouse consolidating all systems data, and a centralized control room allowing remote monitoring and control of car parks. All the parking facilities managed by Interpark can be connected via the web to the centralized service s irrespective of the brand of equipment or supplier and even if located countrywide or across borders’ she says. Benefits for Landlords and Parkers There are numerous benefits of this concept, not only in terms of better control management and reporting, but
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also in facilitating a significant reduction in monthly operating cost for owners. While the onsite parking equipment will still be installed and cash handling logistics will be local, by incorporating a centralized control room and utilizing world-class technology, a centralized service is provided 24 hours a day, seven days a week. The centralized control room can duplicate the onsite management teams operation of the Pay on Foot site and assist with any issues. It can also take over the full operation of the site by being able to talk to parkers via digital intercom and view parkers via digital CCTV system at each and every device (entry, exit and pay station). It can also integrate every incident into the centralized system and remote control equipment when no staff members are on site. Increased Parking Revenue As a result of the centralized control room a reduction in staff can be achieved at the side, depending on the circumstances. This translates into lower monthly operating costs, while providing a far better quality service. The landlord can also obtain real time statistics from the centralized system at any time, enabling key business decisions and quick actions. A further benefit of the centralized system is it will also be able to help parkers to find parking availability before they leave on their journey, and 24/7 operated controllers can assist with pre-booking parking bays online. Landlords will also be able to offer loyalty products such as VIP Cards to key customers.
RESOURCES Interpark, Excellerate Property Services www.reimag.co.za
STRATEGIES
Corporate Real Estate (CRE)
Building the Tenant Power Base BY MALCOLM HORNE
C
orporate Real Estate aligns property strategy to business strategy, creating opportunities for innovation within a real estate portfolio, and enhancing business functions. An effective CRE strategy needs to achieve four key outcomes 1. Engage with Stakeholders It is important to engage with a variety of stakeholders, in both the private and public sectors. One of the keys to building a better partnership between landlords and tenants is a mutual understanding of the value creation specifically generated by the tenant and their lease. For instance, how many tenants can quantify the contribution of their lease to the investment assets within their landlord’s portfolio. 2. Relevant, accurate information It is also important to analyze and understand relevant and accurate information and – more importantly – the implications of the information. Qualitative and quantitative measurement, along with an analysis of transactions and strategies, ensure that the portfolio holding structure is optimized to suit corporate requirements. Removal of internal biases adds to the benefit of third party validation and verification in compiling, assessing and presenting a recommended strategy. Quite simply, well-informed corporate occupiers are more powerful.
3. Seize Opportunities Significant value can be created at any stage of the property cycle by a structured approach to CRE with and independent and impartial partner. Unique experience and expert perspectives expand the universe of possibilities. The core question is always: what can we do differently? 4. Craft Strategies To manage future uncertainties, strategies must be created, with a great deal of flexibility. An end-toend CRE service provider allows for a holistic view across the spectrum of strategic and operational considerations. Controlling the value chain from strategy and implementation, to the full suite of estate management functions provide key advantages. A careful implementation of a CRE strategy matches innovative and efficient property solutions that align types of users, location, demand and supply. Delivery according to the organizational objectives is crucial whether those aims are cost savings, space utilization efficiencies, productivity gains or reputational value.
RESOURCES Broll, CBRE Affiliate Network
www.reimag.co.za
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ADVERTORIAL
5
Reasons You’ll Fall In Love With Little Karoo’s Touwsberg
For booking info please phone Hugo on 082 823 9777 or Bruwer on 082 928 4743, but hurry as the development is already70% sold out 48
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www.reimag.co.za
TOUWSBERG Do you believe in love at first sight? The little Karoo’s Touwsberg Nature Reserve will have your heart racing. This hidden gem is a once in a lifetime find where limitless adventure, wildlife abundance and peaceful tranquility come together. Here are 5 reasons Touwsberg will surely find it’s way into your heart. An undeveloped peace of heaven Forget game reserves filled with tourists – this untouched paradise offers a more bone fide experience than those places ever will. With unpolluted streams, unexplored hiking paths, and free roaming game – you’ll be happy living off the beaten track. It is located right next to Route 62 From panoramic mountain passes to arid desert areas to historic wine lands – Route 62 has it all and it’s right on Touwsberg’s doorstep. Make a day trip of it by grabbing a beer at Ronnie’s Sex Shop, tasting some wines at Robertson’s famous vineyard or meander through a true “padstal” (farm stall). Your nature activities are limited to your imagination If you are lucky enough to call Touwsberg home, the reserve is your playground. Imagine early morning game drives, hiking through the enveloping mountain range, and paddling down one of the many dams or streams. For bird lovers – over 160 species are waiting to be spotted. And if doing as little as possible is what you prefer – no one will bother you. Touwsberg is conducive to your overall wellness Good for the soul, good for the mind and good for the body – is there anything else to say? Thanks to the drier climate, the Karoo is nature’s doctor. The air has been known to treat and rejuvenate ones respiratory system. Coupled with a couple nature walks, you’ll be feeling revitalized and even healthier in no time. The future looks bright for Little Karoo’s Touwsberg In addition to all the wonders above, Touwsberg Nature Reserve has made its land available to both safari operators and the general public. According to hearsay, the 7000 hectare paradise is being snapped up. As lovers of all things eco-friendly, we look forward to seeing these future developments reaching full fruition. If you’re feeling the chemistry building between you and Touwsberg, then don’t hold back on the sweet marriage any longer. Ignite your desire – it’s time to call this nature reserve home. www.reimag.co.za
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ARCHITECTURE
Blok Architecture Jacques van Embdens design journey BY KATE THOMPSON-DUWE
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acques van Embden is a dynamic 32-year-old architectural entrepreneur who was born and raised in Cape Town. Currently managing director of Blok, an urban property developer, Jacques is strongly focused on innovating Cape Town’s urban landscape through property development and urban interventions. Jacques studied at UCT and graduated with his Masters in Architecture in 2007 - right as the recession hit South Africa and the big agencies closed their doors to newly qualified job hunters. He was fortunate to gain important industry experience by freelancing on jobs for small businesses and family homes instead enabling him to work smartly in trying economic times. During this time he planned to launch a value-based, 50
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owner-managed property fund that would manage a portfolio of urban homes and apartments. He achieved this goal a few years later when he launched the Prime Residential Property Fund. The Prime Residential Fund grew exponentially over the following years, adding a rental division, Prime Letting, and staking a decent claim in the Gauteng and Western Cape’s property market. Gradually the group started to develop sites for the rental portfolio, during which time a gap became apparent in the luxury urban apartments market. It focused on people choosing to reside in and around the urban centre, a movement that is becoming more prominent around the world. Enter Blok. www.reimag.co.za
Jacques launched Blok in September 2014 to focus on property development and urban innovation projects, to meet this exact need. Its intention is to not only provide beautiful and intuitively designed urban apartments for young adults, “empty nesters” and families, but also to become the industry leader in the category of urban living through innovation, integrity and design. Blok sees it as paramount that a property buyer should have a close relationship with their developer; to not only meet once to see a property or plans, and once again to sign papers. They are intent on this relationship being a mutually beneficial one in which buyer and developer experience the excitement of choosing an urban way of living together - from the minute they walk through the door for the first time to the minute the keys to their new home are handed over. The buyer is buying into Blok’s expertise in Thoughtful Design, urban living and urban development. When asked where he sees himself in 10 years, Jacques lists growing and innovating within the urban South African residential property space as his number one priority, and developing his team at Prime Residential as his second. During the course of 2015, Jacques has spoken at the EcoMobility World Conference in Sandton amongst international speakers; at the GTP (Greater Tygerburg Partnership) Business Breakfast on how Blok used the principles of innovation and design thinking to move beyond selling apartments to to developing urban living in Cape Town; launched an ongoing partnership with BMW whereby Blok will be the first private location in South Africa to install an electric charging station at their Sea Point exhibition space; and also launched a series of urban interventions including: • A reinterpretation of the Sea Point library’s outdoor public area with the City of Cape Town, • The (Park)let that Blok is constructing for public enjoyment outside of the exhibition space on Regent Road in Sea Point, that will challenge the high street edge and hopefully encourage more use of the street, • Bicycle parking to install along the Sea Point Promenade to encourage people to get out of their cars and cycle the city. “I attribute a large part of the success of Blok to the fact that we are more than just property developers. We are innate urbanists, we believe in the improvement and beautification of the city as well as the development of community, both inside our blocks and in the neighbourhoods in which we develop. As passionate www.reimag.co.za
JACQUES VAN EMBDEN MANAGING DIRECTOR AND CO-FOUNDER OF BLOK
urban citizens, we believe intrinsically in the truth of the above statement, and how our surroundings have absolute influence on ourselves. In order to live in a city we must embrace the city and what that means; the proximity to our neighbours, the ability to change modes of transport from car to bicycles and feet instead of driving to your destination, the increased security and sense of community due to the denser population, and the list goes on. Add in the fact that getting to know your butcher, baker and flat white maker makes for a more connected and safe community. Because of this we continually strive to improve the areas around which we develop, not only the sites that we own and are converting to urban apartments. To date we have invested in and are rebuilding a park in front of our Green Point project, SEVENONT, and we are working with the city on other initiatives including RoboBlok (our branded Segway that patrols the promenade in Sea Point daily to address crime and grime issues).” Considering that Blok has already launched seven developments and have another one already planned for early 2016, and that sales to date exceed R500m, this doesn’t seem too hard to believe.
RESOURCES www.blok.co.za DEC/JAN 2016 SA Real Estate Investor
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LEGAL
SPLUMA
The Spatial Planning and Land Use Management Act
Understanding the Technicalities of the SPLUMA
O
n the 1st of July 2015 the Spatial Planning and Land Use Management Act 16 came into effect after being passed by parliament in 2013. The law gives the Department of Rural Development and Land Reform (DRDLR) the power to pass Regulations in terms of SPLUMA to provide additional detail on how the law should be implemented. Importance of SPLUMA and its Regulations SPLUMA aims to develop a new framework to govern planning permissions and approvals, sets parameters for new developments and provides for different lawful land uses in South Africa as well as providing clarity on how planning law interacts with differing laws and policies. Many of the apartheid era laws have left South African planning laws fragmented, complicated and inconsistent. As such, section 3 of SPLUMA says that the law tries to develop a ‘uniform, effective and comprehensive system’ of planning that ‘promotes social and economic inclusion’. There has been a degree of controversy and debate surrounding the bill, despite its progressive elements. This is largely a result of the powers that SPLUMA and its Regulations grant to traditional councils. The primary complaint being that SPLUMA and
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its Regulations grant too much power to traditional councils, who in turn have called for a suspension on its implementation on the basis that they were not consulted properly during the legislative process. What do the SPLUMA Regulations say? The powers of traditional councils in relation to planning and land use are governed by regulation 19 (1) and (2) of the SPLUMA Regulations, which read: “19 (1) A traditional council may conclude a service level agreement with the municipality in whose municipal area that traditional council is located, subject to the provisions of relevant national or provincial legislation, in terms of which the traditional council may perform such functions as agreed to in the service level agreement, provided that the traditional council may not make a land development or land use decision. (2) If a traditional council does not conclude a service level agreement with the municipality … that traditional council is responsible for providing proof of allocation of land in terms of the customary law applicable in the traditional area to the applicant of a land development and land use application in order for the applicant to submit it in accordance with the provisions of the Regulations.” www.reimag.co.za
These provisions provide that a municipality can conclude an agreement with a traditional council which would allow a traditional council to take over some of the land planning and land use powers and functions that are vested in the municipality. In cases where the municipality does not conclude this type of agreement with a traditional council, the traditional council would be required to provide proof of land allocation in terms of customary law. What are the concerns with the SPLUMA Regulations? Concerns over the legal recognition of traditional councils The SPLUMA Regulations give powers to traditional councils as defined in section 3 of the Traditional Leadership and Governance Framework Act of 2003 (the Framework Act). The Framework Act deems the pre-existing tribal authorities to be traditional councils if they comply with two transformation requirements. The first is that 40% of traditional council members must be elected. The second is that one third of traditional council members must be women. Many traditional councils across the country have not met these requirements, with traditional council elections either being flawed or non-existent. This means that most traditional councils are not validly legally constituted, and so may not have the legal capacity to exercise the powers granted to them in terms of the SPLUMA Regulations. Traditional councils are given wide-ranging powers in relation to land-allocation, -planning and -use Regulation 19(2) empowers traditional councils to provide proof of a customary land allocation to anyone living in that traditional area that makes an application for development and land use. This would mean that traditional councils would be able to define the content of customary law and creates the potential for local land allocation to be taken over by traditional councils. To focus land planning and land use in traditional councils does not hold true to many rural people living in the former homelands. Lack of accountability measures It is unclear from regulation 19 how traditional councils will be held accountable for the land use management powers and functions that they could perform in respect of service level agreements, or for the responsibility of providing proof of customary land allocations (where there is no service level agreement). The land www.reimag.co.za
development and use application of any person living in a traditional area is still dependent on the actions of a traditional council. This is because the Regulations require that the council first provides proof of a land allocation, or assume that the traditional council will be in control of the initial allocation process, in order for a person to submit their application. Effective mechanisms for holding a traditional council accountable to ordinary people and local government are therefore missing in the Regulations. The SPLUMA Regulations could cause confusion about the powers of traditional councils Regulation 19 specifically states that traditional councils will not have decision-making powers in relation to land planning and land use. However, the regulation still allows for some powers and functions to be outsourced to traditional councils. Exactly what these powers and functions are remains unclear as the Regulations do not elaborate on this. This lack of clarity has the potential to cause significant confusion among municipalities, traditional councils and communities, who are unlikely to agree on what land planning and management powers can or cannot be granted to traditional councils.
RESOURCES www.customcontested.co.za DEC/JAN 2016 SA Real Estate Investor
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EXPERT Q&A
SPAIN IS TOP TARGET FOR COMMERCIAL REAL ESTATE INVESTORS IN EUROPE, NEW POLL SHOWS Jenny Ellinas CYPRIOT REALTY More and more South Africans want to acquire permanent residency in Europe to secure a ‘Plan B’ for themselves and their families. And Cyprus, an ex-British colony, full EU member and not part of Greece (!), currently has the most attractive residency programme on offer.
A
ctive commercial real estate investors see Spain as the top investment target in Europe for next year as values are still below peak, new research suggests. This is a sign of the Spanish commercial market’s recovery, with Germany following close and Germany is next on the list, according to a poll of investors carried out by international real estate firm Knight Frank. ‘The fundamental rationale behind investing in Spain is even stronger than this time last year. Prime CBD office rents have risen by 20% over the past 12 months, but remain nearly 40% below the 2008 peak, and both footfall and sales have been increasing in dominant shopping centres for six consecutive quarters,’ said Humphrey White, head of Capital Markets at Knight Frank Spain. At the same time some 25.4% chose Germany as their preferred target and Knight Frank says that the results mirror the buoyant investment activity seen in the country, with a total of €30 billion invested in property during the first half of 2015, an increase of 35% compared to the first half of 2014. The UK also featured strongly in this year’s poll, attracting 17.4% of the votes, on the back of the continuing recovery which has now extended to the UK regions.
1. The residency permit automatically renews every year; and is for life! So you have the legal right at any time to go and live in Cyprus, thereby firmly securing your ‘Plan B’ and also bypassing the normal strict visa requirements. 2. Dependent children up to the age of 25* qualify, thus exposing your children to the world’s largest economy: Europe. 3. It only takes 4 – 6 weeks for the residency permits to be approved thereby safeguarding your and your family’s future in a short space of time. 4. No need to stay/live in Cyprus: except for 1 day every 2 years so you can continue to live & work in South Africa while retaining your EU residency status. 5. No inheritance tax: on your death you can dispose of your assets to your loved ones without having to pay the Cypriot government any tax. This is advantageous for legacy planning. 6. The annual costs to own a property (council taxes, levies, rates etc.) are one of the cheapest in Europe.
Infographs courtesy of Pam Golding Properties Research 2015/16 www.reimag.co.za
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INVEST
Nampula
A modern transport hub BY BRYAN WESTER
U
nlike many other Mozambican cities, Nampula, is not located along the coast or a major river leading to a thriving harbor. Nampula was initially a small village until the Portuguese Colonial Government moved the provincial seat from Ilha de Mozambique to Nampula in 1935, with Nampula officially being incorporated as a city in 1956. With an estimated population of over 550,000 inhabitants, Nampula City is the capital of Nampula Province and acts as one of the major centers of regional commercial, banking and associated industry hubs of Northern Mozambique. The city, surrounded by rolling hills, granite domes, and peaks is situated approximately 200 km inland from the coast and acts as a critical point of accessibility to the Northern region of Mozambique.
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The main railway line connecting Tete to Nacala Port runs directly through this city, acting as a lifeline for economic stimulation and industry. Nampula boasts the Nampula International Airport, which connects Kenya, Tanzania and South Africa, as well as local cities such as Tete, Beira, Maputo, Vilanculos and Pemba. The Mozambican government, together with international organizations, is in the process of rehabilitating and upgrading Nampula’s infrastructure, most notably due to the Nacala Development Corridor. The Millennium Challenge Corporation (MCC), meanwhile, has granted the Mozambican government funds of US$507 million to repair and upgrade the road connecting Loagonha to Nampula. Additionally, another contract between MCC and www.reimag.co.za
the Portuguese construction company of Gabriel Couto, has been agreed upon for the rehabilitation of the city’s storm water drainage system. The Japanese International Co-operation Agency ( JICA) is also investing in sustainable development of the Nacala Corridor, passing through Nampula, for the rehabilitation of the Nampula to Cuamba road. These investments show great signs of revival for this strategically located city, with investments in the area not only limited to infrastructure and transport, but also agriculture. Nampula is rapidly becoming a hub of modern development and a major attraction for business opportunities, to keep up with the other major cities within the country. Nampula is set to play a central role as a railroad corridor for the distribution of goods throughout the www.reimag.co.za
“Nampula is rapidly becoming a hub of modern development and a major attraction for business opportunities.”
Northern regions of the country. The rehabilitation of the railway line between Tete and the port of Nacala will allow for the easy circulation of minerals and goods-in-transit.
NAMPULA FACTS: Established: 1956 Population: About 550, 000 Resources: Precious stones Main Industry: Agriculture Infrastructure Upgrades: Roads and city drainage.
RESOURCES Mozambique Real Estate Investort DEC/JAN 2016 SA Real Estate Investor
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3675 BUFFALO CT, DOUGLASVILLE
US PROPERTY COMPARISON Price: $155000 Address: 3675 Buffalo Ct City: Douglasville Year Built: 2000
Lot Size: 0.63 acres Option Price: $210000 Square Feet: 2600 Bedrooms: 4 Bathrooms: 3
Annual Rent: $16800 Property Management (10%): $1680 Annual Taxes: $1287 Annual Insurance: $536 Annual HOA: N/A
INVESTING IN US PROPERTY
With mortgage rates nearing an all-time low in the US, property investment has soared. Even for those who reside outside the US, investment opportunities abound. Whether it be a vacation property, second home or a rental property, your US real estate options are bountiful! But it is important to ensure you understand the possible tax implications, as well as how to deduct expenses to reduce your US tax liability. The South East quadrant of the United States is the 4th largest economy in the world and Atlanta is the Hub.
DRIVING ECONOMIC GROWTH FACTORS IN ATLANTA • • • •
Bioscience and Health IT Global Commerce Supply Chain Technology
Metro Atlanta is the business and distribution center of the Southeast – with the nation’s fifthlargest concentration of supply chain employment and 103,000+ jobs.
GLOBAL ACCESS FOR GLOBAL SUPPLY CHAINS
Atlanta’s global access, innovation, and talent create an unparalleled logistics network for companies that demand efficient, predictable and consistent global supply chain operations to accelerate growth.
AIR
Home to the world’s most traveled airport, Hartsfield-Jackson Atlanta International, with more than 2,600 daily takeoffs and landings.
GROUND
One of five U.S. cities served by three major interstate highways. More than 80 percent of the United States’ commercial and consumer markets can be reached within two truckload delivery days.
RAIL
Access to the most extensive rail system in the Southeast with 4,900 miles in Georgia. State is ranked 6th in rail intermodal O & D traffic.
SEA
Only 250 miles to the Port of Savannah, fastest growing and fourth-largest container port in the U.S.
WHY BUY PROPERTY IN ATLANTA SA PROPERTY COMPARISON Type of Property: House Erf Size: 1 060 m² Bedroom: 4 Bathroom: 5 Kitchen: 1 Garage: 5 Parking: 6 Garden: 1 Pool: 1
Atlanta is one of the fastest growing, stable metropolitan centers in America… • Forbes Magazine ranked Atlanta as the #1 rental market • CNNMoney.com says Atlanta is the 4th best city in America to invest in • Forbes Magazine ranks Atlanta as the 4th most affordable U.S. market U.S. Economic Rankings • 3rd in job growth • 3rd for most Fortune500 company headquarters • Home to the world’s busiest airport: Jackson/Hartsfield International • 2nd as America’s best cities to relocate • 1st in U.S. as least costly large city for business
For more info SMS Your name and INVEST USA to +27 83 448 2086 www.reimag.co.za
DEC/JAN 2016 SA Real Estate Investor
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FINANCE
Discretionary Allowance Offshore Property a hedge against Local Volatility
BY ANDREW RISSIK
I
I recommend you make use of these allowances while they are still available. If the current trend of disinvestment and Rand decline continues, the government may well impose some tighter capital controls in the future.
The benefits of using your discretionary allowance It’s quick and easy. All you have to do is book your exchange rate with Sable Forex and two days later, we will have your funds in the offshore account of your choice. You don’t need a tax clearance from SARS so there is very little administration. Besides this, the money can be used for anything, including foreign investment. If you are married and haven’t used your 2015 allowance, you could move up to R4 million between now and early January 2016.
Offshore property investing as a hedge against local volatility South Africa has always been deeply integrated into a capitalist international political economy. As a result, external factors in the global economy have an influence on our economy domestically. The very government that manages our economy today was born from the party that used internal tactics to influence market dynamics abroad. In the late 20th century, these strategies had powerful effects, eventually coercing the previous regime to make changes to our political landscape. Ironically, the current government is now being punished by international markets in a similar way. The disregard for the capitalist disciplines of a modern globalised economy, in favour of a blatantly communist system based on patronage and abuse of power, influence international market dynamics where South Africa is concerned.
f you haven’t already used your annual offshore allowances for 2015, now might be a good time. In my last article I concluded that South African investors should be asking whether offshore investing is part of their strategy instead of questioning what the Rand will do. Every year South Africans receive a discretionary offshore allowance of one million Rand and a capital allowance of R10 million. As the end of the year approaches, it is important to ensure that you have made use of these allowances if you intend on investing offshore. Let’s take a look at how you can use your discretionary allowance by investing in offshore property and why that’s a good idea.
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www.reimag.co.za
The ANC is business-unfriendly and dislikes Western powers unless, of course, they need something from them. Tax payers are put under massive strain in SA whilst the government wastes billions of Rands through incompetence and corruption. Disposable income is at an all-time low. An offshore investment should be viewed as a possible yield-generating asset that can derive a hard currency income. This would not only be good for South Africa as hard currency returns are brought back home, but good for the investor too. With all the above in mind, seeking a good offshore investment may be expensive in the short-term, but it could well pay handsome returns long-term. How to manage your mortgage: Be wary of your gearing If you use your investment funds to purchase an offshore property and you apply for a mortgage bond abroad, you need to be sure that you will always be able to service your payments from a Rand-based income. Be aware that as international interest rates climb, the Rand could well devalue and this could put you in dire straits financially.
With this in mind, one needs to understand that as much as we may love South Africa, our local volatility is being further accentuated by this poor economic management. Post 1994 South Africa entered an era of excitement at the prospects of the rainbow nation flourishing. This has soured somewhat since then. The ANC, while in exile, learned the doctrines of a failed communist system. This, coupled with mis-governance and sometimes a total lack thereof, in combination with the end of the commodity boom and dwindling protection from a friendly international community, leaves South Africa very exposed. The country is heading for an investment crisis.
Conclusion On the current trajectory, South Africa is heading for a crisis and it will no longer be able to meet its obligations on its current income projections. Any further ratings downgrades will make borrowing money from the bond and capital markets unaffordably expensive. In a country where most citizens are peaceful and looking for a simple life, any bail-out will put the Marxist ANC into a corner. Things will have to get worse before they get better and when SA emerges from this cycle, it will be a better place. Meanwhile, use your allowances while you have them available to hedge yourself and your wealth.
“The 100 largest companies on the JSE are sitting on a cash mountain of R403 billion, suggesting corporate unease at the state of the investment climate both at home and abroad.” Ciaran Ryan | 23 November 2015 Foreign investors are also shying away due to policy uncertainty surrounding the rights of land ownership, as well as tough and unclear BEE guidelines and a very militant labour force. Whilst the Rand is “cheap”, our labour productivity is so uncompetitive that potential returns for the perceived risk are simply not worth it. www.reimag.co.za
RESOURCES Sable Group DEC/JAN 2016 SA Real Estate Investor
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TURKEY
Turkey Istanbul Real Estate Sees Significant Growth BY DREW HOOK
I
stanbul is the biggest city in Turkey and is arguably Turkey’s biggest economic powerhouse. It is also showing excellent signs of strong performance as a destination for property investment in 2015 and beyond. In particular, three of Istanbul’s streets have recently been singled out in a report by Cushman & Wakefield for their exceptionally strong property performance. Indeed, these streets have reportedly displayed some of the most significant rental growth in the world today. The streets in question are Bagdat Avenue on the Asian side of the city and Istiklal Avenue and Abdi Ipekçi Avenue on the European side. All three ranked in the global top ten streets for rental growth. In 2014, these streets saw a total of 17,500m2 of real estate rented out. Rents, meanwhile, grew by 24.4% on Bagdat Avenue, 27.3% on Istiklal Avenue, and 20.9% on Abdi Ipekçi Avenue. The exceptionally strong performance of Istanbul’s property market is down in no small part to tourism, which is boosting the real estate sector across the country. Turkey ranks sixth in the list of the world’s most popular destinations for tourists. It is particularly popular with visitors from the UK, Germany and Russia. US citizens also make up a significant and growing portion of Turkish tourist numbers. Last year, Turkey’s GDP received around €26bn from the flocks of international tourists, which numbered just short of 37 million individuals. This represented year-on-year growth in the tourist sector of 5.5% and this boosted a number of key sections of the Turkish economy, including real estate.
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Naturally, those markets that directly accommodate tourists are booming as a result. In particular, the Turkish hotel market is currently showing signs of exceptional health. However, the robust state of the Turkish tourist trade has also boosted businesses and driven increases in employment and earnings, fueling demand for residential properties as well as shorterterm accommodation for tourists. This has been a key driving force behind growing demand and the rapid growth of rental yields, creating an attractive situation for investors. In the suburbs of Istanbul, a one-bedroom property can currently be purchased for around €50,000 on average, and commands average rents of roughly €300 per calendar month. This represents respectable yields of 7% and that is before the potential for capital growth is considered. Such one-bedroom properties are of particular interest to many investors at present, because there is a short supply of this type of property compared to relatively high levels of demand from young professionals. As a result, property investors have been keen to take advantage of this situation. Over the course of 2014, there was a 56% increase in foreign investment in Turkish real estate. A particular increase in investment activity came from Middle Eastern investors, but buyers around the world have been taking an interest. Overall, 1.16 million Turkish residences were sold last year to domestic and international buyers – a 2% yearon-year rise in the number of transactions.
RESOURCES www.nuwireinvestor.com www.reimag.co.za
EVENTS
Congratulations to
E v e n t s Dion Prytz 2 0 1 5 / 1 6 ETHICS AND PROFESSIONALISM IN THE PUBLIC SECTOR
STRATEGIC PLANNING FOR LOCAL ECONOMIC DEVELOPMENT
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DATE: 07 December 2015 to 08 December 2015 TIME: 08:00 AM - 04:00 PM VENUE: Pretoria, Johannesburg, Durban COST: R5,499
DATE: 09 December 2015 to 11 December 2015 TIME: 08:00 AM - 04:00 PM VENUE: Pretoria, Johannesburg, Durban COST: R7,499
CONTACT: O. Bright TEL: +27 12 753 2263 EMAIL: info@intah.co.za
CONTACT: O. Bright TEL: +27 12 753 2263 EMAIL: info@intah.co.za
SERVICE DESIGN THINKING FUNDAMENTALS CAPE TOWN DATE: 07 December 2015 TIME: 08:30 AM - 04:30 PM VENUE: V&A Waterfront, Watershed, Workshop 17, Cape Town COST: R1,600 if you book before 30th of November TEL: 072 549 2190 EMAIL: robert@designthinkersgroup.com
SOUTH AFRICA FOREX EXPO DATE: 05 February 2016 to 06 February 2016 TIME: 10:00 AM - 05:00 PM VENUE: Sandton Convention Center, Johannesburg COST: Free CONTACT: Basil Omeje TEL: +2347088882475 EMAIL: sales@safxexpo.com
who wins the David Green Timepiece For correctly answering last months Master Investor Question
LESSONS
Buying your First Home Lessons for first time home buyers BY VANGILE MAKWAKWA
B
uying a house is the first step on the property ladder. This will the biggest investment you will ever make but people often incorrectly make this important decision based on emotion. Firstly, check out your credit score and your affordability. Determine your credit status because this determines your risk for the bank and your risk determines your interest rate. Your credit score will let you know how much negotiation power you will have with the bank manager in the home loans department at the bank. Then, find out your buying power. The banks normally look at 30% of your income. However, if you have too much debt the bank will lower your interest rate which will negatively affect your affordability. This is all a direct contrast to what the National Credit Act prescribes. To work out how much your re-payments will be divide or multiply your income by 30%. That is your affordability test. You are looking at your credit profile and affordability test to see whether you will be able to afford the deposit. This helps you to improve your credit profile and your subsequent risk to the the bank which can help you negotiate a lower interest rate. Buying a home is a long process and does not take place overnight. Make sure a professional can asssit you to secure your new home and determine your timeline to prevent any delays. The normal timeline of events before you buy your home include:
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1. You submit an offer to the seller 2. The seller accepts the offer in about three days. 3. You get all your paperwork together such as bank statements, proof of income etc. which gets sent either to a bond consultant or directly to the bank. 4. It takes 10-21 days to get your bond approved. 5. It takes another 14 days to get the instructions about the bond sent to the attorney. The bond attorney and the transfer attorney will work together. In that time, they have to prepare your transfer documents, apply to the Municipality for rates and taxes and they have got to get your bond documents signed. 6. Then, they have to send it back to the bank again. The bank will have a lead time of six-10 days to ensure that all the paperwork is in place. There is also a cancellation attorney involved because they have to attend to the cancellation of an existing bond of a seller. 7. This all goes to the Deeds Office which has a turnaround time of about 10-14 days. Now you are already looking at a total of 62 days, which about four months ago when you first submitted the offer to purchase the property and made an offer to move in by the 1st of the month, you were not aware of the following delays. Rather provide for a specific date when you are moving.
RESOURCES Wealthy-money.com www.reimag.co.za
Exceptional
FINANCIAL& IMMIGR ATION services Sable specialises in helping private individuals, small and medium-sized businesses and clients with international interests or links.
MONEY MIGRATE | FOREX | WEALTH NATIONALITY | GOLDEN VISA PORTUGAL Sable South Africa Ground Floor, Block B1, Regent Square, Doncaster Road, Kenilworth, 7708, Cape Town t: +27 (0) 21 657 2120 | e: info@sable-group.com | w: www.sable-group.com Sable offers a wide range of professional services to international citizens. Sable has registered offices at Castlewood House, 77/91 New Oxford Street, London WC1A 1DG. Sable is part of Sable Group.