Freehold vs Sectional Title and Body Corporate vs HOA’s explained

A freehold property within an estate is not subject to the same ownership, regulations and rules as a sectional title. Let’s look at the differences:

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There is however a grey area; when a freehold property is part of an estate, and therefore no Body Corporate is required. In a case such as this, home owners are encouraged to form a Home Owners Association (HOA), which is a non-profit organisation.

See more: Parking in a sectional title

HOA’s have becoming increasingly more popular. Essentially they serve a community of individual properties that while may be exclusively owned by members, as in freehold circumstances, they share common infrastructure such as roads, security services, reception areas, recreational facilities etc.

Whilst this does sound similar to Sectional Title ownership, Andrew Smith, Director of Denoon Sampson Ndlovu Inc, a law firm specialising in conveyancing and property development, explains the role of HOA’s.

One normally finds a HOA has been created for a residential estate where the owners of the properties have a common goal of sharing the cost of security and costs of maintaining pavements and roads within an estate.

“Sometimes however, the goals of the HOA are a lot more specific. For example, the rules may cover regulating architectural styles, the control of paint colours for the exteriors, and the gardens may be required to only have indigenous plants. These goals are to create a generally harmonious feel within the estate and to maintain standards to ensure that the property investments retain their high value.”

Smith does agree that the needs of residents within an estate hosted by an HOA are similar to those of one with a Body Corporate under Sectional Title schemes but he emphasises that as there is no legislation to force the creation of HOA’s, developers of such estates, sometimes even the owners themselves, determine that an HOA will better serve their needs.

“A HOA will have a Constitution, or Articles of Association, which determine the structure of the entity: how meetings are run and how Rules are created,” says Smith. “These are much like the Rules of a Sectional Title Scheme but are slightly different.

“HOA Rules can be compared to Conduct Rules, and are agreed to by the members. These can be strict or lenient, depending on the needs of the community. The Rules tend to be a lot less stringent than those created for a Sectional Title scheme because the homes are generally further apart, and the owners are not jointly responsible for the maintenance of their homes. Instead they are only responsible only for the maintenance of their own home.”

As in any society or organisation rules exist to ensure stability, and in the case of contravention, fines apply, be those relative to Body Corporates or HOA’s. Smith explains however, that fines imposed by the trustees of an HOA are “a lot less frequent that one would have with a Sectional Title Scheme where residents live almost on top of one another.”

Where fines, and levies, are not paid, be those imposed by Body Corporate’s or HOA’s, appropriate court action may be imposed. It is therefore crucial to understand the Rules of the estate in which you live or intend to live. Best yet it is in each owner’s best interests to be appointed to these governing bodies for at least one term, to fully understand the impacts of estate Rules, the legislation behind them, and to represent that your vision for your investment is maintained to the highest possible standards.

This article was sourced from www.Privateproperty.com and written by Kerry Dimmer

Buying vs Building – which is more financially viable?

The FNB Property Barometer for 2019 indicated a low 3.7% year-on-year growth in Feb this year, compared to the 4.2% year-on-year CPI for the same period and the 3.8% annual average recorded in 2018. This slow growth coupled with a potential sentiment boost following the recent election results, might lead to a buyer’s market emerging across the greater part of SA.

This is according to Sheldon Jennings, Architect and founder of Archimedes Design – an innovative architecture practice in SA, who says that the first consideration for first-time home seekers should be whether to buy a pre-existing home or take up the challenge of building a tailor-made family home.

“Selecting the most financially viable option that can also serve practical lifestyle requirements is usually a deciding factor for first time home-seekers looking to acquire a family home. Unfortunately, there is no cut and dry answer when it comes to deciding whether to build or buy. From city to city the cost of construction and land vary vastly, and one needs to decide on a case-by case basis.”

Jennings identifies the following pros and cons for each of the options:

Buying a property

Purchasing a property could yield less unforeseen costs, provided that a comprehensive property inspection is conducted prior to the offer being made. Think about it as if buying a second-hand car versus a new car. As is the case with purchasing a second-hand car there are many hidden expenses that might creep up down the line, such as maintenance on individual elements that have suffered wear-and-tear. Common examples would be broken or cracked tiles, corroded roof sheeting that cause leaks and even foundation settlement that may compromise the structural integrity of the building.

Buyers must also be very sure to scrutinise the council approved building plans – which should be provided by the property agent – against the existing structure on the property. In some cases, the current owners may have added a bedroom, entertainment area or second dwelling without attaining the necessary council approval. In these instances, the new owners may be liable for hefty fines of up to 100% of the building costs of the illegal structure and in worst case scenarios where local building regulations were not adhered to, council has the right to issue a demotion certificate for illegal parts of the building. As most buildings are sold voetstoots in SA – costs that arise as a result of these penalties will likely fall on the shoulders of the buyer alone.

There are several property inspection firms in SA who conduct these pre-purchase inspections, but Jennings advises going with a firm that employs professional architects or engineers to ensure that the inspection is of the highest quality and to provide credibility, should the buyer wish to utilise the report for a potential discount on the asking price.

On a more positive note, a key benefit of buying a ready-built home is that you don’t have to go through the many stresses and the extended timeline generally associated with building. From transfer of property to council approval, the timeline of the entire construction process can easily exceed six months and can take even longer if unexpected hick-ups arise.

For individuals who are not prepared to go the extra mile and who do not have the time and capacity to invest in the construction process, it may be better to opt for buying, which generally concludes in under six months and where you essentially pay a team of advisors and professional consultants to guide you through the process and perform a lot of the admin on your behalf.

Building a home

Jennings explains that while a key benefit of building a property is the autonomy it offers the purchaser to create a truly novel and tailor-made space for his / her family, the process is not without its own pitfalls.

When building there could also arise unforeseen costs, such as special levies that apply depending on factors such as elevation above natural ground level, or if a second dwelling will be added to the property for example. Many first-time developers forget to add some hidden fees into their initial cost estimate. While they may have accounted for the professional consultants’ fees such as the architect, engineer and the construction team – they might neglect crucial items such as the geotechnical survey, (which helps to establish the subsurface soil and water conditions that influence the structural design) or development levies payable to the city.

Another hidden issue to be aware of is the potential for subsurface boulders that may need to be removed at great expense and effort. Additional elements that contribute to the cost of construction – such as steel reinforcement in the foundations – might also need to be added if the soil is found to have a high clay and water content following a geotechnical survey.

On the other hand, a Geotechnical survey might reveal ideal building conditions and therefore lessen the overall expected cost of construction. When building with a qualified team the client can at least have peace of mind that the building’s structural integrity is intact and that there are no hidden flaws or latent defects that will plague them down the line.

It is therefore always advised to consult with an architect before purchasing a piece of land to develop. Remember that the home you envision is not always possible. Elements such as height restrictions, boundary lines and aesthetic finishes are usually determined by the local council and it is important to be aware of these in order to have a realistic idea of what the finished product you envision on your new piece of land will look like.

Jennings advises that many architecture practices, including Archimedes Design, waves consultation fees if the buyer decides to continue with the purchase and appoints the firm for the design process. If the buyer is seriously considering a purchase it is a worthwhile exercise to ensure that the right decision in made, with all the right information at hand.

He concludes that building a custom design that is tailored to your family’s unique lifestyle requirements is usually a bit more effort, but it can be very cost effective, and it is usually worth it.

“One thing is for certain, if a client is willing to go through a little extra effort, one can create a unique space to enjoy with friends and family that need not cost as much as purchasing a pre-existing home and renovating. More often than not we see greater long term satisfaction with a home that has been built specifically to cater to a client’s need, rather than a purchased home.”

Five Reasons Why Downsizing your Property is on Trend

The international trend of purchasing smaller homes continues unabated and downsizing isn’t necessarily only a symptom of tough economic times. Many well-heeled homeowners are choosing to downsize to smaller properties that are easier to manage. In South Africa, this trend has been confirmed by the latest FNB Estate Agents Survey. As sellers, the choice to downsize rather than upscale is mainly due to these five factors:

1. Location

With the price of fuel and traffic congestion on the increase, people are choosing to downscale the size of their homes to upsize their lifestyle. “Many people are opting to rather purchase a smaller home or an apartment closer to the city instead of a larger home in the suburbs so they can spend less time in traffic, spend less on fuel and spend more time with friends and family. It’s definitely a lifestyle choice that is driving sales,” says Glenda Luitingh, Branch Manager of Jawitz Properties Cape Town CBD & Atlantic Seaboard.

2. Financial

The most recent data reflects a decline in household wealth since last year. With pressures on disposable income, buyers are more interested in smaller, easier to maintain properties. The cost of general maintenance and the upkeep of gardens and pools has meant a shift away from larger homes to those that are easier to maintain.

3. Retirement

As our population continues to age, many homeowners are looking to downscale from larger family homes to easy-to-manage, more compact properties. “Generally, once couples retire, they’ve been empty-nesters for some time and are looking to clear out their homes and live an easier, simpler life,” says Luitingh. A popular property choice for retirees is purchasing within a secure lifestyle estate, where smaller homes don’t mean a smaller life. Lifestyle estates oftentimes offer the necessary healthcare and support needed by older residents but also offer a wide variety of lifestyle and sports amenities, activities and wellness facilities.

4. Security

Security remains one of the main factors for people choosing to downscale. Larger properties need fencing, beams, alarms and cameras to maintain a sense of security which is costly to install and maintain. Instead, buyers are more interested in smaller homes within a security estate or apartment complex that offers all the security as part of the purchasing price. Lock-up-and-go homes have and will continue to gain in popularity.

5. Family Dynamics

As family dynamics shift according to natural and unexpected lifecycles, so the need for upscaling and downsizing is impacted. Many family events that occur, such as divorce, death, debt or becoming empty nesters, make the decision to downscale common sense. “As with any situation, you need to adapt your living environment to the family’s current lifestyle needs,” says Luitingh.

The trend towards downscaling and downsizing property is also echoing a larger, more philosophical need for us to simplify our lives. More practically though, Luitingh concludes, “The high cost of living and the need for security will see the trend of downsizing and empty nesting continue”.

Being single is not a barrier to owning property, 56% of home buyers are single, says FNB

24 June 2019 – FNB Home Finance has revealed that the number of single applicants who bought residential property through the Bank increased from 48% to 56% between 2016 and 2018.

Over the same period, single female buyers showed significant growth, surging from 22% to 28% while single male buyers recorded a 2% increase from 27% to 29%.

FNB Home Finance Chief Executive Lee Mhlongo says, “the consistent rise in the number of single home buyers indicates a greater level of awareness around property ownership as a worthy investment and asset. Based on the current trend, we’re likely to see more women property buyers than men in the next two years,”.

“FNB’s data is consistent with a broader industry trend which was highlighted by property research group, Lightstone, indicating that single women have been the biggest group of property buyers in South Africa, with almost 72,000 single women having purchased residential properties in 2018,” he says.

What’s important to note though is that the growing purchasing trend of single home buyers shows that being single is not a deterrent to individuals who want to buy property.

The Bank’s provincial comparison shows that single home buyers continue to dominate the Gauteng and Western Cape Property markets. However, married couples continue to outweigh other buyer types in provinces such as the Eastern Cape and KwaZulu Natal.

“Property ownership remains a vital foundation on which socio-economic transformation can take place. The empowering impact of owning your own property should never be underestimated. Over and above, owning property represents a stable investment which will grow over time and serve as a wealth creation tool for you and your family for future generations to come,” concludes Mhlongo.

this article was sourced from http://sapropertyinsider.co.za and was first posted on 24/06/2019

 

3 mistakes empty nesters make when downsizing their home

Real estate professionals will tell you that the average family will move once every five to ten years. This is usually to accommodate a family’s changing needs as their family grows. Often one of the last moves a family makes is from their large family home with multiple bedrooms down to a two- or one-bedroom home that houses the last two that remain: the parents.

It can be difficult for buyers to adjust their thinking when viewing new homes and empty nesters often make the mistake of buying ‘too small’ or ‘too big’, or feeling they should by near their children.

“Relocating after your last child leaves the nest can be an emotional experience – especially if you are tightly-knit family,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa Goslett. “It can be difficult for buyers to adjust their thinking when viewing new homes, as they now need to consider only their own wants and needs and not those of their children.”

According to Goslett, below are the three mistakes empty nesters most often make when downsizing after their children move out of home:
1. The difference between too large, too small and just right

Many empty nesters make the mistake of purchasing a new home that is either too small or too large to suit their new family dynamic.

“Purchasing a property that is too small will make it feel as though you are living on top of each other, while purchasing a property that is too large will only emphasise the fact that your children are no longer around to fill the vacant rooms,” says Goslett.

2. Hitting the location sweet spot

Goslett says empty nesters tend towards one of two extremes: either purchasing property as nearby to their children’s homes as possible, or as far away as possible so that they can start afresh and live out the lives they’ve always hoped to live.

While it is better not to buy a home purely to be close to your children (keeping in mind that they can relocate at any point in time), it might also be difficult to move too far away if you are a close family who are used to getting together regularly, he says.

Find retirement property for sale around South Africa

“Buyers should purchase based predominantly on where they would like to live out their years together, perhaps only secondarily factoring in where their children stay.”

3. Moving before you’re ready

Empty nesters should also avoid rushing the process of relocating, Goslett cautions, as it can be difficult to deal with the loss both of your family and the home in which they grew up.

“What’s more, there is always the possibility that one of your children may need to move back in with you after having attempted living on their own and consequently realising that they aren’t quite as ready to leave the comfort of your home as they initially thought they were.”

Work with a find a ‘compassionate’ agent

Lastly, Goslett advises that empty nesters find a compassionate and experienced real estate professional when selling their family home.

“Homeowners are often far too subjectively attached to these sorts of properties to do a good job of selling them. There might be things that need to be updated or remodelled in order to make the house more sellable. Homeowners need to trust their agent enough to make these calls on their behalf,” he says.

Why the first offer on a home is often the best

There are exceptions to the rule, but there is a very good reason why estate agents encourage sellers to seriously consider the first offer.

It’s not easy being an estate agent, mainly because most clients seem to believe that agents will do anything in order to make a quick buck – and this includes coercing sellers into accepting the first offer that’s made on a property.

You’ve all probably heard the mantra that invariably comes from practically every real estate agent’s mouth – ‘the first offer is always the best offer’, but what you probably don’t know is that it’s not only South African estate agents who produce this line over and over again.

Yes, there may be exceptions to the rule, but there is a very good reason why estate agents around the globe encourage sellers to accept (or at least give serious consideration to) the first offer and that’s because this old chestnut has proved to be true time and time again.

But why is the first offer usually the best?

According to various experts, sellers need to appreciate how buyers think in order to understand why things can go pear shaped if they reject offer after offer after offer because they are waiting for something just a little better.

Buyers generally all operate in much the same way, regardless of how much money they are able to – or want to – spend on a home. They start out by dipping their toes in the water. This testing of the water doesn’t necessarily mean that they are going to approach an estate agent with their list of requirements. Instead they will generally begin by checking out prices online and visiting a couple of show houses in the area in which they are interested.

Those who are really serious about buying will then follow up by contacting an agent in order to find out as much as possible about a particular area, including how much the average property is currently selling for. Things start to hot up from here and, having narrowed down their search parameters, buyers will start to make appointments to view specific properties. By this stage they will have a good idea of property values in the area and would have begun making enquiries about bonds. Remember, the information they have acquired isn’t a thumb suck, it’s the result of intensive investigation, sometimes conducted over a period of months. And this type of buyer is often the one who will submit the first offer on a property.

They are in serious house hunting mode and their estate agent will know this. For this reason they will hear about listings the moment they come on to the market, particularly properties in the right price range and which their agent knows will appeal. Technology also plays a role in this as property portals like Private Property can send out notifications of listings they think will appeal to buyers within minutes of them hitting the market. Serious buyers will want to see suitable properties as soon as possible and will usually be able to gauge from the moment they step over the threshold if it’s priced correctly and competitively when compared to other properties in the area. Remember, these buyers are keenly aware of what’s happening in the market and although they may not make an offer immediately, when they do it will be based on sound property knowledge.

Serious buyers watch the market carefully and will take note of overpriced properties. They may not make an offer immediately, but would rather wait to see how the market responds. If the home remains on the market for a lengthy period of time, this buyer will come in with a lower offer which is more often than not market related and should in all fairness be regarded as good.

Sellers need to consider a few things before rejecting a lower offer outright. Who is the buyer? How long have they been looking for a property? Which agent are they working with and perhaps most importantly, what conditions are attached to the offer? A cash deal is always going to be the best deal, mainly because the transaction is guaranteed. However an offer which isn’t reliant on another property being sold to help finance the deal – even if it is subject to a bond – is also a good option.

The other aspect that needs to be considered is how close the offer is to the price originally put forward by the agent. Estate agents know their stuff and they certainly know what homes are selling and at what price. Forget any preconceived ideas you may have and focus instead on what they are telling you – who knows, they might actually make you more money in the long run by selling your home quicker.

Tax benefits of investing in buy-to-let property

There is an age-old saying that in life there are two things you can’t escape -death and taxes. While scientific development hasn’t yet found the secret to living forever, there are ways of investing your money so that your tax returns work in your favour.

Proper accounting records need to be kept in order to provide SARS with supporting documents for the deductions claimed. Furthermore, the rental income should be added to any other taxable income the owner may have received.

While taxes can’t be escaped entirely, the money owed to the South African Revenue Service (SARS) can be decreased through wise investment and managed expenditure. Buying a property to rent out is the type of investment that can generate income, grow capital and potentially decrease your dues paid to SARS, says Craig Hutchison, CEO Engel & Völkers Southern Africa.

The benefit of owning an investment property, whether it be in an individual capacity, as a company or in a trust, is that all expenses are deductible from the rental income before tax is calculated. These costs typically include property management fees, municipal rates, levies charged by bodies corporate, repairs and maintenance, insurance premiums and municipal service costs that are paid by the property owner.

Proper accounting records therefore need to be kept in order to provide SARS with supporting documents for the deductions claimed, if you’re required to do so. Furthermore, the rental income should be added to any other taxable income the owner may have received. Any amount paid to you in addition to the monthly rental is also subject to income tax. A refundable deposit paid by a tenant is not taxable, provided it is kept separately in a trust account and is not used by you. If it is forfeited by the tenant, says Hutchison, then it is taxable.

Investing in property in a good area where there is a high demand for rental homes will go a long way in making tax returns work in your favour, he says. “Whether investing in property for long-term leasing or if you’re wanting to let out a holiday flat short-term in a high tourist area, do your research and capitalise on something that fits your financial capacity.”

In terms of a residential property that is buy-to-let, the following expenses are deductible:
– Rental agent’s commission or fees for securing a tenant.

– Advertising costs of marketing the property.

– Levies, municipal rates, insurance fees, water and electricity.

– Interest paid on the home loan, if applicable.

– Cleaning costs, garden services and security.

– Repairs and maintenance costs (excluding improvements to the property, as this would be deducted from capital gains tax).

“As a landlord, deducting the non-capital expenses from your tax return will reduce your taxable income. However, before embarking on your landlord journey, it is advisable to chat to a professional real estate company, your accountant, a financial advisor or a tax specialist, so that you fully understand both the financial implications and tax benefits,” says Hutchison.

“The start of the new financial year is akin to spring – a time to clean up, make new plans, new investments and sharpen your financial acumen for the year ahead. It is also a good time to find that perfect buy-to-rent property.”

5 things you need to know about prepaid water

You already know that we live in a water-stressed country, receiving an annual rainfall of 492mm, while the rest of the earth receives 985mm.

With a prepaid water system consumers can track usage, load credit remotely, and decrease the possibility of bill shock due to leakages or incorrect monitoring.

This is according to Marcus Thulsidas, Director: Business Development, Utility Systems, who says in addition, the WWF (World Wide Fund for Nature) cautions that 98% of South Africa’s water has already been allocated to users, leaving little surplus water to cater for a growing population and increasing demand.

In this context, could it be that prepaid water – like prepaid electricity – is the answer to more sustainable water consumption and management?

“Well, we at Utility Systems believe it is,” says Thulsidas says, and there are five important things that South Africans need to know about installing prepaid water meters:

1. What is ‘prepaid water’?
Prepaid water means that the consumer purchases water credit in the form of a prepaid water token. When entered into the user interface unit (located in the consumer’s home), the token instructs the water management device to allow a certain amount of water through the meter before closing.

Consumers can track usage, load credit remotely, and decrease the possibility of bill shock due to leakages or incorrect monitoring.

A prepaid water meter can also be used to limit water flowing to a particular area. This helps municipalities and property owners to control the amount of water used at certain outputs and prevents wastage in low-income households that can’t afford to pay for excess use of this basic need.

They can make payment in smaller, frequent increments. This prevents their falling into debt, which can compound in a post-paid arrangement.

2. Who can access it?
This is completely dependent on the municipality. So, even if you’re feeling inspired to install a smart water management device to enable prepaid water, you may not be able to – based on where you live or work.

That being said, most municipalities are beginning to embrace prepaid water management technology, so it may just be a waiting game. To find out your eligibility for prepaid water, it’s wise to approach your municipality and ask.

If you have a garden cottage, however, you can add an additional meter and smart water management device to the building to ensure that your tenants don’t rack up huge bills in your name – and then refuse to pay, or leave.

3. How does it affect rental properties and bodies corporate?
The implications for rental properties and bodies corporate are significant.

Prepaid metering reduces admin to a minimum, while removing the risk and frustration of late or non-payment of water bills. This is why housing estates are swiftly moving to prepaid water, as they did with prepaid electricity.

Gone are the days of splitting the entire estate’s water bill by the number of units. Prepaid metering means that users pay for their consumption only.

4. What’s in it for municipalities?
Prepaid systems are cost-effective solutions to sustainable water management in that they have a low cost of acquisition and, by curbing water usage, capital recovery is possible within months.

The systems are also able to distribute water equally, based on free water quotas, water balancing and fluctuating demand.

Aside from their ability to alert municipalities to leaks, prepaid water meters also drastically reduce government’s admin costs. This is because municipalities don’t need to chase bad debts or budget for legal fees on unpaid accounts. Public sector cash flow is immediately improved.

Collecting data from prepaid meters is also more efficient than the manual collection required for post-paid meters. A radio link receiver can be fixed, vehicle-mounted, or carried by municipality personnel.

5. Is prepaid water cheaper?
No – this is a myth. Prepaid and post-paid water cost exactly the same. It is illegal to sell municipal water above the municipal tariff rate declared. That being said, prepaid water gives consumers the opportunity to monitor their consumption and react immediately to possible leaks.

Finally
“The bottom line? Even the simplest smart water management device can provide the tools to track and control water usage. Prepaid water meters are smart tools with the potential to revolutionise water conservation efforts and revenue management worldwide. But it’ll be a while before every South African household is able to benefit from this enormous potential,” says Thulsidas.

11 smart ways to save electricity (and money) in the winter months

Eskom has issued steps consumers can take to save electricity as the colder weather grips South Africa.

A thermostat-controlled oil heater no bigger than 2 000W (watt) is the best choice to heat a room of 3 x 3 x 2.5 metres for three hours.

“During the colder months, space heating can be responsible for up to 8% of an average household’s electricity usage. The current constrained electricity network calls for smart electricity usage to help keep the warmth inside and the cold outside,” said the power utility last Wednesday.

Last week the power utility started implementing its ‘Use electricity smartly’ campaign, which aims to reduce electricity the shortage so as to minimise the risk of load shedding.

The power utility said insulated and draught-proofed rooms require 51% less energy to heat.

Eskom has the following tips for the winter period:

1. Use foam tape to seal windows and doors if they do not close properly – in winter, draughts can account for up to 25% of heat loss.

2. Hang curtains to reduce heat transfer.

3. Lay ‘door snakes’ to stop cold air from entering – aluminium skirts with rubber seals on the outside of doors are also highly effective.

4. Seal cavities in and between bricks with a polyurethane sealant.

5. Seal the chimney if you have one – the best way is to have a damper installed when the chimney is not in use; if not utilised at all, seal it at the top and bottom.

6. Install fire-retardant ceiling insulation – with approximately 40% of heat lost through the roof, ceiling insulation makes your home up to 5% warmer in winter.

7. Only heat the room you are occupying, and use the correct type of heater when you feel the need for extra warmth.

8. A thermostat-controlled fan heater is ideal to quickly heat a room of 3 x 3 x 2.5 metres for one hour.

9. A thermostat-controlled oil heater no bigger than 2 000W (watt) is the best choice to heat the same room for three hours.

10. A thermostat-controlled heater no bigger than 1 000W (watt) is the most energy efficient option to heat it for eight hours.

11. Most gas heaters generate a great amount of heat and do not require electricity at all.

Use ‘door snakes’ to stop cold air from entering.

The power utility has in recent weeks implemented load shedding as a result of generation capacity.

“Eskom is currently faced with challenges at its power stations, which has led to the need for load shedding over the past few months.

“If consumers can assist us by using electricity smartly, it would help to reduce the need for load shedding, which is a measure used to balance the supply and demand of electricity,” says Eskom acting Group Executive for generation, Andrew Etzinger. – SAnews.gov.za

Good news for home loan approval rates in South Africa

Buying a new home continues to become more affordable as weakening housing demand results in ongoing negative real price growth (after inflation) in the residential property market.

For the first quarter of 2019 (Q1 19) statistics from home loan comparison service, ooba, show negligible year-on-year growth in the average purchase price of 1.6% from Q1 18 to Q1 19.

Growth in the average purchase price for first-time buyers was also minimal at 0.5% from Q1 18 to Q1 19. This means that house price appreciation remains below inflation, reflective of the current uncertain economic and political landscape, ooba said.

Rhys Dyer, CEO of ooba, said: “Over and above more affordable property prices, buyers in the current market are also benefitting from higher bank approval rates. Banks continue to display a robust credit appetite and are increasingly approving home loans with lower deposit and also increasingly with no deposit requirements.

“This is indicative of the banks’ confidence in the property market and in customers’ ability to repay loans.”

“Our home loan approval rate of 81.3% in the first quarter of 2019 was the highest on record for ooba since May 2007 and importantly, the approval rate on applications without a deposit (100% loans) has increased by almost 8% on Q1 2018,” Dyer  said.

The average deposit as a percentage of purchase price is down by 11.3% year-on-year compared to Q1 2018, from 16.0% of the purchase price to 14.2% of the purchase price in Q1 2019. Similarly, ooba’s statistics showed that deposits for first-time home buyers are down by 21.6% over the same period from 12.5% of the purchase price to 9.8% of the purchase price.

“More affordable property prices, coupled with reduced bank deposit requirements, higher approval rates and improved home loan pricing create a perfect opportunity for property buyers at present,” said Dyer.

Banks are competing for a bigger share of the home loans market by approving finance at historically low interest rates, ooba said.

The group’s statistics for Q1 2019 show that the average interest rate is 5 basis points cheaper year-on-year. The average rate that ooba achieved for its buyers in Q1 2019 was 0.11% above prime compared to 0.16% above prime in Q1 2018.

 

this article was originally published by Businesstech on 18th April 2019

to view the original article Click here