Formation of a body corporate

A sectional title body corporate is automatically formed when the developer of a complex transfers ownership of the first unit from the developer to the owner. This does not require any intervention of the developer or the owner, as such it cannot be stopped, or postponed.

At this stage the body corporate will consist of the developer and the new owner. Although the developer is probably the majority in this case, it does ensure that the developer cannot pass a unanimous resolution on his or her own, without the consent of the new owner. As ownership of more units are transferred from the developer to other owners, the developer has less control over the complex.

As every owner is a member of the body corporate, the developer is a member of the body corporate until he or she transfers ownership of the last unit to another owner. At this point ownership of all exclusive use areas (not sections) that may be in the developer’s name, is passed to the body corporate free of charge.

The first meeting of owners of the newly formed body corporate must be held within 60 days of forming the body corporate. Notice of 7 days must be given to all owners of the complex for this meeting.

At this meeting the developer must provide all the unit owners with:

  • a copy of the sectional plan;
  • a certificate from the local authority, stating that all rates are fully paid until the point of forming the body corporate;
  • proof of revenue and expenditure of the management of the complex from the date the first unit is occupied, until the body corporate is formed.

The developer must pay any surplus of funds from managing the complex to the body corporate.

If the developer does not comply with the above, he or she will be liable for a fine of R 1 000 or less.

Section 36
The agenda must include the following:

  • The consideration, confirmation or variation of the insurances effected by the developer or the body corporate;
  • The consideration, confirmation or variation of an itemised estimate of the anticipated income and expenses of the body corporate for the ensuing financial year;
  • the consideration and approval, with or without amendment, of the financial statements relating to the management, control and administration
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Have You Thought Of Investing in a Hotel Apartment?

Wouldn’t life be grand if you could sleep in a hotel every single night? The good news is you don’t need to be a hotel owner to do this, all you need to be is the owner of a room in a hotel.

Apartments in hotel buildings are a new type of property investment and  this type of investing is gaining popularity.

Having an apartment in a hotel building like the Michelangelo is great since the Michelangelo is also a mixed-use development that includes residential, retail and office space.

The owner of a hotel apartment has the option of either putting their property into the rental pool to be rented out by the hotel as part of the hotel suites, or to keep the unit for personal use. If the hotel apartment is kept for personal use, they can still rent the unit out themselves or naturally they can live there.

If an owner decides to keep the apartment as part of the rental pool, in most instances the hotel will have certain requirements in terms of furnishings/styling, linen and appliances.

This sort of development is becoming increasingly popular in Sandton and more and more of these developments going up. Some examples are The Capital n the corner of RivoniaRoad and Empire Drive in Sandhurst .

In central Sandton, many of the Legacy hotels are developments in which you can buy apartments and either opt-in to the rental pool or keep it for private use. This includes the Michelangelo, Da Vinci and Raphael, which are especially desirable and highly sought after by international travellers.

Parts of Morningside that are closest to central Sandton also have these hotel apartments, such as WestPoint and 20 West ave been popular for many years.

The pricing of these apartments varies greatly, however prestige definitely puts a premium on the pricing. Price depends on factors like the grade of the hotel rooms, the services offered by the hotel and the position of the apartment within the building.

From an investment point of view, these apartments hold their value well. Property in Sandton central is a fantastic investment, if held for five to 10 years, investors will probably enjoy good capital gain.

Mixed-use developments work especially well in the upper end of the market particularly if there is a business center very near to the development or else demand will decrease significantly.

An important consideration is that the apartments must be luxurious and should offer concierge services, and the surrounding shops and offices must attract affluent clientele, while security must be carefully balanced with convenience.

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Good Advice For Investing In Student Accommodation

Investing in student accommodation can be a very wise choice, but it is crucial to do some home work on the topic before making any investments. While there are universities and colleges, then there will be a market for private student accommodation. In this article I will briefly give a bit of advice to ensure that you make the right decision.

Multi apartment buildings and secure complexes which is close to any tertiary education institution will always be highly on demand, in any place in South Africa. What makes this topic so attractive is that this type of accommodation is usually close to the campuses causing parents rather to pay for close accommodation than buying a car for the students, also the fact that it is usually in secure complexes, makes it very safe for the students and their belongings as well.

We will see that most of the universities and colleges will hand out free pamphlets of pages full of available housing for the students. In most cases there is always a big waiting list for students who are seeking for private housing, thus making it a very attractive investment.

It is also wise to not only use or advertise the property as just “student accommodation”; you would always want to appeal to a broader spectrum of renters, like young couples or bachelors.

Next I will explain a few considerations to keep in mind for when thinking of investing in such a “goldmine”.

Make sure that the property is with in walking distances from local transport, shops and off course the learning institutions.

Make sure to consult with the university’s housing board, to ensure that you provide market related rent fees etc. So that you don’t end up making a loss, and keep in consideration of maintenance and repair costs of the property.

It will also be wise to use a well known real-estate company to manage your property. Sometimes it can be very difficult to handle the legal stuff like contracts and tax issues etc.

You have to conduct the same rules as to normal rental property rules. You have to establish the rules of the flat and the behaviour of the tenants. Make sure that a good deposit is set in place and that there is a good lease agreement between you and the tenants.

It will also be your duty to do regular inspections, to see if the flat is till in good order. It would be wise to have an emergency fund account to be able to repair or replace unexpected problems like plumbing issues etc.

A very good time to advertise your property will be in September, because that is peak time for student accommodation seekers.

We can see that by investing in student accommodation can be a very good investment, but it is of utmost importance to do your research well and to have a good managing strategy in place.

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Homework Advice For First Time Home Buyers

It is clear that the decisions which a home buyer makes can have a major impact on your financial status in the future. It is important that property buyers don’t feel under pressure whilst making their decisions, but should rather take their time to make sure that they don’t regret any decisions in the future. It is important to do some homework before making any drastic choices. In this article I will give some advice on what a property buyer should consider before making the purchase and applying for a home loan.

Professionals in the real estate trade has said that by buying property is a major investment in one’s life, therefore it is important to make sure that you have your facts right regarding the buying process. It is important to know that you should not only base your decisions on feeling alone, although the home buying process can be a very exciting time of your life. There are many factors that you should consider before making the purchase. Next I will give a few tips on how to obtain the correct information to make sure that you won’t regret anything that you might have done.

The first thing that you should do is to assess your finances and your affordability level. The first and most important thing to do is to make sure that you will be able to afford the property which you want to buy. By consulting with a bond originator will help you to see for what home loan you can apply for and how much you will be able to afford. While these figures aren’t guaranteed, they will surely give you an idea of in what price range to shop for. By getting pre-qualification will also show the sellers that you are serious on buying. In the current market we see very few people who qualify for a 100% bond, there for will the pre-qualification also help you to see what deposit you will be looking at. There are also some other factors which should be considered. You should know that there are many other expenses which you will have to pay upfront. Thing like, transfer duties, home insurance, taxes and rates.

It is also very important to obtain as much info as possible on the property. The more information you can obtain, the better your end results will be. We all know the popular saying which says that knowledge is power. The more a buyer knows about the current market and the area of the house, the better prices you will be able to negotiate. It is also important to know how long the property has been in the market for. That should give you an idea of how lenient the sellers will be with the negotiations. A professional estate agent will be able to give lots of valuable market related info on properties in a chosen area.

Another thing that one should do is to check out the chosen neighbourhood. If you have decided upon the area which you want to buy property in, one should first look at a few other factors before signing any papers. The factor which has the biggest impact on the value of property is where the house is situated. One should look at factors like, traffic in the area, crime stats, condition of the infra structure and the quality of the schools. These thins will have a big influence on the value of the property. This information can be easily obtained by the local municipality and the local police station.

Another important factor is to make sure that the property is in a good state. People can make use of a professional home inspector to see whether the house is in a liveable state. Although that there might be small things which can be fixed, damage to the structure of the house can become very expensive to repair, making it not worth buying.

We should remember that knowledge is power, and armed with a lot of information can and will help you to make the right decision. The only way that you will ever be happy with property is if you do your homework well.

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Be careful not to over price your property

The property market in South Africa is always based upon the price that buyers are prepared to pay for the property they are interested in. It therefore goes without saying that overpriced properties will stay unsold for until they become more realistically priced, and eventually potentially losing the seller money. Properties that are well-priced will always sell within a reasonable time.

Even taking the above into account, most sellers are still overpricing their properties.  Understandably most sellers want to obtain the highest price for their property, however, one important thing that sellers must remember is that buyers have no emotional connection to the return on investment. The main criteria for the buyers whether the home that offers them a fair market-related price. So there the overpricing of a property or home will not achieve the objective of selling within a reasonable time.

As mentioned above all overpriced properties don’t sell and end up losing the seller money due to being on the market for too long which involve extra bond repayments and the unseen cost like keeping the property clean and available for viewing to potential buyers. Ultimately being overpriced affects the selling or offered price due to a stale listing that was overpriced for too long. Savvy property buyers do their homework and usually submit unrealistic offers for properties that have been on the market for a long time. In some instances, desperate sellers are forced into accepting these offers, which could have been avoided if the home was correctly priced at the beginning of the selling process.

A good indication is usually when more than one buyer put in offers within a similar price bracket, then the seller should seriously consider that the price offered is close to the price that the current market conditions support. A property evaluation is mostly based upon an educated opinion based on the evaluation of similar properties in the surrounding suburb and area. Other strong factors to consider are market trends and the condition the property is in, and how much would need to be spent to get the property to a certain standard.

It is almost impossible to determine the exact right price, but more realistically a price range.  So, do not make the mistake of putting up the price on the remote chance of receiving an unrealistic offer as the property is only worth what a willing buyer is prepared to pay.

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Tips For When Buying Your First Home

Due to the pricing of property and the steady interest rates today, a first time home buyer has a lot more options than in the past. Because of this we can now see a lot more people being interested in their dream house rather than just buying a starter home. At the end of the day it all depends on the affordability level of the house and the individual needs of a first time home buyer.

It is obvious that everyone would love to buy their house of their dreams, but due to the financial climate of today most people are not in the position to do so. They will have to settle with a starter home, which is in most cases a lot smaller than the desired home. There are thus a few advantages in buying a smaller house and then to climb the property ladder from the bottom. By buying a smaller house can help them build equity on that house, which will be to the buyer’s advantage for buying a bigger house in the future.

Another aspect to keep in mind is that by buying property is a long term transaction. One should see if you would need an extra bedroom, big garden, swimming pool, shower etc. All these above mentioned “extras” could contribute greatly to the price of the home. The less you pay on your mortgage and the less the maintenance of a house is, the more money you can save for your next dream house.

Of course buying a property privately through the No Agent platform will in most instances save the purchaser money due to no estate agent commission, or the lower commission if purchased via a No Agent Estate Agent partner. Although the commission is paid by the seller, the buyer ultimately benefits from the lower purchase price.

We have seen that most first time buyers are young couples and young professionals who are in the early stages of their career. So by investing in cheaper property will allow them to build on their income in order to be able to afford bigger bonds and to be able to invest in a bigger house in the future.

Another benefit of buying a starter home is that while you live there you can determent which features you will need in your next home and what features you don’t need or want in your next home. This will help that you don’t spend unnecessary money on your home in the future. It will also educate you on some of the new responsibilities that come with living in your own house.

Next I will give some advice for first time home buyers.

One should save long before the time for a deposit on a home, because the more you put down on a deposit the less you will pay on you monthly mortgages and it will help to get your application approved quicker. One should also save at least 5% of the total property price to use on renovations and maintenance. It is always a good thing to pay a bit extra on your mortgage. By paying an extra R300 per month can reduce your mortgage term by almost four years. Last but not least, be prepared for the unexpected. One should be financially prepared to be able to adapt payments if the interest rates change drastically.

It is clear to us that now is a very good time to invest in property. By following these tips and information one will be climbing the ladder of property quicker than imagined.

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First-time South African property buyers must beware the hype

First-time South African Property Buyers Must Beware the Hype

In the current property market, buyers are kingpins heavily courted by developers and estate agents alike – but first-time buyers in particular should take care not to be seduced into serious and potentially costly mistakes.

So says Berry Everitt, MD of the Chas Everitt International property group, who notes that in the excitement of hunting for a first home, many buyers become over-enthusiastic and run the risk of succumbing to “hype”, particularly in new developments where they may be subjected to high-pressure sales tactics.

“And signing an agreement to buy before they have done their homework properly, may quickly take the gloss off owning their own home.

“Therefore, they should keep basics in mind, such as studying the market and finding out what implications fluctuating interest rates hold for them and what the relative advantages of different types of properties are, such as sectional title as opposed to freehold ownership.”

Writing in the Property Signposts newsletter, he says it is always a good idea for buyers to visit as many show houses as possible and to consult estate agents about the state of the market in areas where they would like to settle. “And they should never be afraid to ask questions and have them answered to their satisfaction.

“Above all, though, they should resist temptation to over-commit themselves financially in the hope that a bonus at the end of the year or an expected salary increase will make up any temporary shortfall. Also, of course, all related costs such as transfer duty and legal fees should be taken into account when they draw up their budget and decide how much to spend on a home.”

It is far better, Everitt says, to under-spend rather than overspend on a first home, and to put any spare funds into the bond to reduce interest and to build equity. “In this way buyers will be in a better financial position when circumstances dictate it is time to upgrade to a bigger property.”

Published By: Chas Everitt

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Cluster Homes Property in South Africa

Cluster Homes Property in South Africa

Freehold property enclosed by boundary walls are referred to as “cluster homes” in South Africa. Cluster homes are commonly governed by a homeowners associations. Over the last few years this type of property development has seen an increase and their is some confusion over the legal status of cluster homes among South Africans.

In South Africa their is two ways in which you can own a property namely freehold and sectional title. With freehold the property is registered in your own name and you are free to manage the property independently. In the case of a sectional title you buy not only your unit but also an interest in common property such as gardens, swimming pools and security. you are responsible for the upkeep of your own unit but the administration and maintenance of the complex and common property are the responsibility of the body corporate and you are subject to the rules of the body corporate.

Cluster homes property are sold as freehold in south Africa. This means you gain individual title to your unit and garden and are entitled to use other parts of the property such as roads. Cluster homes are governed by a homeowners’ association with a constitution drawn up by elected Trustees and approved by a percentage of the owners. Because cluster homes are bought as freehold many owners believe that they are in no way tied to any association and that there is no legal link between them and their neighbours. The reality is that although the cluster home is bought as freehold property their is a clause in the offer to purchase and the title deed outlining that all purchasers acknowledged that they would automatically belong to the homeowners’ association.

The rules in a cluster development would encompass operational management issues and common area payments and as an owner you will be bound by a levy payment. In addition, a well-drafted set of rules will include architectural guidelines and will impose conditions on homeowners disallowing certain action.

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Guide for Non-Residents Buying Property in South Africa

Guide for Non-Residents Buying Property in South Africa

Non-Residents can feel comfortable when investing in South African property as the property market for overseas buyers are well regulated in South Africa. No significant restrictions apply to non-resident property buyers in South Africa and the overseas buyer can enter the South African property market with confidence.

Buy Property in Own Name or Through Legal Holding Entity
A non-resident buying property in South Africa has the option of buying the property in their own name or through a legal holding entity such as a trust or company structure. Some non-residents prefer buying property through a legal holding entity for taxation, management and asset protection reasons. You should consider, through consultation with a lawyer or property expert, which option will suit your individual circumstances the best.

South African Property Ownership Methods
Share block, freehold, leasehold or sectional title are the methods of property ownership in South Africa that non-residents can choose from. Most non-resident property buyers choose the leasehold method of property ownership as this method of transfer is much more flexible than the other methods.

South African Exchange Control Regulations
Generally overseas property buyers who retain their non-resident status can remit and repatriate funds freely overseas, this includes capital gains made after the deduction of taxes due. Once an individual becomes a resident in South Africa he/she may only remit and repatriate funds for a period of five years before he/she falls under the exchange control restrictions imposed on South African residents.

South African Property Contracts and Documentation
When a suitable property has been found and a price has been agreed upon, either an ‘offer to purchase’ or a ‘deed of sale’ can be signed. Both documents are legally binding and it is advisable to consult legal advice before signing either of the documents. In fact it is a good option to have the services of a lawyer to assist throughout the entire conveyance and purchase process to check any contracts and to carry out title and land registry searches and checks.

Transfer and Registration of Property 
The transfer and registration of property is usually handled by the seller’s conveyance lawyer. The seller will give the lawyers power of attorney to handle the process of registering the property at the Deeds Office in the name of the non-resident buyer.

South African Property Taxes, Fees and Charges 
When property is purchased in South Africa transfer duty is levied by the government; the duty is charged at a variable rate of between 1 and 8% for private property ownership or 10% for a property purchased via a legal entity. Other fees involved in buying a property in South Africa include transfer costs of between 1 and 2%, mortgage costs, lawyer’s fees and estate agents fees which are normally included in the purchase price.

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Guide to Property Investment in South Africa

Guide to Property Investment in South Africa

Stay Informed of New Property Developments
New property developments are usually quickly snatched up by investors with the right connections long before investors new to the game have an opportunity to find out about the property. The serious property investor needs to have ongoing contact with estate agents in South Africa who have good contacts with developers and is able to inform the investor timeously when property become available.

Build Up Available Capital
If you are serious about becoming a property investor you will need a certain amount of available capital to start off with. Many developers will require a deposit from a buyer to ensure that the investor is serious before agreeing to the sale; as an property investor you do not want to be in the position of having a excellent property investment opportunity but no cash deposit to secure it.

Obtain a Pre-Approved Home Loan 
Be prepared for when a property investment opportunity comes your way obtaining a pre-approved home loan. This will ensure that you now exactly if you can afford the property and what information the bank requires from you.

Property Investment With Friends
If you cannot afford to invest in a property on your own you can form a syndicate with friends. You can co-sign for the home loan in your individual capacities or form a closed corporation.

Property Management Company 
Find a good property management company to manage your tenants. They will be responsible for finding a suitable tenant, drawing up a contract, regularly inspecting the property, collecting the rent and the paying levies on your behalf.

Long Term Property Investment
The full potential of property investment is seen in the long term. While good profits can be made in the short term the big fortunes are acquired over long periods of time.

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