Monday, August 29, 2011

SWELLENDAM PROPERTY NEWS

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Raimond Lamprecht, principal of the new Jawitz Properties franchise in Swellendam says there is good value to be found in in the town but that most sellers are still having to accept offers 10% to 15% below their asking prices.

"There's been interest lately from foreigners and up-country buyers who are drawn to the area because of its scenic beauty and its proximity to Cape Town and George. Families regard it as a safe environment in which to raise children, and are attracted by the reputable schools and the quality of life. And of course the fact that Swellendam is the third oldest town in SA adds an historic flavour," he says.

Currently, growth is mostly taking place at the lower end of the market, that is the R400 000 to R750 000 range.

At the upper end, there has been much less activity and some properties have been on the market for more than a year. "Having said that, though, we have recently sold two up market properties for R2,175m and R1,950m respectively in less than a month," Lamprecht notes.

In the middle sector of the Swellendam market, buyers can expect to pay around R1m for a three to four-bedroom house, and around R850 000 for a sectional title unit in a retirement village.

*For more information contact Raimond Lambrecht on 082 5143914 or 082 377 1953 or visit our website at www.overbergprop.com or www.jawitzswellendam.co.za




Friday, July 15, 2011

HOUSING FOR THE GAP MARKET

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The property industry’s next boom may come from affordable housing.
Housing for the so-called gap market (households earning between R3 500 and R15 000 per month) has until now been seen as risky business for developers and financial institutions.
However, as the implications of the massive backlog hit home, industry players are falling over themselves to take part in the segment.
The gap market traditionally earns too much to qualify for an RDP home, and too little to qualify for a home loan. It is estimated there are between 600 000 and 800 000 homes needed for this market.
According to Rob Wesselo, the country manager for International Housing Solutions (IHS), the affordable housing market is the only segment showing attractive growth in the property industry. IHS is a global private equity firm which partners with housing developers.
The IHS SA Workforce Fund raised R1.9bn available for investment in SA real estate – with a focus on the affordable housing market. The fund aims to provide at least 35 000 affordable units for sale and rent by 2018.
According to IHS, the government and some private investors supply only about 20 000 units per year, not enough to make a dent in the backlog.
“You don’t see business queuing for the commercial or industrial sector, but there are queues for this segment because there is such a shortage.
“It’s clear there’s a need. There’s been a perception that people in this market don’t pay rent, but if your asset management is good this can be an excellent investment,” said Wesselo.
Banks have also come to the party. FNB’s housing finance unit was created to find ways of financing homes for the lower income market.  “Research told us that only about 15% of the country’s households had access to home loans,” said the unit’s CEO, Marius Marais on Wednesday.
FNB’s Smartbond offers 100% home loans to households earning between R3 500 and R15 000 per month.
Despite the recession, FNB’s profit from end-user finance in this market grew by 84% in the 2009/2010 financial year.
“We see this as a great market; there’s massive demand and a proven business model,” said Marais.
According to Marais, despite the push by government to address the need for housing for the gap market, it’s in the group’s interest to do everything in its power to keep defaults as low as possible.
This includes encouraging clients to buy at fixed interest rates (a rise in interest rate can decimate a household earning under R10 000), and compulsory formal homeowner education.
If managed correctly, this market segment should not be seen as more risky than others, said Marais.
Absa Home Loans also offers an affordable housing product. The 110% MyHome loan offering covers bond costs (about 4% of the total purchase price). Borrowers also do not have to pay a deposit.
On the developer front, Absa launched Diliculo Investments, an affordable housing fund with over 2 000 units in its portfolio, in 2007. The fund plans to own and manage close to 4 000 units by the end of this year.
Listed companies have lauded the affordable housing market for propping up its earnings during the recession. Alterations and home improvements groups like Italtile and Cashbuild reported the lower end of the market is to form a bigger part of its focus.
Cashbuild CEO Pat Goldrick said last week the group's focus on rural communities means it can take advantage of the growth spurt the affordable housing market is set to experience. 
He said home owners in the lower income bracket will want to improve and extend their homes.
"Everybody wants to get a share of this market," he said.
“This is a very exciting place to be right now, and there’s still so much left to do,” said Marais.

Friday, June 24, 2011

CONSUMER PROTECTION ACT IMPACT ON PROPERTY TRANSACTIONS

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The new Consumer Protection Act (CPA), which came into effect on 1 April 2011, could see property sellers and estate agents exposing themselves to great risk should they attempt to market and sell a property without letting a buyer scrutinise all relevant documentation prior to the signing of a sale agreement.
Implications on property transactions
Implications for property sellers
Sellers are quite often in a rush to sell their properties, but do not consider the impact of the costs of repairs related to plumbing, beetle damage, electrical faults and full disclosure of the condition of their property.
Property buyers may attempt to hold sellers and their estate agents responsible for defects or non-disclosure of property faults, even months after ownership has passed to the buyer. Sellers now have to ensure that properties being sold are inspected and evaluated by accredited or registered service providers, which can be a time-consuming and laborious exercise. The results of these inspections have to be made available to potential buyers, giving them an objective description of faults or defects to the property. The buyer has to agree to purchase the property in that condition, should they wish to, or can request that the seller repair these faults before the buyer signs the deed of sale.
Implications for property buyers
Buyers, who are usually led by the emotions of buying a new home, often do not focus on the administrative details required to finalise a transaction. They are generally unaware that they are able to obtain comprehensive due diligence information on the property on which they are to spend thousands or millions of rands.
Buyers now have the right to information that will help them to make an informed decision about the property they are planning to buy. However, they have just as much responsibility to request the required documentation from the seller as the seller has to obtain and present it to them. Once presented with all the facts the buyer can then decide to buy the property as is, ask the seller to adjust the asking price or ask the seller to repair the faults to the property and cover those costs.
Having all available information pertaining to the property at hand also helps buyers to strengthen their applications for a home loan. The structural condition and construction of a property, according to the approved building plans (which are included in the information that buyers should have access to), are important factors considered by a bank before granting a loan.
Implications for estate agents
Sale agreements must be prepared in simple and understandable language. A buyer with average comprehension skills and education must therefore be able to understand the sale agreement presented to him for signature. In many instances, the "voetstoots" clause will also no longer be applicable as the term "voetstoots" must be explained in simple and clear language to the buyer.
Property Transaction Kit
A new service, aimed at protecting property buyers, sellers and estate agents equally during the course of a property transaction, addresses – and ultimately provides – a transparent process in purchasing a property.
Property Transaction Kit (PTK), the brainchild of conveyancing attorney Meyer de Waal, was developed in consultation with key industry associations and service providers, and offers a structured process through which to gather required compliance material in order to ensure a smooth transfer. The service is available to buyers, sellers, estate agents and property attorneys, and enables them to either compile or have secure online access to all the documentation and certificates of compliance related to the sale of a property.
"Once a seller registers for the service the PTK team will access a database of accredited service providers to source all the relevant documentation and issue certificates of compliance pertaining to the property," says De Waal. "The documents are then loaded onto a virtual 'property vault' on the PTK portal. There the seller, his estate agent, buyer, attorney or bank can securely access the information.

"The seller can, after viewing the various reports, either decide to improve the property’s condition or simply share the documentation with the potential buyer so as to disclose the true condition of the property. Potential buyers can also request access to this comprehensive report to help them decide whether or not to put in an offer on the property."
De Waal explains that, for years, the lack of strong consumer protection laws have left ill-informed property buyers at the mercy of sellers and estate agents who often sold properties voetstoots. The voetstoots clause used to protect the seller from defects that the buyer could identify during a viewing of the property, but not against defects that the seller did not know about and thus could not disclose to the buyer.
Without knowing the true condition of the property many buyers had to fork out a substantial amount to repair their homes, resulting in serious implications on their budget and their ability to meet other financial obligations after taking ownership. In addition, most buyers do not have the knowledge or experience to request relevant information about a property in which they’re interested and seldom ask for even basic documentation such as a copy of the title deed, current and approved building plans or zoning certificates.

FORREIGNER LAND OWNERSHIP

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South Africa, whose land tenure system has been in the past described as a ticking time bomb, is moving to put controls on foreign access to the resource.
The government is soldiering on with plans to restrict foreign land ownership in the country and to prescribe conditions for land use to keep South Africa's prime land — relatively cheap by international standards — from being snapped up by foreign buyers who can then push prices higher.
With the country's land reform programme based on the willing-buyer/willing-seller model, it is in the government's interest to keep prices down.
But even with prices said to be lower than international standards, the government has admitted it cannot meet its 2014 land redistribution targets as white farmers price the resource out of the state's reach.
Rural Development and Land Reform Minister Gugile Nkwinti has said rather than preventing foreigners from owning land, a policy on 'precarious tenure' for land ownership by foreign nationals would be developed 'to determine the basis on which foreigners can lease or use land'.
Nkwinti, tabling his budget vote in Parliament recently, said the Land Protection Bill would be submitted to the cabinet this year.
President Jacob Zuma announced in January the state was reviving its plan to limit foreign land ownership.
This initiative stalled after a government probe in 2006 found only about five percent of land in South Africa was foreign owned.
It emerged last month that Nkwinti plans to ask the cabinet to permit more land claims by black South Africans who lost their property before 1913.
Legislation providing for land claims, which has cost the fiscus billions of rand, had as a cut-off date for restitution the promulgation of the 1913 Land Act, which removed the right of black South Africans to own land in more than 80 percent of their own country.
The procedurally complex claims process is administered by the Land Claims Commission, which has to battle with bureaucratic headaches that have made land transfers a nightmare for the black majority.
Analysts say it has largely benefited those forcefully removed by apartheid laws from urban areas, rather than rural communities.
Liberal economists also claim that the process discourages investment in agriculture, implying that land should not be transferred from the minority to the majority.
The restitution of claimants is a separate programme from the government's drive to redistribute farmland to black South Africans through the problematic willing-seller/willing-buyer policy.
Deputy Rural Development and Land Reform Minister Thembelani Nxesi told South Africa's Parliament last week that the government wanted to guard against the danger that South African prime land would become more expensive due to an influx of foreign buyers.
'We need to make it very clear that these measures are in no way motivated by anti-foreigner sentiment,' he said.
Instead, the government planned to encourage foreign investment in land in a manner consistent with 'national interests'.
Nxesi said the policy would endeavour to thwart 'undesirable' land use practices such as prime agricultural land being 'converted into game farms and golf estates', as was happening in parts of the Western Cape and Eastern Cape.
He warned those in the real estate industry who rejected any form of regulation which reduced their profits that they would not prevail.
He said Australia had introduced legislation seeking to control foreign purchases of real estate, while encouraging investment in building new housing, thus benefiting its building industry.
The South African Property Owners Association said afterwards that while it was sensitive to the need to redress past injustices in the property market, the future performance of the economy was connected to the country's ability to attract foreign direct investment.
Its CEO, Neil Gopal, called for a predictable and 'nondiscriminatory' regulatory environment for foreign and domestic enterprises, and regulations that were in accordance with international law.
Gopal said an absence of undue administrative impediments to business, including an impartial system of courts and law enforcement, would be 'ideal'.
The land hungry, however, say such language has been used in the years following the fall of apartheid to protect the tenure systems that were created by the race-based system and only systematic affirmative action that takes into account that today's inequalities are discriminatory can result in any meaningful changes for the poor majority.
A three-tier system of land tenure that sought to restrict foreign land ownership and also suggested limited freehold for South Africans was proposed last year in a green paper on revising the policy for land reform and rural development.
The resultant furore caused Nkwinti to separate land reform from rural development and to produce two green papers. Both, he said, are now ready for debate by the cabinet.
Nkwinti also told Parliament that R1.3 billion had been allocated 'for making all land reform farms fully functional and 100 percent productive' through his department's recapitalization and development programme.
'This should cover an additional 387 farms, and revitalize 27 irrigation schemes, which have already been identified across the country,' he said. Nkwinti also indicated that another aspect of the review of land reforms - drafting legislation to protect the rights of farm dwellers and farm workers - was on track.
'The Land Tenure Security Bill 2010 seeks to promote and protect the relative rights of persons working and residing on farms, as well as those of farm owners,' he said.

Monday, May 23, 2011

RENTAL DEMAND MORE THAN LETTING

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'Demand outstrips supply for letting'

In the first quarter of this year 25 percent more rentals were concluded in the Cape Town metropolitan area than in same period last year, with demand for lower-to-mid priced rentals outstripping supply, said Francois Venter, Jawitz Properties regional sales manager for the Western Cape.

"Studio, one-and two-bedroom townhouses and apartments priced between R5 000 and R10 000 are the most popular, so buy-to-let investors should focus on this bracket.

"This means looking at properties worth anywhere from R500 000 to R1.5 million," he said.

Demand was also strong for rented houses priced from R10 000 to R15 000. Part of the supply was from people entering the rental market because they could not afford bonds and other costs of owning homes, but were not able to sell their homes at the right price at present.

"Renting can often be cheaper than paying off a bond, so some sellers are opting to move out of their homes to more affordable, rented properties, and then let their homes rather than selling and accepting low offers.

"In addition, many people are obliged to rent instead of buying from the outset. Getting finance to buy a home is still difficult. Not only are banks' lending criteria still stringent, in most cases they also want deposits of at least 10 percent.

"With the high costs of electricity, petrol and food prices, not many potential buyers can afford the up-front cost of buying a home which, in addition to a deposit, includes transfer and bond costs and often renovation costs as well."

Venter said the top end of the rental market was still buoyant, with demand often coming from companies relocating executives. But pricing was key, and property owners needed to ensure they did not turn prospective tenants away with unreasonably high rents.

Jawitz Properties Press Release

Wednesday, May 11, 2011

MORE FEMALE BOND APPLICATIONS

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The number of single female homebuyers in South Africa has risen significantly over the last four years, on the back of an increase in single person households and as women gain better positions in the workplace.

The ratio of women to men in single person home loan applications to ooba has increased from 36.53% in January 2007 to a current level of 46.94%. In total, single person applications presently make up 49.65% of applications in comparison to the 50.35%of joint applications.

This is a very positive development for the South African property market. The South African constitution has enshrined equality so it is pleasing to note that the dynamics of the historically male dominated property market has evolved. A steady increase in the number of women in the workplace, particularly those occupying more managerial top level jobs which command higher income earnings, has helped to shift the balance towards a more equal ratio among homebuyers.

The fact that so many more women are part of the job market has had an impact on the male/female home loan application ratios. Now that females are more focused on creating their own wealth portfolio, credit, such as home loan finance, is far more easily accessible to them individually. As a result, purchasing property has become an ideal long-term wealth creation goal for women as much as men.

The record 30 year low interest rate environment has also certainly made property purchasing more affordable for single women, however, there are some important key factors that any buyers, male or female, need to bear in mind when looking for a home.

Firstly, women looking to enter the property market should ensure that they have a sufficient deposit to put down. Besides improving your chances of getting a home loan approved, a deposit will result in a more favourable bond rate, which will save you in interest over the term of the loan. As a home loan is paid back over a long period, generally between 20 and 25 years, even a small reduction in the interest rate on your bond, can save you thousands in interest payments over time.

A positive credit profile and a stable employment history will assist females when applying for home loan finance. Employment history is very important as it reflects a pattern of stability and income. For most lenders a consistent income stream is key when working out how much one can borrow. Lenders will also want to look at your credit history, so that they can see a historic pattern of borrowing and repayment as well as how you have managed your bank accounts and other credit facilities.

When looking for a new home it is strongly advisable that you are pre-qualified, as this will give you a good sense as to the value of the property that you will be able to purchase.

The pre-qualification process can also pick up credit issues on your record that would need to be fixed before you can formally apply to a bank. This process not only streamlines the home buying process, but also ensures that the buyer is able to negotiate from a position of strength.

Wednesday, April 6, 2011

CLAIMS BY PURCHASER SPENT ON PROPERTY BEFORE TRANSFER

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An Appeal Court ruling (in the case Solvista Investments vs Sasol Fibres) which clarifies the message that the liability to pay all rates and taxes and "other outgoings" passes to the purchaser on the date of transfer but does not entitle him to claim for expenses paid out prior to transfer.

In this case the purchaser claimed a large sum for the costs of security, cleaning, maintenance and protection apparently spent in the period between the signing of the deed of sale and transfer.

It often happens that a purchaser will be given permission to occupy the premises prior to transfer, and in most cases will be charged an occupational rental for this. However, any money ("other outgoings") that the purchaser spends on the property during this period is for his account, even though he takes complete ownership only after transfer.

In the current court case, the judge did not accept the claim that the money laid out should be refunded even though the buyer had apparently thought that would happen from the time he entered into negotiations.