Moving to a smaller home may be the answer
Property ownership in today’s economy is no small feat. But even when you’ve worked most of your adult life towards buying the family home of your dreams, the possibility of downsizing should never be discounted. Whether you’re looking at lowering the costs of homeownership, or reassessing your property needs once your children have moved out, there are a number of clear indications that it’s time for you to move on to something smaller. Cost Concerns The financial costs of homeownership are no laughing matter, and they are in no way constant. Owing to a constantly fluctuating economy and the condition of a property that changes over time, the costs of owning a property and keeping it in tip-top condition will not stay the same over time. So even if you could afford your home when you bought it, it doesn’t necessarily mean that its costs will always fit into your budget, especially with older properties that require more maintenance. Another topic that should be broached when finances are discussed, is the possible benefits of resale. With a bit of TLC and home improvement, a property’s value can easily increase substantially. In the face of financial uncertainty, especially when the property’s value has increased, a resale will allow you to benefit greatly. Unused Space Whether it’s due to a thorough spring cleaning, the adoption of a more minimal approach to living, or the children moving out of the house, homeowners often face the fact that they aren’t using as much of their home as they used to. Our needs and priorities change over time, and along with them, it makes sense that our property should too. When downsizing due to unused space, homeowners have the option to either move to a smaller property or to restructure their current home into something smaller, remodelling the unused space into something useful, like an office or a rental apartment. These options, as mentioned, will also be dependent on how your needs and priorities in life have changed. The Empty House Even though we’ve come through a period where social distancing has become our default setting, certain careers continue to demand strenuous travel and time away from home. When a homeowner’s career demands that they spend the majority of their time away from their home, it may a good idea to think about using the money you spend on a large home on something more simplistic for the times you actually spend there, investing the additional funds in other avenues. Planning for the Golden Years While we all want to stay at the peak of our health for the rest of our lives, you have to be realistic about growing older and the limitations of your living conditions. Multiple flights of stairs and steep driveways, for example, are not items you’ll want to face every day for the rest of your life. Planning ahead and downsizing before your current home stands in the way of your enjoyment of life is always a good idea. Downsizing is often an unavoidable part of homeownership, but it’s a change that most often helps homeowners find a new happiness that suits their lives better. When downsizing, however, it is important to assess your needs carefully as you search for your new home. To do this, it is best to get support and guidance from a trusted property specialist to help you make the best decision for the next chapter of your life. This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
The rising popularity of sectional title ownership
Sectional titles have become a staple in the real estate industry over the past decades. And with all the benefits that come with it, it makes sense. Heightened security, lower insurance costs on buildings and outdoor areas, shared maintenance costs with other owners, becoming part of a community, no cleaning the pool on Saturday mornings — it sounds like any homeowner’s dream. And it’s not just hearsay, the numbers speak volumes. In 2005, sectional title sales only took up about 13% of overall property sales. But by 2010, sectional titles sales started picking up, soon accounting for 22% of all sales and reaching a whopping 28% of overall sales by 2016. Even with the slight dip sales took due to the pandemic, sales were still able to reach a high of 29% of the market at the end of 2020. When looking at sectional title sales in each province, Gauteng has always been the frontrunner, accounting for more than half of all sales nationally, while the Western Cape and KwaZulu-Natal take 2nd and 3rd place (with 18% and 14% of sales, respectively). The market is drastically shifting, though, with the Eastern Cape’s sales increasing by 28,3% over the past four years. Growth in the other provinces has been substantially lower, with the Western Cape even showing a decline of 4.9%. When it comes to revenue, however, the Western Cape is still in the lead, dominating the R3 million+ property market. The Western Cape market saw an exceptional rise in sectional title sales between 2016 and 2018 with an influx of sales born out of the semigration trend. In the following years the sales have metered out and plateaued again (however, still leading in the upper market spectrum). Beyond the benefit of having a cost-effective home that allows you to lock-up-and-go knowing that your property will be safe, one of the primary factors that contribute to the growing popularity of sectional title sales has been the lower price inflation rate. Lightstone statistics show that sectional title properties have had a lower inflation rate compared to freehold properties since 2010. The margin between the inflation rates had slowly been closing over the years, with the rates aligning at the end of 2019. Though, in 2020, the gap widened once more. That gap may be narrowing once again, though, as the inflation rate of a 3-bedroom property in either category reached the 4%+ mark in the first quarter of 2021. This is largely due to the momentum that sectional title sales have gained while freehold properties have been losing traction. It doesn’t look as if sectional title ownership is going to drop in popularity any time soon. Rather, all signs indicate that it has become a mainstay in the property market going forward. This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
Buying and selling: Avoid the potential nightmare
Buying a new home is always an adventure – but what if you’re still trying to bring a previous adventure to a close? Facilitating the transition of homeownership comes with an array of concerns that are unavoidable when the purchase of a new home and the sale of an old one occur simultaneously. The two primary concerns for buyers who are sellers at the same time are finances and logistics. If the transition is to be facilitated successfully, these two concerns must be taken into consideration from the start. Financing Your Future Finding funding for a real estate purchase is not a simple process, and it is even more complicated when you are already attached to a home loan or mortgage plan. When this is the case, your options vary: Equity from your Current Home When your current home is put up as equity in a new home loan, a suspensive condition can be added to your Offer to Purchase, clearly stating that your purchase relies on the sale of your existing property. However, such a suspensive condition will always contain a deadline by which the sale of the existing property needs to occur. If it doesn’t, your dream home will become fair game on the market again. Securing Bridging Finance Another option is to obtain bridging finance, where you take out a new loan that enables you to cover the essential costs of the new property purchase while you await the sale of your current property. This is an expensive option, as it comes with additional administrative costs and conditions. It will, however, enable you to purchase your dream home without the threat of it going back onto the market. Cash Purchase While not common, cash purchases are possible. The most common scenario in which a cash purchase becomes possible is where a homeowner uses the funds from a successful property sale to fund the purchase of another property when no existing home loans still needed to be settled or were close to being paid off. With a cash purchase, the buyer removes much of the pressure – but this not something that is realised often. Considering the Logistics With all three of these financing options another conundrum enters the picture: Where are you going to stay if the sale and purchase times do not overlap? When one home is being traded for another, the possibility always exists that one contract will have ended before the next has begun. Occupational Rent The first option is to pay occupational rent in order to continue living in your old property after it has been sold. With occupational residency, you will unfortunately also be inhibiting the new owners of the sold home from moving in, making this an arrangement that must take both parties into consideration. This option does, however, allow you to move directly from your old home into your new home in one go, saving on transport and storage costs. Short-term Rent Finding a short-term rental is the next best way to go. It may be more expensive, but you will most likely be allowed to stay on as long as you need, as long as you pay your rent. The only downside is that you may need to rent storage space for your possessions as well, depending on the size of the short-term pitstop. Bumming on the Couch This is the cheapest of all the options. Family and friends who live close by will undoubtedly be willing to offer you and your family the spare room, the couch, or at least a tent in the backyard if there are no other options left to you. Unfortunately, this option also requires the renting of storage space, or family and friends who are willing to have you park your furniture-filled trailer in the driveway. To ensure that your move from one adventure to another is not a financial and logistical nightmare, it is vital that you obtain the necessary guidance to get things done right the first time. This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)