Complex Living: Be Aware of the Hidden Costs
When considering the purchase of a unit within a complex, it’s crucial to look beyond the surface-level expenses such as the advertised levies. Without thorough research, potential buyers may find themselves facing unexpected financial burdens. The structure of sectional title schemes In sectional title schemes, you own your unit but share ownership of the property’s common areas with other unit owners. This collective ownership, known as the body corporate, is responsible for the maintenance of exteriors, gardens, security, and the overall upkeep of the complex. These responsibilities are funded through monthly levies, which can be more complex than they first appear. Monthly administrative levy The administrative levy is the primary fee in sectional title schemes, varying based on your unit’s size, which means that larger units contribute more. This levy covers not just the utilities—such as electricity and water, billed collectively to the scheme and then apportioned to units based on usage—but also the maintenance of common areas, operational expenses, and building insurance. Reserve funds and special levies Since 2016, a law has mandated that a portion of levies be allocated to reserve funds for long-term maintenance, guided by a 10-year capital expenditure plan. This fund, typically no less than 15% of the administrative levy, is designed to prevent the sudden imposition of special levies for major maintenance projects. Despite the reserve fund’s intent to cover large expenses, unforeseen costs like significant repairs or utility billing errors can necessitate special levies. These are decided by the trustees and can represent a significant additional cost. CSOS levy The Community Scheme Ombud Service (CSOS) levy, another cost in sectional title schemes, is the lower of R40 or 2% of an owner’s levy when it exceeds R500, with no levy charged for amounts under R500. This is collected quarterly by managing agents. The risk of non-paying owners Non-paying owners in sectional title schemes pose a significant risk, which can strain the scheme’s finances. Trustees can address late levies by seeking an adjudication order from the Community Schemes Ombud Service (CSOS) or taking legal action through an attorney to enforce payments. However, these steps can take time, and in the interim, compliant owners may face unexpected special levies as the scheme manages these financial shortfalls, directly impacting your budget and financial planning. Make an informed decision Before committing to a purchase, prospective buyers should request the latest levy statement to fully understand monthly charges, particularly since utilities are included in sectional titles. The actual cost, including utilities, can far exceed initial quotes. It’s also vital to review the most recent AGM pack, current budget, and financial statements to understand the financial health of the scheme and avoid investing in a poorly managed, financially unstable scheme. While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither the writers of the articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes.
Navigating the real estate market: Tips for buyers
Understanding the real estate market is crucial when buying or selling a property. The market’s current favour, whether for buyers or sellers, significantly impacts your decisions and strategies. Buyers’ market: When the real estate market leans towards buyers, it signifies that there’s an abundance of properties available for sale compared to the number of active buyers seeking to make a purchase. This scenario empowers buyers with more options and greater bargaining power. Consequently, properties may linger on the market for extended periods, and sellers may find themselves compelled to lower their asking prices to attract potential buyers. Sellers’ market: When the market is seller-oriented, the demand for properties outstrips the available supply. This heightened demand can trigger intense competition among buyers, potentially resulting in multiple offers and bidding wars. In such seller-driven conditions, properties tend to change hands swiftly, giving sellers the upper hand in setting higher prices and negotiating terms that favour their interests. Let’s explore some tips for making the most of the current buyers’ market: Timing is key: In a buyers’ market, you have the luxury of time. Homes tend to stay on the market longer, and sellers may be more motivated to negotiate. Take your time to research and explore properties. Carefully inspect homes, consider the neighbourhood, and evaluate their long-term potential. This patient approach can lead to better deals and investment opportunities. Bargain with confidence: In a market that favours buyers, you have more bargaining power. Don’t hesitate to negotiate on price and terms. Start with a reasonable offer based on market research. Sellers may be open to concessions, repairs, or even lowering the asking price. Be prepared to negotiate to secure a favourable deal. Get pre-approved for a mortgage: Being pre-approved for a mortgage gives you a significant advantage. It shows sellers that you are a serious buyer with financial backing. Before you start shopping, work with a lender to determine how much you can afford. A pre-approval letter can make your offers more appealing and streamline the buying process. While the current real estate landscape is leaning toward buyers, remember that local dynamics can vary. Staying informed about market trends in your area is essential for seizing the best opportunities. Armed with knowledge and these tips, you can confidently navigate the buyer’s market and make informed decisions. While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither the writers of the articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes. Powered by SucceedGroup
Avoid the long-term implications of skipping a bond repayment
Are you feeling the financial pinch? You’re not alone. Many South Africans are finding it increasingly difficult to meet their credit obligations. The cost of living is on the rise, disposable incomes are shrinking, and servicing debt has become a significant challenge. Homeowners are feeling the strain too, with financial institutions noting a surge in foreclosures. As the economic outlook appears to be in a state of flux, more consumers are struggling to honour their bond repayments and servicing their debt. In such times of financial stress, the thought of defaulting on a bond payment may sneak into the minds of homeowners. This is a decision that should not be taken lightly, given the long-term implications of a bond repayment default. On the surface, missing a single repayment on your home loan might seem like a minor setback, but the repercussions can be surprisingly costly over time. This becomes apparent when one considers the additional payments that a homeowner is compelled to make as a result of a missed repayment. Consider this scenario. Let’s say you have a bond on your property and you’ve committed to a certain repayment period. If you were to skip a single payment without making arrangements to pay it off, especially early in the repayment term, you could end up extending that repayment period significantly. This extension can result in a substantial increase in the overall repayment amount. The reality of skipping a bond payment is that instead of adhering to the original repayment plan, you now have to grapple with a markedly higher debt burden. It’s an additional financial obligation that can be avoided simply by making regular payments. In the long run, missing a repayment, irrespective of the circumstances, can prove to be an expensive affair. So, what should you do if you find yourself unable to fulfil your obligation to pay your home loan instalment in a particular month? The first step is to engage with your financial institution. Make arrangements to pay off the instalment as soon as possible. The flexibility and understanding demonstrated by many financial institutions can be a lifeline during tough economic times. However, it’s crucial to remember that skipping an instalment should only be a last resort and should be contemplated in the most extreme of cases. The potential financial consequences, as highlighted above, are too significant to ignore and can have a profound effect on a consumer’s bond repayment structure. The essential question shouldn’t be whether you should skip your bond repayment, but rather, how can you manage your debt more effectively?The answer is straightforward: seek expert advice. Engage with professionals who understand the intricacies of financial management and home loans. They can provide invaluable insights into managing your debt effectively and help navigate the complexities of bond repayments. Financial challenges are a part of life, but there are ways to navigate them without jeopardising your long-term financial stability. Skipping a bond payment might seem like a quick solution, but the long-term implications can be costly. By seeking expert advice and making informed decisions, you can manage your financial commitments effectively and secure your future. While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither writers of the articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes and should not be construed as legal advice.