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)
Know how to make the most out of home insurance
Home insurance is there to protect one of the most important assets you own. And when done properly, it will allow you to insure both the structure of your home and the life that is lived within its four walls. Home insurance can be divided into three sections: Building Insurance, Home Contents Insurance, and Personal Valuables Insurance. The purpose of Building Insurance is to cover only the structure of your property, and Home Contents Insurance covers items such as appliances and furniture that stay within the home, while Personal Valuables Insurance covers the household items that travel with you out of your home, such as cell phones and laptops. To ensure that your home insurance policy covers you as best as possible, you should understand your cover fully and assess its accuracy over time as your property changes. Check your liability limit It’s important that you should be covered realistically, which is why comprehensive coverage is always advisable. When you consider the costs of rebuilding your property or replacing its contents, the numbers can quickly add up, and you need to be sure that you are covered adequately should you need it. Cover for natural occurrences While damage caused by natural disasters, such as hurricanes and tornadoes, is usually covered by insurance policies, other natural occurrences may be excluded. When you live near areas that are prone to natural influences, such as a riverbank or known fault line, you need to find insurance that will cover you should damages arise due to these natural causes. Update it as you go Your policy is based on the contents of your home, and should this change, your policy should also be updated accordingly to reflect its latest status. The presence of a piano or original piece of art in your home, for instance, can increase your instalment substantially. So, if you decide to sell an item of substantial financial worth, make sure to update your policy to avoid paying for cover of an item you no longer own. When you add something, on the other hand, updating your policy is just as important, as major items (especially high-value ones) will not be covered if they are not explicitly included in your policy. Specify your structures Knowing which structures are covered by your policy can save you a lot of hassle and financial turmoil. Many insurance policies cover only the main dwelling structure, the home itself, and do not cover any damages to, for instance, garages, swimming pools, or lapas. Keeping your policy simple may save on instalments and may be prudent when the other structures on your property are not of high value. But when the additional structures on your property are of high value, it is usually advisable to include them in your policy. While most home insurance policies are rather comprehensive in their cover scope, there are a few items that are most often not covered by insurers. Coverage is often limited/not granted in the following instances: Most damages caused by pets. Appliances used in B&B-use rooms are not covered by household insurance. Theft due to the homeowner’s negligence, such as leaving a door unlocked. Where damage is the result of poor maintenance. Damage caused by natural occurrences that could be avoided, such as roots and weeds. Any damages of theft occurring when a property has been left unoccupied for a significantly long period of time. Home insurance may not be something you look forward to utilising, but the old proverb is highly applicable here: it’s better to have it and not need it, than need it and not have it. If you’re looking for new home insurance or want to update yours to be more comprehensive, make sure to contact us for the advice you need. 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 most reliable investment in the market
Buying real estate is more than finding the right home or location for your business – owning property is an investment that holds more benefits than you might know. Income Predictability While interest rates may alter mortgage repayments at first, real estate offers a somewhat constant financial investment. Once home loans are repaid in full, real estate offers the owner a constant income that does not fluctuate with the market, an income that can increase with inflation. Of all the investment types, real estate is the safest from external influence. Increasing Value Property appreciates in value over time. Thanks to South Africa’s reliable climate, real estate investments rarely depreciate due to natural causes, so long as the property is well looked after by its tenants and owner. Appreciation levels have increased at 6% per year, on average, since 1968, meaning your investment will grow no matter what. Improve Your Investment Where other investments rely on the financial market, the greater economy and an organisation’s performance to increase their value, property value can be greatly improved by improving the actual property. With a little elbow grease and dedicated planning, you can increase the value of your investment yourself. Retirement Ready A great benefit of owning property is that it is there when you need it the most. While the initial burden of home loan down-payments on cashflow can be rather strenuous, the weight lessens considerably over the years as the principal reduction increases. This means that your cashflow will increase as you near retirement, allowing you to invest your money more appropriately. Up Your Equity While you pay off your home loan, you are also increasing your equity as your property counts as an asset in your net worth. Through increased equity you will be able to gain more leverage in financial situations, when obtaining a loan, for example, and you will be able to grow your wealth more steadily as well. Portfolio Diversification Real estate investment holds less risk than other major class investments, allowing you to create a diversified and safer investment portfolio. Through a diversified investment portfolio, you ensure that your investments are not all influenced by the same external factors, such as a fall in share value (as has been seen during the COVID-19 pandemic). When you start looking at investment options, it may be a wise decision to consider including real estate in your portfolio early on. Remember to reign in the assistance of the experts to help you find the perfect property to invest in. 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)
Moving regulations during the lockdown
We’ve all felt like it – the hairs on the back of your neck standing up, sure someone is keeping an eye on you, watching as you receive a DVD box set that was for some reason labelled “essential” on the online store, sneaking in at 09:20 after the morning jog you were sure was shorter yesterday, or absent-mindedly fixing your mask as you stand in the chocolate aisle at the supermarket. Feeling like you are crossing a line has become part of daily life and moving during the lockdown may have many people feeling just as guilty. But as with most regulations, things have changed (except for the mask part – it’s best to just ignore the tickle till you get to your car). Moving during Level 3 is allowed, and with the effects of the lockdown touching so many lives, a very possible occurrence as landlords and tenants alike seek their footing. The good news is that moving safely is entirely possible. The most important element is following adequate safety measurements throughout the process. Businesses operating under Level 3 are all required to have an adequate safety plan in place, with a COVID-19 Compliance Officer that oversees the company’s compliance with the necessary preventative measures. These requirements ensure that estate agents and transport companies keep every person involved in the move safe. These are the most important guidelines to follow when moving: Get the necessary permits from a SAPS office that will allow you to travel during the lockdown. Adhere to social distancing and keep a minimum of 1,5m between yourself and the transport team. Have sanitiser handy to offer to all parties before and after the move. Sanitise the surfaces of the old property once furniture has been removed; sanitise surfaces in the new property both before and after furniture has been moved in, as well as the furniture itself. Be kind with your words, not your actions, for the time being. These precautions are there for a reason. The real estate industry relies heavily on multi-channel interaction and is, consequently, at high risk. This has been seen in the Johannesburg and Pretoria deeds offices, which were forced to close temporarily on June 12 after conveyancers in the building were tested positive for the virus, and the Cape Town deeds office, which has already closed twice for the same reasons. While moving is allowed, tenants are still encouraged to move into a new safety bubble only if it is truly necessary. When moving is truly the only option, ensure that the necessary safety precautions are adhered to. 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 tenant-landlord relationship
The relationship between landlord and tenant is a symbiotic one, where the efforts of either party results in the best outcome for both parties. During the lockdown, this two-way relationship between many tenants and landlords has been threatened. The biggest contributor to this is quite simple: a lack of information. Paying your dues One of the biggest impacts the lockdown has had on tenants is through affected income. Unfortunately, tenants are still required to pay the full rental amount if they are still able to occupy the property, regardless of how their income has been affected. Where income has been affected, tenants should discuss the possibility of a reduced rent directly with their landlords. Landlords, however, also rely on rental income and cannot always afford to lower rental amounts. When this is the case, tenants can, technically, apply to the Rental Housing Tribunal to request a reduction in rent, but due to new cases not being heard at the moment, such a request is unlikely to be successful. The best option is for tenants to apply for State assistance, and so ensuring the least impact on both parties. With these types of requests, it is important to note that landlords will have to be furnished with relevant personal information of the tenant to corroborate a tenant’s inability to pay their rent. The landlord will, however, be responsible for guarding the privacy of their tenant’s personal information in such a case. Sticking to the rules Even when the relationship is no longer a beneficial one, and becomes filled with strife, landlords may not terminate a lease or refuse services to tenants and may not insist on conducting an investigation of the property without the tenant’s express permission. Similarly, tenants may not cancel their leases during this time either. Such “threatening” actions are highly discouraged while the country is in any level of the lockdown. As before, a tenant’s deposit may not legally be used to cover rental arrears, but only for its intended post-rental purposes. Deposits, along with the accrued interest, must be refunded to the tenants upon their exit, where only the necessary cost of repairs may be deducted. Landlords are also still responsible for the maintenance of their properties, and for ensuring liveable conditions for their tenants. During any maintenance procedures landlords and workmen are obliged to adhere to social distancing and must follow adequate sanitising methods throughout. The landlord must also provide the necessary clothing and equipment for the procedures to be completed themselves. End of lease But while tenants may not be evicted and leases may not be terminated, the reality is that leases do come to an end. As far as possible, tenants and landlords are encouraged to continue their relationship, even if just on a month-to-month basis until moving house can be done without safety hazard. Where the continuance of a lease is not possible, tenants should obtain a permit from the SAPS allowing them to move freely during their relocation, and follow strict safety measures throughout the process. 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)
Is the real estate market catering to everyone?
Knowing who’s in the lead when it comes to the property market is difficult. The traditional progression used to be: Finish your studies; find a job in which you’ll stay until retirement; get married; buy a starter home; start a family; work hard and finally retire. That tradition has faded away entirely. The generational divide is nowhere more apparent than in the property market. But is the property market evolving as quickly as society? And is the change happening where it needs to? Statistics show that the average age of home buyers is 44, smack dab in the middle of the Generation X age bracket, which is 38-53. But Gen Xers may have taken in a difficult niche in the real estate market. Currently, more focus is placed on the generations on both other ends, the Millennials (22-37) and Baby Boomers (54-72), trying to accommodate an older generation that is still thriving and looking for ways to enrich their lifestyles, while also trying to find ways to shape the market for the younger generations. On one hand, Gen Xers are often as up to date with technology as Millennials, being comfortable with the digital evolution they’ve been a part of since their first antennaed mobile phones and orange-screened Dos computers. In The Dark Knight Rises, Bane says to Batman, “You merely adopted the dark; I was born in it, moulded by it.” With Generation Xers, it may be the fact that they had to adapt to the changing world and be moulded by it that gives them the head start in the real estate market. On the other hand, Gen Xers are more settled in their careers and focused on their families, bringing with them similar financial stability as Baby Boomers. What makes the Gen X generation so uniquely placed in the economy, is that they incorporate the best of both worlds — being more financially stable, and looking for that stability in their real estate as well, just like the Boomers; but also being able to utilise the advantages of technology and be as connected with the world around them as the Millennials. That said, Baby Boomers are still proving to play an increasingly active part in the shaping of the real estate industry as the norm of retirement accommodations and “old age homes” drastically fall out of vogue. Those nearing retirement no longer want to be locked up in a room that is barely bigger than a school boarder’s hostel room and have three meals and a corner-mounted television provided in the common room. Thanks to improved health, with regular exercise and a healthier diet, Baby Boomers are looking for ways to make the most of their lives after retirement, creating a demand in the real estate market that had been missing for a long time. Millennials, while still the largest percentage of first-time home buyers, owning roughly 38% of the market, play a reasonably small part in property sales. But Millennials choosing to rent rather than buy may be out of their hands if one considers the inflation rate was 5.2% in 2018, and salary increases only averaging at 4.9% (resulting in a take-home increase of only about 0.4%, according to BankservAfrica’s Take-home pay Index). Many Millennials are only now entering their careers, and even when they have started a family, they do not have the same financial stability needed to properly invest in their families or become key players in the buying and selling market just yet. It’s clear to see that shifting the focus accordingly in both the rental and selling spheres has become an essential part of keeping the real estate industry up with the times. 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)
Tips for investing in property for retirement
Have you ever wondered if real estate is a sound investment? Well, it certainly can be! There are people out there who have invested in real estate and created a very comfortable lifestyle for themselves. That being said, there are also people out there who have lost everything due to bad real estate investments. When it comes to investing in real estate, especially for retirement purposes, it takes quite a bit of knowledge, skill, intuition and guts. Here are some tips to consider when it comes to investing in property for retirement income: Make sure to increase your real estate knowledge It goes without saying that to be good at anything, you need to know what you are doing. There are many seminars that you can attend that focus on how to invest in real estate. You can also read books on the matter and with the internet, all this information is readily available to you. Make sure to polish your skills There are many ways to invest in real estate. You can purchase a home or piece of land that you can flip, or a home that you can remodel and sell at a higher price. Otherwise, if you are looking to generate an income that can be used for retirement, you can look for income-producing properties such as commercial office spaces, apartments or homes that can be rented out. It’s important to assess your skills before purchasing a property. For example, if you have close ties to the development plans of your area, you could have a knack for spotting pieces of land that will increase in value over time and if you know contractors, you could be able to get remodels done at a discounted price. Make sure to develop your intuition Have you ever heard the real estate saying, “Location, location, location”? Well, this saying is very true. You need to have some intuition as to what areas will become popular over time, and what areas will deteriorate over time. We recommend avoiding buying property in areas that you are not familiar with. Have the guts to take the leap When it comes to investing in property, you need guts because there will be taxes to pay and there will be times where your rental properties are left unoccupied. Just because your rental property is vacant, doesn’t mean that you don’t still have a mortgage, repairs and maintenance costs to pay. That is why it is so important to choose the right property to invest in. Flipping properties will take guts too. Because the property might not sell as quickly as anticipated, that is when you need to have the guts to hang on or the guts to sell the property at a lower price. The takeaway here is that real estate can be an excellent investment and can generate a great source of income while you are enjoying your golden years. However, you must go about it in the right way. If you are planning on using real estate to build a source of retirement income, make sure to be patient and work systematically as you build a portfolio of income-producing properties. Never jump the gun, do your research and make the right decisions, this way you can enter retirement with peace of mind. 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)