Do your homework before signing up
Xolile Bhengu and Simpiwe Piliso
First-time home buyers must beware of the hype of buying into new developments and extra costs that can be incurred.
In the last decade developers are said to have added more than 2.2million dwellings in established residential areas in South Africa.
This is the equivalent of 4400 middle-class suburbs — which have come at a growth rate that has helped to stretch the country’s power supply to the limit.
Property experts say buyers should ask for electricity compliance certificates from developers, which some may not have.
Chas Everitt said new homeowners might find themselves paying thousands of rands for the compliance certificates if one was not issued to them.
The company said prospective buyers must be careful not to buy to the maximum value that they qualify for from a bank, as there was a real danger of further interest rate increases this year that would affect the initial price of the properties they had purchased.
Rod Williams, Chas Everitt chief executive of business development operations and training, said last week that new home buyers should ideally go through their bank to be properly qualified for their property purchase.
He said the applicants should then buy for less than what they qualify for, to ensure that they still have access to equity from their property.
“If you qualify for R800000, rather opt for purchasing a property worth R600000 to ensure that you still have access to some credit if you need it.
“If you max out your qualification you will sit with a problem with significant cost increases. Rather buy down and factor in extra costs. Also buy closer to work to factor in commuting costs,” Williams said.
He added that many buyers did not do enough scouting for properties and needed to do their research.
“Get your hands on the body corporate rules to familiarise yourself with the rules of the development, and also ask for financial records of the body corporate to get a sense of its financial health. Also check if they are in arrears, for example, with the municipality, and how that would affect your property,” said Williams.
“You must ask for the billing structure of the development. If you buy into a freehold or standalone development you are charged individual rates and taxes for water and electricity. A sectional title development has two structures of billing.
“Homeowners are either billed individually for their consumption or an average is worked out for the development. Ask for any other special levies that you may be asked to pay.”
Absa Home Loans senior property analyst Jacques du Toit agreed that buyers should buy down — and be honest with themselves and about their financial position.
“Prospective home buyers should calculate their affordability, taking into account how an extra two percent increase would affect their purchase and affordability.
“Banks and consumers are obliged by the National Credit Act to ensure
that after deductions and any future increases the person would still be able
to afford further debt repayments,” said Du Toit.
ISSUED BY CHAS EVERITT INTERNATIONAL
FOR FURTHER INFORMATION CALL
BERRY EVERITT ON
011 801 2500
OR VISIT www.chaseveritt.com