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Property 24/10 - 114

28 June 2012

Why you should invest in property
Surprisingly, says Jason LeeRawson Commercial National Manager, the “obvious” advantages of investing in property are often not fully understood or appreciated by many people, even though they may have been highly successful in other fields. 

He says the simple fact that most of us live and work in buildings, one would think would give us a basic understanding of property and its intrinsic merits. 

In practice, however, he says many are often seduced by an apparently more attractive investment channel elsewhere, usually in the money market or a business option - and he says frequently these ‘exciting’ opportunities in business have resulted in the investor losing virtually all or most of what he has put in. 
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Can body corporate approve tenants?
In recent months the building I live in has had to evict tenants due to contravention of the Body Corporate rules - this includes running night clubs to brothels. 

After some investigation it turns out the agents are finding tenants on behalf of owners who are sometimes not even in the country. Would it be possible that where an owner employs an agent to find a tenant, the body corporate implement a rule that would require the agent to request approval from the body corporate before the tenant's application is processed? 

If this is not possible, who can we hold accountable, the owner or the agent? 

Phil Calothi, owner and Managing Director of the Cape Town based managing agent company,   Land and Sea Development Services (Pty) Ltd  , advises:
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Greedy bargain homebuyers will lose
South African homebuyers greedy enough to only pay for home bargains are in danger of not buying a home if they continue on their path.

Tony Clarke, managing director of Rawson Properties says although price rises and residential property marketing conditions are improving noticeably month-by-month, South Africa is still very definitely not yet a home sellers’ market.

He notes that bargain hunters are still able to buy homes at big discounts on the prices that would normally be set for the homes in question.

Clarke says this can be a worthwhile and highly profitable exercise. 

However, time-and-again they find that these bargain hunters are missing out on chances and becoming totally disillusioned because they are determined to get the ultimate good buy but in doing so wreck their chances of getting any buy at all.

Such buyers tend to spend far too long hunting for homes and to look at far too many properties without making a decision.
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Building plans at a glance - report
The value of recorded building plans passed (at current prices) increased by 0.8 percent (R158.5 million) during January to April 2012.

According to Statistics South Africa (Stats SA), the biggest increase was reported for residential buildings (4.2 percent or R362.7 million), followed by additions and alterations (2.6 percent or R166.7 million) and a decrease reported for non-residential buildings (-8.4 percent or -R371.0 million).

The increase in the value of building plans passed was dominated by Western Cape (contributing 2.2 percentage points or R437.4 million) and North West (contributing 1.6 percentage points or R309.7 million).

The decrease reported for KwaZulu-Natal (contributing -6.3 percentage points or -R1 224.9 million) counteracted the increase reported for building plans passed to a large extent, according to the report.
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Levies when buying on a golf estate
With today’s emphasis on value for money, many aspirant home buyers at golf estates are understandably concerned about the costs of ownership over and above the actual purchase price, namely levies and, if applicable, golf subscriptions.

This is according to Richard Arderne, area principal in St Francis Bay for Pam Golding Properties, who says while it’s true that many residents of golf states may not necessarily be golfers, the long-term viability of the estate and golf course is important to home owners. 

"In this regard St Francis Links, ranked 9thbest golf course in South Africa, has opted for what is now accepted as the best golf estate structure: all property owners are automatically members of the golf club, thereby ensuring the financial viability of the entire estate. 

"In fact only home owners on the estate can be members of the golf club, although visitors can of course play on the golf course,” says Arderne.
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Tenant’s guide to renting property
Many tenants enter into lease agreements, paying large sums of money as deposits with an agent or property owner, not knowing anything about their rights in terms of the Rental Housing Act.   

Many have come to the Rental Tribunal when they have not had a refund of their deposit, the landlord has not carried out necessary maintenance or unfair notice has been issued. 

If prospective and current tenants were prepared to educate themselves, there would be far less problems. 

Below are some of the main aspects of leasing residential property: 

The lease agreement is a legal document, which confirms whatever has been negotiated between the landlord and the tenant.  It should contain no surprises, thus if a tenant finds on signing a lease that there are extra terms and conditions of which he was not made aware prior to the signing, he can object or not sign the lease. 

A verbal lease is binding though it is always preferable to have a written one.
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Homeowners sell and opt to rent
Tough economic times seem to be causing some homeowners to sell their houses and opt to rent instead, as consumers fight to keep the home fires going. 

And with about 15% of the population partly depending on rental income, the immediate future income looks strained as the smoothed year-on-year increase in rental income, according to the latest PayProp Rental Index, is the lowest in more than two years at 4.9% – below the projected inflation rate of around 6%. 

These findings are included in the June PayProp Rental Index, a research tool recently launched by PayProp, South Africa’s largest processor of rental transactions. The index tracks a series of indices from real-time transaction data to provide a comprehensive view of the state of the residential rental market in South Africa. 

Currently most developing economies seem to be propped up by low interest rates that are unlikely to rise anytime soon – perhaps not even until 2014, says Mr Mike Schüssler, chief economist at economists.co.za. 
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Key growth factors for estate agencies
Four factors were highlighted by Bill Rawson, Chairman of the Rawson Property Group, when he addressed a Rawson Properties training session and explained the factors which, in his view, have led to the group achieving a 40% growth last year and being on track for similar growth this year. 

Rawson says the first factor is that there has been a very obvious increase in confidence in residential property throughout South Africa this year. 

He says this is at least partially driven by low interest rates and an easing up of the banks’ lending criteria. 

A second factor is that the Rawson Property Group, although well represented in the upper middle and upper brackets, is especially strong where ‘the fish are now biting’, i.e. in the sub-R1million market, he says. 

The third factor is that franchisee support has always been a major priority within the group and the fourth is the group’s emphasis on ongoing training, he explains. 
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