When property is sold - tenant's lease
In Roman Dutch law, which forms the basis of most South African legislation, including that which pertains to property, the principle of “huur gaat voor koop” is honoured and accepted.
This applies whether or not there is a bond on the home and whether or not the purchaser knew of the lease when he signed the deed of sale. Even if a lease is signed after the conclusion of the sale, this, generally still has to be honoured. The “huur gaat voor koop” principle ensures that any contract with a tenant, whose lease has not yet expired must be honoured, if and when the property is sold.
It often happens that when a home is sold in execution, it will still have significant outstanding payments owing. It is accepted in these situations, says Wayne Albutt, National Manager for Rawson Rentals, that the bank has first claim on the sale money but, again, the lease has to remain in place.
VAT return due date for HOAs
The deadline for submitting VAT returns via eFiling for Homeowners' Associations, has recently been clarified by SARS.
“Homeowners’ associations, if they have a turnover of more than R1 million per annum (which can often be the case in larger developments), have to submit VAT returns, so it is of particular importance that they do not have the incorrect information,” says Michael Bauer, general manager of sectional title management company IHFM.
The levies collected by bodies corporate are VAT exempt, so this would not apply to them, he says.
The deadline is usually the 25th of each month (or the last working day before the 25th if this falls on a Saturday, Sunday or public holiday) but if VAT vendors use eFiling it is not necessary to submit the return by the 25th, according to a recent SARS announcement.
Rental increases slowest in 2.5 years
The third quarter PayProp Rental Index shows that rents in South Africa increased at the slowest rate since the index started. The average rental rate increased to R5 221 in September, which was only 3.9% above the average rental charged in September 2011. According to the data, rents are increasing at their slowest rate in two and a half years.
Rents peaked in June 2012 at a revised R5 232 per month in absolute terms, indicating that rents actually declined by R11 over the last four months. Rental increases have been in single digits for 23 months on a year-on-year basis, with the Soccer World Cup being the last big boom for the residential letting market. The 3.9% average rental increase is much lower than the 5.5% consumer price increase in September, indicating that rental increases are not rewarding investors fully for inflation risks.
With the economic recovery still very slow, it seems that landlords are finding it very difficult to increase rents at pre-recession rates and that renters, whose financial position has deteriorated due to cost of living increases, cannot afford much higher rents in many places in South Africa.
List items included in property sale
When a home is sold, there are all too often issues, arguments and sometimes even court cases about the fixtures and fittings – which form part of the sale and which the owner is allowed to take away with him.
A good estate agent, says Tony Clarke, Managing Director of the Rawson Property Group, will ensure that this does not happen – but, regrettably, he says, a small minority of estate agents are still unaware of their duties in this respect.
Most arguments relating to these issues, says Clarke, arise from those involved in the sale, not knowing the law and/or not specifying which items the seller plans to exclude from the deal.
In South African law, says Clarke, anything which is a permanent and integral part of a property is assumed to be a ‘fixture’ and to be included in the sale. "Doors (along with the keys), windows, blinds and awnings, built-in cupboards, wall-to-wall carpets, kitchen and bar counters (and their seats), as well as plants in the garden are all automatically part of the sale."
10 tips for renting out property
If you invest in property to rent it out, it is important, whether you manage that rental yourself or whether you have a rental agent, to follow certain guidelines so that your investment is a success and you don’t run into problems later. This according to Michael Bauer, general manager of IHFM, the property management company, who has the following advice for landlords.
1. Screen your tenants properly. Don't rent to anyone before checking their affordability (payslips and three to six months’ bank statements), credit history, employment references and previous landlord references. If this is not done properly, it often results in problems later - a tenant who pays the rent late or not at all, damages a property or allows undesirable visitors might have a record of doing this repeatedly. Be sure to have a written rental application with supporting documents to get all of the prospective tenant’s information.
2. Get things in writing. Be sure to use a written lease agreement to document the important facts of your relationship with your tenants - including when and how you handle complaints and repair problems.
Record home loan approvals - ooba
House prices continued to show a moderate year-on-year growth of 3.8% to R854 740 in October, according to the latest statistics from bond originator ooba.
For the month of October, ooba reported record high approvals, up 47% on October 2011. This boosted ooba's performance for October to 299% higher than ooba’s historical lowest month in 2009.
“The house price numbers reinforce the recent trend of continued subdued average price growth,” says Saul Geffen, ooba CEO. “However, ooba’s market experience paints a different picture with aggressive growth experienced in both applications received and in approved home loans.”
House prices for first-time buyers grew marginally to R649 424, 3.8% up year-on-year. The percentage of first-time buyers among ooba’s total applications dropped 1.5% from September’s record high to 52.4%.
SAPOA wins appeal against COJ
The City of Johannesburg’s 18% rates increase on commercial properties, which came into effect with the City’s 2009/2010 budget, and which has been hotly contested by the South African Property Owners Association (SAPOA) and other property industry stakeholders, has been declared invalid by the Supreme Court of Appeal of South Africa.
SAPOA took the City to the South Gauteng High Court over the matter in 2010 on the grounds that the increase contravened several laws and that there had been woefully inadequate public participation allowed for. SAPOA contended firstly that the levying of the rate contravened section 19(1)(b) of the Rates Act because the ratio of the rate levied on business properties (1.54 cents in the rand) to the rate levied on residential properties (0.44 cents in the rand) exceeded the ratio which is permissible under section 19(1)(b) of the Rates Act read with the regulations; secondly, that the levying of property rates is an integral part of the budget process in terms of the Rates Act, the Local Government: Municipal Finance Management Act 56 of 2003 (the Finance Act) and the Local Government: Municipal Systems Act 32 of 2000 (the Systems Act) and the decision to increase the rates on business properties by an additional 18% required community participation which did not occur; and, thirdly, the rates imposed on business properties contravened the Rates Act because they unfairly discriminated against the owners of commercial properties. At the time, the High Court ruled against SAPOA and the rates increase was upheld.
Home loan applications and your bank
For many years, the conventional wisdom for the consumer has been to “shop around” for the best deal. And in principle one certainly can’t find too much fault with this philosophy.
Today, this approach is followed by many banks’ home loan applicants.
Ironically, though, the net result of multiple applications by home loan applicants to more than one bank may actually be a more costly home loan, for example, a higher interest rate, than would have been the case in a hypothetical “single submission” world.
This may sound strange to some but it is because a home loan is a very different product to some durable off the shelf consumer product.
Considering more than one bank could theoretically save a small margin on the interest rate.
However, there are limits to how 'cheap' banks can go on interest rates, as there are lower limits to the cost of funding the loan as well as a myriad of bank operating costs.