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17 October 2013

Johannesburg: A property buyers' den
There is something very intriguing about the City of Johannesburg CBD despite some of its failings.

It is a vibrant city, full of dreams for many, a place to live, work and play in, and it is here that many astute investors are 'digging their own gold' buying and selling property.

Of course, some properties and buildings are run down, but there are those that are thriving and have, in fact, seen growth in property values.

Property in the Johannesburg CBD
Many people are still stuck with the fact that the Johannesburg CBD is not as safe a place to buy into, then again, buying property is an individual choice.

Property24.com recently caught up with Dave Teasdale, managing director of Mafadi Property Sales who specialise in the Johannesburg CBD, to find out what is happening currently in the CBD as well as the commercial property market in Johannesburg.
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CPA: Individual vs. corporate tenants
The Consumer Protection Act (“CPA”) grants many rights to consumers, South African consumers now being among the most protected consumers on a global level.  As a consequence, added protection for consumers invariably means a little less protection for landlords. Application of the CPA

  1. The CPA does not apply to corporate tenants if their asset value or annual turnover is R2 million per annum or more, irrespective of who the landlord is. For the purposes of this article, I refer to corporate tenants as tenants who are above the threshold.
  2. Section 14 of the CPA does not apply between a landlord and tenant if both are commercial entities.
  3. The CPA does apply if the tenant is a natural person and the lease is deemed to have been concluded in the ordinary course of business. For purposes of this article I am treating a lease as being in the ordinary course of business.

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Don't overspend on home renovations
Beware of overcapitalising on your home. The South African property market is a far cry from a bubble waiting to burst. However, most real estate experts will confirm that the industry, although recovering, has still got a long way to go, and is expected to remain on a slow incline for quite some time.

While this news allows us to lay fear and dread aside as we see improvements, we still need to recalibrate our perspectives and expectations to the new economic climate.

The FNB House Price Index for August shows a slight acceleration in its year-on-year growth rate, from a previous month's revised 6.3 percent, to 6.4 percent in August. The average value of homes transacted in the FNB House Price Index was R894 600.

With the scene set, how should we realign ourselves to ensure that we don't unwittingly cross lines into unnecessarily low financial gain?
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Home loans for different age groups
People of different ages have different housing requirements but they also face different challenges when trying to obtain a home loan.

Retired or almost retired borrowers, may well have low debt, significant assets and high home equity, but may also be on a fixed income. And if that income is lower than what they used to earn can hinder the approval of a home loan for their retirement home. Some banks may also be reluctant to grant new 20-year mortgages to senior citizens.

According to the latest statistics from BetterBond Home Loans, which is SA’s biggest mortgage origination group, home buyers over 60 years of age are now typically buying properties worth around R1.2 million and having to pay an average deposit of some R470 000 (39 percent) to do so.

This puts their average bond repayment at R6 700 a month and the income required to secure the bond at R22 500 a month.

BetterBond CEO Shaun Rademeyer says, however, if they’re not sure that their earnings will continue at this level, or are worried that that their expenses, particularly in regard to health, will rise substantially over the next few years, they need to consider other options.
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Landlords liable for tenant misconduct
What happens when a landlord is fined because of the misconduct of his tenant’s guest?

Prescribed Management Rule 69 says, “The provisions of these rules and of the conduct rules, and the duties of the owner in relation to the use and occupation of sections and common property shall be binding on the owner of any section and any lessee or other occupant of any section, and it shall be the duty of the owner to ensure compliance with the rules by his lessee or occupant, including employees, guests and any member of his family, his lessee or his occupant.”

Michael Bauer, managing director of IHPC, says the owner is responsible for his personal behaviour and that of his family and visitors to the unit, and if he has a tenant, their behaviour and their visitors too.

He says it is recommended that the landlord have a clause in the lease which transfers responsibility to his tenant so that he is not held liable each time any fines for misbehaviour are issued by the body corporate.
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Renting out a room in your home
With property transfer fees, conveyancer’s costs, the estate agent’s commission, Capital Gains Tax, and electrical and beetle infestation expenses related to a home sale now often totalling as much as 10 percent of the sale price and with salary rises being cut back to exceptionally low levels, it is not surprising that people today are holding onto their homes far longer than they did previously.

Bill Rawson, chairman of the Rawson Property Group has frequently been questioned by trainee agents on his often-quoted policy of “hold on to properties wherever you can" noting that selling them is usually a mistake.

“This statement is one in which I firmly believe and it only refers to properties bought as a home or for investment purposes.

“However, today, we are seeing people stretched for cash in a way that they were not a decade ago, opting to stay in their primary homes far longer,” he says.
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Buying property off-plan? Read this
In recent months there have been signs that residential property developers of multi-unit sectional title schemes are once again becoming active, says Tony Clarke, managing director of the Rawson Property Group.

While this is welcome and very necessary, he says, it is likely to lead to a revival in the disputes which have been seen occasionally in this field between the clients (often represented by a body corporate) and the developers.

Many sectional title developers have mastered the art of marketing their units and are extremely proficient at it.

Using models, digital walk-through videos, brochures, well displayed plans and computer graphics they can, if not carefully watched, make developments look a great deal more glamorous and attractive than they will be when actually completed – and this can lead to disappointment, he explains.

Particularly reprehensible is the practice of a small minority of developers who do not specify exactly the materials to be used or, if asked about this, downgrade them and use inferior materials in their place.
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Green tool for existing buildings
If you own a non-green building, not a problem, the Green Building Council of South Africa (GBCSA) has announced the development of the new Green Star SA Existing Building Performance rating tool, sponsored by Nedbank Corporate Property Finance (CPF) and aimed at addressing demand from a new segment of the property market.

This tool will allow effective and objective measurement of an existing building’s environmental performance operation and assess key performance indicators (KPIs) relevant to specific environmental issues such as energy and water consumption. In Green office property trends in 2013, Manfred Braune, technical executive at GBCSA, said the focus of the green building industry will continue to switch from new building design and construction to greening existing buildings.

GBCSA’s efforts have to date focused on new buildings – advocating specific design and technical interventions to be implemented before and during construction to improve environmental impact and performance.

However, the new rating tool signals the GBCSA’s shifting focus to include transformation of the existing building stock in South Africa, explains GBCSA chief executive officer, Brian Wilkinson.
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