Buying Property in South Africa

Before you begin looking for a property in South Africa, you need to decide in which town or suburb you want to buy, whether you want a house, townhouse, or an apartment and how you will be paying for the property.

Town And Suburb

When choosing a town and suburb, you have to consider if it is convenient for you to get to work from there, if it has the shops, schools, places of worship, and other amenities you need, if there is public transport (bus, train or taxi service) that fits your needs, if air and noise pollution in the area is at an acceptable level and if the crime rate in that area is acceptable.

You should only start looking for a property once you are satisfied that the town or suburb fits your needs.

House, Townhouse Or Apartment

A house, townhouse and an apartment are considerably different in the utility, freedom and responsibilities they offer.

Full Title

If you decide to buy a house (full title), you will normally own the whole property and you will have to maintain and repair it. But you will have the freedom to use, alter or expand it in accordance with the title restrictions and municipal zoning and by-laws.

A full title house can be used as security for a loan.

If you buy an apartment in a building or a town house in a complex, the type of ownership scheme will determine exactly what you will own.

Sectional Title

A townhouse is usually a unit in a sectional title scheme, and the majority of apartments in South Africa are also units in a sectional title scheme.

A sectional title unit consists of the inside of the home, usually including garages and laundry rooms, if any, as well as the exclusive use rights for an enclosed garden, parking bays and/or outside entertainment area, if any. In other words, you will own the inside of the townhouse or apartment and the right to use certain areas of the common property exclusively.

You will also own the "common property", such as the fences, outside walls and roof, passages, elevator, visitors' parking and garden, if any, jointly with the owners of the other townhouses in the complex

You will be able to use your sectional title townhouse or apartment as security for a loan.

Share Block Schemes

Apartments can also be part of a share block scheme.

If you decide to buy a share block apartment, you will not own the apartment itself, but you will own shares in the company that owns the whole apartment building. , Your shares in the share block company will give you the right to live in the apartment.

You will not be able to use your shares as security for a loan

Generally speaking, owning an apartment or townhouse, whether in a share block or a sectional title scheme, means less responsibility for repairs and maintenance work than owning the full title to a house. You will, however, have to pay a monthly fee to contribute to the needed repairs and maintenance.

Paying For Property

There are three common ways to pay for a property.

You may decide to pay the full purchase price in cash, pay part of the purchase price in cash in the form of a deposit and the remainder of the purchase price with a loan (a "mortgage bond") or pay the full purchase price with a loan (known as "100% bond")

It is advisable to apply to your bank for a pre-approved loan if you plan on paying all or part of the purchase price with a loan. This will enable you to identify the price bracket you can afford to look at.

If you choose to take a loan, you will usually have to repay the loan amount and interest over a period of 20 years or less. As a general rule, lenders will not approve loan repayments of more than 30% of your monthly income.

Finding Properties

There are several ways to find out about properties for sale in an area.

You could look at websites that list properties for sale, read the special property advertising pages most newspapers contain, drive around the suburbs (especially on Sunday afternoons) and look for "for sale" or "on show" signs, or visit real estate agency offices and browse through their stock registers.

Assessing A Property

Once you have found a property that interests you, you should assess it carefully. Some aspects are deal-breakers. These are aspects you simply cannot change or live with. Deal-Breakers should be on your highest priority list.

Deal-Breakers

Decide if you like the neighbourhood or not.
Does the building face north to make best use of the sun in winter and shade in summer?
Is the building's structure sound? If there are cracks in the walls, ask the owner or real estate agent about it and assess if it is a structural flaw or a minor defect. Beware of wallpaper and wood panelling that could be used to cover cracks on the inside of a house.
Open taps and flush toilets, to make sure the plumbing is in good working condition and that there is adequate water pressure.
Is there too much of traffic along the roads?
Are there too many vagrants in the neighbourhood?
Are there plans to develop any new buildings or roads that might affect the property negatively?
Is there room for future extensions on the property, and would such extensions be allowed?
What municipal zoning and title restrictions apply to the property and its neighbours?
Does the property fall in a good TV and radio reception area?
Will you be able to get a telephone on the property?
Is there an adequate communications link for your Internet, e-mail or data transfer needs?
Does your cellular network cover the property sufficiently? Will your cellular phone work?
If rates and taxes apply, how much are the annual rates and taxes?

Sectional Title Deal-Breakers

If a levy is payable, how much is the monthly levy? Is any special levy is being discussed or planned?
Make sure that the Body Corporate is financially healthy. Ask to see the Body Corporate's most recent financial statements.
Find out if the developer or the body corporate has reserved a right to extend the sectional title scheme in the future.

These are all things that are totally out of your hands. You will not be able to change these aspects at all, or changing them would mean great effort and/or expense.

Other Considerations

Make sure that the building is in good condition.
Feel if the walls are damp and look for signs of moisture on the inside walls.
Check woodwork for woodworm and woodborer beetle infestation or rot. If you decide to buy property in one of the coastal areas, find out if woodworm or woodborer beetle infestations occur in that area, and make sure you get a valid beetle certificate from the current owner.
Ask if the roof leaks and check for decoloured or sagging ceiling boards.
Check for missing roof tiles.
Ask if the roof is insulated.
Ask if the electricity (or gas) is in safe working condition, and if you decide to buy, make sure that you get a valid electrical certificate of compliance from the current owner.
Make sure that there are sufficient plug points and that extra rewiring will not be required.
Check if all the fixtures and fittings are of a good quality and in good repair.
Do you have unusual items of furniture? Will your furniture fit in the rooms?
Make sure that there are sufficient cupboards in the kitchen and bedrooms.
Check the condition of the flooring.
Check that automatic gates and garage doors are in good working order.
Check the condition of boundary walls and fences.
Check for a working swimming pool pump system. Ask if the pool leaks.
Check the condition of the garden. Is tree felling or urgent landscaping required?

These aspects are bargaining tools. It would be nice if everything was to your liking, but if it is not, and the property is priced too high, you can use these considerations to motivate a lower offer.