Where do you want to stay – in a big house with a lawn, in a small apartment?
Do you want to stay in the big city, or in a small hamlet? There are many questions to consider when deciding where and how to live, and much has nothing to do with money, as we saw in What is a financial investment? Financially the big question is, of course, “to buy or not to buy?” Is a house an investment?
House prices generally go up, although some years may show much better growth than others.
On average, over the long term, this growth is very close to inflation. This is to be expected. Houses are constructed from bricks and mortar and other materials, all of which become more expensive, in line with inflation, as years go by. And the wages of builders and architects, as well as the land on which a building stands, also tend to go up with inflation.
A home then, which grows with inflation, but also requires some maintenance, is not a financial investment. As a rule, property is only a financial investment when it is rented out.
For many people, the best strategy is this: Buy the cheapest property in which you can live comfortably. Invest the rest of your available funds in assets that actually beat inflation.
Some advantages of owning your home
Some disadvantages of owning your home
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The Property Practitioners Act now just needs the president's signature to come into effect, and when it does it will bring about many significant changes in South Africa's property sector.
It will not only replace the Estate Agents Act, which has been in force since 1976, but will considerably broaden the scope of that legislation to cover commercial property brokers, bond originators, home inspectors, home owners’ associations, companies selling timeshare and fractional title, property developers and property managers as well as “traditional” estate agents.
The new legislation also defines a managing agent as anyone who collects or receives any money payable in respect of a leased property or business undertaking or who provides, procures, facilitates, secures or otherwise obtains or markets financing for or in connection with the management of leased properties.
Protection for landlords and tenants
Thus everyone who sets up in business to let and manage rental properties will now fall under the provisions of the new Act as regards trust accounts and the management of client’s deposits and monthly rentals, for example, and that means better protection for both landlords and tenants. All managing agents will also need to hold a valid Fidelity Fund Certificate (FFC) in order to claim commission on any new or renewed leases.
The Act also provides for a new Board of Authority to replace the current Estate Agency Affairs Board, as well as further protection for landlords, tenants and other consumers of property services in the form of a separate and independent Property Practitioners Ombud to deal with any complaints against property practitioners.
The new law allows for both mediation and adjudication as part of the process for dealing with such complaints, and this should help the Ombud’s office to resolve most matters quickly and efficiently. However, it is important to note that disputes between tenants and landlords will still need to be taken before the Rental Tribunal.
Other important provisions of the new legislation for landlords and tenants to note include the following:
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Property professionals agree - nothing maintains your home’s value better than regular maintenance. A good home maintenance plan will safeguard against mishaps such as clogged drains, burst pipes and leaking roofs.
A preventative maintenance plan will also guard against an insurer rejecting a claim due to maintenance-related faults.
The condition of a property is often a deciding factor in securing a buyer, and the interior and exterior being in prime condition will make it more attractive and easier to sell. Over time, annual maintenance costs average around one percent of a property’s value. So, if your home cost R2 million you should plan to budget R20 000 a year for ongoing upkeep, repairs and special projects - from the weekly garden service to annual chimney and roof check-ups and repairs.
The best way to keep on top of home maintenance is to have a systematic maintenance programme, including regular weekly or monthly tasks as well as seasonal and annual jobs. The plan should cover a home’s general appearance, including manicuring the lawns and caring for plant life and repairing plumbing, electrical, heating and air conditioning problems.
The basics would include:
Ideally, you should have cash available to cover emergency repairs and large occasional expenses. You could set up a separate savings or credit card account for these, and deposit funds each month so that you don’t end up paying steep credit card interest for a major repair. If you have a big expense, be sure to replenish the account for the next big-ticket job.
Where possible, do the jobs yourself to save on labour costs, and hire professionals for dangerous or especially difficult jobs. Two or three pairs of hands can make the most difficult jobs much easier. Offer to help neighbours with their routine repair projects and they will return the favour when you need them.
To do the hard work, you’ll need a list of reliable artisans, starting with a handyman or general contractor who can handle a broad range of jobs. Since contractors usually charge a call-out fee, wait until you have at least two or three jobs that can be done all at once.
Ask around for the names of an electrician, a plumber, a carpenter and a painter. With each, start with small projects to be sure you’re satisfied with their work.
Doors and windows – Replace broken or cracked panes of glass and apply new putty where needed. Finishes should be checked for paint deterioration and rot. Also ensure that all seals around doors and windows keep drafts out. Correct insulation around doors and windows will result in big savings on heating and cooling costs. Check that door frames are properly fitted. Bent door frames or those showing some movement during a relatively short period such as six months may indicate structural problems.
Roofs – Inspect tiled roofs for damaged, loose or missing tiles which should be repaired or replaced, as a leaking roof can cause serious water damage. Check flat roofs for any blistering or bubbles. Make sure all debris is cleared from the roof and cut away any trees or branches that make contact with the roof.
Chimneys – Check for loose or damaged bricks or mortar and have chimneys swept professionally once a year to remove build-up of creosote and other flammable by-products inside the chimney flue, if you burn wood. For gas-burning appliances, a licensed gas technician should be called to check that they are operating properly.
Gutters – Keep gutters and downpipes clear of leaves and debris to prevent clogging. They should also be checked for blockages and leaks from holes or joints. Some sections may need to be resecured to walls or resloped to ensure they operate correctly. Remember to always make sure that water drains away from the house.
Paint - adds more than just aesthetic appeal to a home - it also acts as a protective layer against the elements. Paint prevents metal areas from rusting and wooden areas from rotting. Repaint sections that have blistered or bubbled, peeled or cracked.
Walls and ceilings - should be inspected for cracks in interior finishes and any damp areas. Fill any cracks and voids to allow for easy monitoring of movement between inspections. Note any water stains on the interiors and monitor regularly. Moisture or damp within walls will cause paint to bubble, and damp in the ceiling could cause sagging or even collapse.
Patios and decks - Wooden decks must be properly sealed. If water is poured onto the deck and it beads the sealing is intact, but if the water is absorbed, the wood must be sanded down and resealed. All wooden sections should also be checked for rot and insect infestation. Also ensure that steps and railings are properly secured.
Fixtures - Check for any leaking taps in the kitchen or bathrooms, which usually result from washers that need to be replaced. Make sure toilets are sealed and secured to the floor. Listen for toilets that run continuously. Check grouting and sealant around all bathroom fixtures and renew as necessary. The smallest amount of water seepage through the grouting can cause mould and rot behind tiles.
Garages – Inspect the walls of the structure for cracks, damp and evidence of movement. Check all wooden components for evidence of rot or insect infestation and paint or treat as necessary.
Driveways and pavements – Check these areas for cracks and wear, and correct hazardous uneven sections. Redirect sections that cause surface water run-off towards the house.
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A survey recently carried out by Lightstone has revealed a range of statistics that will be of interest to anyone keeping track of property trends in South Africa today.
Lightstone calculated that of the 8 million registered properties in South Africa, 83% are residential.
These 6.7 million homes have a combined value of R5.4 trillion, with Gauteng accounting for some R2 trillion of this figure. 67% of the total are freehold properties, 18.3% are in estates (a figure almost double that of 15 years ago) and 14.2% are sectional title units. The average value of the estate homes is roughly three times that of normal freehold properties.
Gauteng remains the province with the densest residential properties as regards value and volume. Figures for SA’s municipalities show that Cape Town values are way ahead of the rest, with residential properties worth R1.6 trillion. Johannesburg comes second with R0.94 trillion and Tshwane third with R0.54 trillion.
The number of homes in the Western Cape and Gauteng together is just over 50% of the total value
for the country, but in value terms these two provinces account for 66% of South Africa’s homes. In Johannesburg Bryanston, Morningside and Midstream are the highest overall value suburbs, while in Cape Town Sea Point, Rondebosch and Fresnaye have captured the most value.
At R19.3 million, Llandudno has the highest value per home. The far less expensive middle bracket Cape Town areas of Sillwood Heights, Hospital Hill and Voëlklip saw the highest price growth in the last year.
Lightstone’s survey also reveals that single, female residential buyers in Cape Town, have increased in one year to just over 71 700 - a figure which is almost 15% higher than that of their male counterparts.
The data confirm yet again that Cape Town remains a favoured precinct for property investment, with greater stability and, on average, steadier growth than other metropolitan areas. Prices here continue to be well above the average for South Africa.
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