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Property in SA

Category : Property in SA

Property Management tips for landlords.

Tarleys Trust 0 comments 22.01.2016

As any landlord knows, property management is seldom as it seems at a glance. Many homeowners who plan to let out their property assume that managing tenants and the property itself will be simple and straightforward, without understanding the huge amount of admin and effort that goes into the management of a property – especially in the case of an apartment block. For new landlords hoping to learn how to effectively manage their property in South Africa, here are a few things to consider when letting out your property to prospective tenants:

  • Finding the right tenant

This is the first and often the trickiest step when managing a property. A company that has experience in dealing with tenants is able to determine what sort of tenant to avoid and which tenants will be the least problematic, while an inexperienced landlord may not know how to approach this without added stress. Things like background checks, references, suitability and other factors all play a huge role in property management, to ensure that you find only the best tenants, who do not have a history of rent payment delays, property damage or other factors.

  • Day to day tenant management

Another huge aspect of the landlord job is dealing with tenants on a regular basis. Landlords may be expected to speak to tenants about rent owing, rent increases, problems in the block, noise complaints, any items that need repair and many other issues that may arise on a daily basis. Having to always be on call can be demanding and extremely stressful to many landlords, especially those who have full-time jobs in addition to managing their property. This is where property companies come in – they are able to deal with the petty issues that arise, leaving landlords free to focus on the bigger issues without having to worry about being bothered throughout the week with small complaints.

  • Property Maintenance and upkeep

Yet another aspect of managing a property in South Africa is the property maintenance and repairs that always arise. Landlords often under-estimate the level of work and patience that this requires, from dealing with the tenant and addressing their queries, all the way through to finding a repairman to fix the problem at stake, and getting the best quote too. Then the landlord needs to liaise with the tenant to ensure that they will be at the premises when the repairman is due – resulting in a huge amount of time and admin.

  • Renovations and property improvements

Aside from repairs and ongoing maintenance of your property, you may also want to consider property renovation as a way to increase the value of your property. For most landlords operating independently, this means obtaining permission from your tenant, and working around their schedule as well as your own schedule to determine what renovations are required, and how to go about getting them done. Without experience in this, it can lead to many sleepless nights – making a property manager a hugely important investment.

  • Rent payments and other issues

How do you go about ensuring that rent is paid on time each month? This is another huge factor when it comes to managing a property, and with many tenants lapsing on payments, it can become a huge chore to keep track of who has paid their rent. This is one of the biggest values of a property management company – they are able to keep track of rent and all other aspects, ensuring that landlords can focus on the profits rather than the day to day stress.

Buying your first property in South Africa – A ‘How To’ Guide

Tarleys Trust 0 comments 22.01.2016

For first time buyers considering property in South Africa, the process is both hugely exciting, and immensely scary. Knowing how to go about securing a home loan, and what steps, documents and procedures you need to follow in order to buy your dream home can be tricky if you have never taken the plunge before, and with friends and family all adding even more confusion by offering conflicting advice, it can make the entire process something of a nightmare. Before you give up and resign yourself to a lifetime of renting, consider these expert tips from property management service experts:

  • Know your budget and agree on a price limit

Chances are good that you are purchasing property with a wife, husband or long-term partner. Together, you will need to work out your joint budget, and decide how much you can afford to spend on property in South Africa. Much as you may be dreaming of owning that beautiful four story mansion in Constantia, if your income does not allow you to budget sufficiently, you will not be able to secure a home loan. If you choose to go with a joint loan however, you will be able to apply for a greater loan than you would if applying for a single loan – this often amounts to about 25-30% of your joint income in total.

  • Understand the bond process and what it means for you

The minimum amount for a home loan in South Africa is about R100, 000. Another key thing to consider is whether you can afford a deposit towards the loan, as this will affect a number of things, including the interest you may need to pay on your loan. When your loan application is received, the bank will determine the Loan-To-Value ratio (LTV) – this is basically the ratio between the loan you require, and the value of the property in question. The lower the LTV ration, the lower your interest rate will be.

  • Get all your documents and information together

Once you are ready to put together your application, you will need to have the following documentation ready to give to the bank. In the case of joint loans, both parties will need to provide these documents:

  1. Copy of your ID
  2. If you’re full-time employed, three months bank statements
  3. Your offer to purchase
  4. Most recent payslip or in some cases, up to six months payslips.
  5. Self employed business owners will need the following:
  • Six months business accounts statements
  • Six months personal bank statements
  • Proof of monthly income

To qualify for a home loan to purchase property in South Africa, you need to meet certain requirements. You need to be over the age of 21, be employed for at least two years (or self-employed for at least six months) and be earning a minimum of R10,000 joint or single income and have a clear credit history with no defaults or judgements. If you meet these requirements, then you can begin the first steps to purchase your dream property in South Africa.

How the World Cup has changed the Property Market in South Africa

Tarleys Trust 0 comments 22.01.2016

There is no doubt that the FIFA Soccer World Cup has had a huge impact on tourism and South Africa as a whole, but what impact has it had on the property market in terms of foreign investors and real estate evaluation? Experts agree that the World Cup had been hugely successful in terms of foreign investment on the South African real estate market, with the increase in exposure and visitors playing a vital role in the property industry. Property prices are at a premium, especially in the highly sought-after areas across the country such as Sandton, Bishops Court, Camps Bay and other key residential areas. What does this mean for local homeowners seeking to invest in property, and will this influx of investment set a long-term precedent once the World Cup fever has died down?

 

The Times Live recently reported that many celebrities are considering South Africa for property investment, with many estate agents noting an increase in high profile viewers over the month of the World Cup. Coastal properties are especially attractive to celebrities seeking property in South Africa, in particular the high-end suburbs of Cape Town’s Atlantic Seaboard. Other members of the elite and extremely wealthy, such as dignitaries and political figures have also been taking an interest in the country’s property market, with visitors from the UK, US, Italy and France especially interested in owning property in South Africa. Estates such as the exclusive Pezula Estate on the Garden Route have attracted sporting celebrities such as Nick Price, Roger Federer, Jonas Bjorkman and Graeme Smith, while many A-list celebrities have chosen select Cape Town property – sneaking in incognito when they need to escape the crowds.milnerton
It goes without saying the types of properties that appeal to celebrities are far beyond average. Some of the country’s premier real estate can be purchased at anything from R15 million to R100 million and even higher, whether these are towering glass mansions overlooking the Atlantic coastline, picture-perfect apartments in the heart of Sandton or sprawling homesteads in the Constantia green belt. One of the most expensive and exclusive properties on the market includes the spectacular R110 million property in the Waterfront area of Cape Town – situated at the top of The One and Only hotel. Launched by the iconic Sol Kerzner, this penthouse has it all; views, location and the ultimate luxury.

The World Cup and its related success will see property values increasing as the interest and demand among foreign investment grows, giving even more value to property in South Africa. As any property management company can attest, now has never been a better time to invest in this hugely sought-after property market.

Body Corporate Insurance Explained

Tarleys Trust 0 comments 22.01.2016

We know that unforeseen events can cause a large amount of stress on you as a property owner. Luckily, insurances are in place to help alleviate the stresses caused by these situations. In this information pack, we will look specifically at Sectional Title property insurances.

Generally speaking, there are 2 types of insurances a homeowner in a Sectional Title complex will have. The first is the insurance you, as an owner, have in respect of your particular flat. The second is the insurance the Body Corporate has in respect of the building.

The individual units insurance is usually based on the requirements of the institution which has an endorsement over the property, usually the bondholder (if applicable) and is taken out either through the bond issuer or an independent insurance company or broker.

The Body Corporate’s insurance is based on the replacement value of the entire building less the cost of the land. In other words, the total it would cost to rebuild the complex should it be destroyed. Certain other items are covered in this type of insurance as well.

Understanding these types of insurances and their application is fundamental to being a property owner and will allow educated decisions and the correct action being taken in a given set of circumstances.
Before delving into the different applications of the different types of insurances, there are a few general rules that apply to both types of insurances:

Insurance will never pay for the cause of the damage only the resultant damage;
  • Insurers and underwriters often have specific contractors that must quote on insurance related repairs;
  • Insurance will not cover any damage caused as a result of a failure to maintain any item;
  • Insurance will not pay for replacing any item which can be saved or repaired;
  • Insurers will not accept an incomplete claim form;
  • The cause of the damage must be repaired and proof thereof is often required;
  • Neither of the above mentioned insurances cover the contents of any property, this will only be covered in a policy specific to your contents
When the Body Corporates insurance is appropriate in a set of circumstances, the Owner will always be responsible for the excess. There are no exceptions to this rule.

In order to determine which of the two types of insurances are applicable in a set of circumstances, one need first assess the situation. If the cause of the problem is completely inside your unit, your individual property insurance will cover the resultant damage. If, however, the cause of the problem is related to an external source (which usually includes your geyser), the Body Corporate’s insurance may cover the damage.

When any event occurs which is subject to an insurance claim, the first action one would need to take is to limit the damage as far as possible. For example, if a pipe bursts, the Owner must take all necessary and appropriate steps to stop the flow of water. Thereafter, the resultant damage can be assessed.

Insurers will only appoint an assessor when they feel it is necessary and therefore none of the damaged items should be discarded before this determination has been made.

In order to ascertain the appropriate insurance, we illustrate through a simple diagram below. In this diagram, we depict a 1 bedroom flat with a main en-suite and a guest bathroom.

insurance_diagram_copy

Key:
Double Lines  ( = ) : External brick walls
Single Line ( - ) : Internal brick walls
If the problem were to occur on an external wall ( = ) the issue would usually be covered by the Body Corporates insurance.
If the problem were to occur anywhere within the section but not on the double lines ( = ), this would not be covered by the Body Corporate’s insurance.
If the problem were to occur within or on the single lines ( - ), the problem would also not be covered by the Body Corporates insurance.
To expand matters further, should the problem be coming from the slab above or below the Section or the roof above the Section, this is also for the Body Corporates insurance (provided it is not due to any neglect of maintenance).
If a plumbing problem is being experienced which falls under the Body Corporate’s insurance, the resultant damage should be covered by the Body Corporates insurance.  This, however, is a very tricky area, as often the cause of the problem defines what is or isn’t covered.  Each claim needs to be assessed individually to determine this.  Your first steps would be to get the water flow stopped, the problem isolated and repaired and the floor area dried.  Once again, we need to use the insurance recommended contractors to attend to these problems and all reports and invoices need to be handed in to our offices to submit with the claim.  All other resultant damage will be assessed once you have completed the above steps.
If there has been a break-in or attempted break-in, the matter needs to be reported to the police and a copy of the claim number needs to be handed in to our offices to submit with the claim form.  Again, all reports and invoices need to be handed to us as well.
When an insurance claim is completed, we will need to complete a claim form.  An example of a claim form is below:

Claim Form CSure.xls

Once all information pertaining to the claim has been completed, this will be forwarded to the insurance brokers who will then either appoint an assessor, or pay the claim on the strength of the supporting documentation.
Should the problem fall within the definition of the Body Corporate’s insurance but the claim not be paid for any reason, this does not automatically confer liability upon the Body Corporate.
Important Steps to Follow:
1)       Take all necessary steps to reduce damages
2)       Assess which insurance the problem falls under
3)       Inform the appropriate insurance company in order for them to log the date of the event
4)       Attend to the cause of the damage
5)       Obtain quotes for repair of the resultant damage (do not discard any damaged goods)
6)       Submit all quotations and all necessary information to complete the claim form to us in order for a claim form to be completed and submitted

The Consumer Protection Act

Tarleys Trust 0 comments 22.01.2016

From 2011 and after the implementation of the Consumer Protection Act (“The Act” or “CPA”), South African consumers will be among the best protected consumers in the world. South Africa, a company with a diverse population and history of persecution has been the breeding ground for many empires preying on not only the uninformed but also the misfortunate consumers.

The CPA will have far-reaching implications, much further than most business operators currently anticipate by promoting and advancing the Social and Economic welfare of consumers in South Africa with regard to both products and services, and in essence, prohibit certain unfair marketing and business practices in order to protect against exploitation in respect of transactions concluded and the promotion of goods within the Republic of South Africa. The Act places great emphasis on honest and fair dealings as well as responsible conduct of service providers within the Republic of South Africa.

The Acting Deputy Director General in the Department of Trade and Industry, Ms Nomfundo Maseti, says “the primary purpose of the Act is to protect consumers from exploitation and unfair practices in the marketplace from unscrupulous businesses, and to empower consumers to make wise purchasing decisions. It achieves this by introducing, amongst others, a system of product liability and improved redress.”

“Producers, distributors or suppliers, will be liable for any damages in the form of death, injury, loss, or damage to property and economic loss, to the consumer or third party. This Act decriminalises certain conduct and subjects it to administrative sanctions, while also enables consumers to demand refund if the goods are of inferior quality”.

“Consumers may return the goods to the supplier, without penalty and at the supplier’s risk and expense, if the goods fail to meet the required standard”, added Maseti.

The CPA is a further development of South African Law which challenges both product and service-based industries which focuses on promoting a fair, accessible and sustainable platform upon which service providers and retailers must conform to and for that purpose:

  • Establish national norms and standards of consumer information,
  • To prohibit unfair marketing and business practices
  • To promote responsible consumer behaviour
  • To promote a consistent legislative and enforcement framework relating to customer transactions and agreements

The Act extends further than just to transactions of a sales and service based nature but also includes the way in which these companies market themselves to the end-user consumers.

The Act is a definite step in the direction of ensuring the protection and equality of all consumers. Some of the provisions, although seemingly Draconian in nature expose companies which otherwise would have been indemnified against risks inherent to their trade including both their acts and omissions.

It is extremely important for the interpretation of the Act to understand the definition clauses of both the Supplier as well as the Consumer.

Definition of a Supplier:

A person or an entity who markets Goods and Services, irrespective of whether the supplier:

  • Resides or has its principal office within or outside the Republic
  • Operates on a for-profit basis or otherwise
  • Is an individual, company, close corporation, partnership, trust, organ of state, an entity owned or directed by an organ of state, a person contracted or licensed by an organ of state … or is a public-private partnership
  • Is required or licensed in terms of any public regulation to make the supply of the particular goods or services available.

Definition of a Consumer:

  • A  person to whom particular goods or services are marketed in the ordinary course of the supplier’s business
  • A  person who has entered into a transaction with a supplier in the ordinary course of the supplier’s business
  • A user of those particular goods or recipient or beneficiary of those particular services, irrespective whether that user, recipient or beneficiary was a party to a transaction …
  • A  franchisee in terms of a franchise agreement

Problems with Managing Agents

Tarleys Trust 0 comments 22.01.2016

One of the most common questions we have been asked lately in practice is how to deal with troublesome Managing Agents and how to go about the process of changing Managing Agents.

As with many service providers, notice periods and the terms of cancellation depend entirely on the contract you have with your Managing Agent. Many contacts for management preceed the appointment of the current board of Trustees as well as Owners in the scheme.

Given the circumstances, many people are extremely hesitant to change service providers despite sub-standard service they have been receiving.

Although changing Managing Agents may appear, on the face of it, to be an act which incurs expenses beyond the scope of the Trustees authority, one should bear in mind that these restrictions are to be put in place for UNBUDGETED items only and therefore may not be effected by the restrictions.

Changes in regime will often be met with hostility and for this reason, one should handle the process of changing Managing Agents extremely carefully.

An exercise which we encourage in practice would be to list the non-negotiable aspects of the services one should reasonably expect from a Managing Agent and find a suitable candidate, capable of eliminating the current problems.

The reputation of a building tends to be subject to an accumulation of experiences of residents and owners experiences when dealing with matters relating to the Sectional Scheme and having a competent Managing Agent certainly goes a long way to extending the profitability and cultivating a good reputation for any long or short term relationship of a Sectional Scheme.

When is the right time to change Managing Agents?

Tarleys Trust 0 comments 22.01.2016

One of the most common problems in Sectional Title developments today is that Owners are saddled with Managing Agents who are either unwilling or unable to service the needs of the Body Corporate.
In practice, this creates much uncertainty in the building and can give a building a reputation for being mismanaged or have inadequate finances.

Trustees and Owners are often hesitant to change Managing Agents for various reasons. This can cause a variety of problems to the other Owners within the complex.

Should Owners be experiencing problems with their current Managing Agents, the Managing Agents should be informed of the problems experienced and be given the opportunity to improve in the specified areas, if they are unable or unwilling, it is in the interests of all other Owners that the management contract be reassigned to another firm.

It is important that prospective Managing Agents be informed of the problems that were previously experienced to ensure that the new firm can improve in these areas.

Always ensure new prospective Managing Agents are in possession of a valid Fidelity Fund Certificate and registered with the Estate Agency Affairs Board and are full member’s professional organizations such as NAMA (National Association of Managing Agents).

Always remember that Managing Agents are responsible for a large extent of the finances, maintenance and reputation of the building and having the right Managing Agent will go a long way to ensuring your long term investments don’t fall into a black-hole of depreciation.

The Importance of NAMA

Tarleys Trust 0 comments 22.01.2016

NAMA, the National Association of Managing Agents, is an important functionary body in sectional title management today.

It is not compulsory for Managing Agents to be members of NAMA, but one should always ensure that their managing agents are registered as FULL STATUS members with NAMA. All members of NAMA are bound by the code of conduct which NAMA has introduced. This code of conduct needs to be strictly adhered to in addition to the provisions imposed in terms of the Estate Agency Affairs Act.
Members are constantly kept up to date with the latest developments in the industry and the organization boasts a range of different professionals on their committee at both national and provincial level.
The importance of being members of NAMA for Managing Agents, and an affiliate member if not a Managing Agent should not be underestimated.
All members are checked for compliance with procedural and statutory requirements before allowing membership.
With so much uncertainty in the industry, we recommend all contractors for any Sectional Title scheme are members of NAMA.
For more information please visit www.namasa.co.za

Quorum Requirements at Meetings

Tarleys Trust 0 comments 22.01.2016

No business shall be transacted at any general meeting (annual and special) unless a quorum of persons or by proxy is present at the time the meeting proceeds to business.
A quorum at a General Meeting shall be:

  1. Bodies corporate with ten units or less: At least 50% of the votes in number and value in person or by proxy.
  2. Bodies corporate with less than 50 units but more than 10 units: At least 35% of the votes in number and value in person or by proxy.
  3. Bodies corporate with more than 50 units: At least 20% of the votes in number and value in person or by proxy.

Only those persons whose levies are paid up at the time of an AGM may cast a vote

Use of Insurance Claim Money

Tarleys Trust 0 comments 22.01.2016

Use of claims payments and why it is preferable to pay directly into the Body Corporate or Managing Agent's trust account

Section 37 (1) (h) of the Sectional Titles' Act mentions that all insurance monies received must be used for the reason of the claim in respect of damages.

In other words, the money paid out cannot be used for anything else and must be used to reinstate the damaged property. If, for example, the gate motor is stolen and the claim is paid out, the trustees must utilise those funds to replace the motor.

Some complexes have such inadequate levies that they make use of these funds for the daily running of a complex – which is not legal. Likewise, if a claims payment is in the hands of the owner, the monies may possibly not be used for the purpose for which it was intended and the damage remains, deteriorating further – to the financial detriment of all the owners as the building falls into a state of disrepair.

It is for this reason that it is preferable for claims payments to be made directly into the bank account of the Body Corporate or the Managing Agents trust account to ensure the funds are utilised for the purpose for which they were intended.

The views contained herein are that of Biccari Bollo Mariano Inc , a firm of attorneys specialising in Sectional Title Legislation. For more information on this issue please contact:
Marianette Bubb - Sectional Title Consultant

BICCARI BOLLO MARIANO INC

Tel: (011) 628-9300 | email: mbubb@bbmlaw.co.za