6 tips for buying sectional title property

The demand for sectional title homes in the Cape Town area is increasing, with the CBD proving to be most popular among buyers due to the convenience and accessibility of location.




“Buying a property is a long-term investment, and the initial analysis into a property must be conducted before making a decision,” says Rebe.

This is according to David Rebe, CEO of Sandak-Lewin Property Trust, who says sectional title living has grown in popularity over the last decade for various reasons, including heightened security concerns, increasing maintenance costs of private homes and Capetonians opting to live in close proximity to their places of work.

Rebe shares the following tips with buyers looking for properties to buy:

  1. Get your home loan pre-approved

Meet with one or more banks or mortgage originators to obtain pre-approval on a bond before you begin the actual house hunting.

Rebe says before meeting with the banks, ensure that your record is in good condition and that any outstanding debt is accounted for. This will determine the value of the bond that you qualify for, which will give you an advantage over a potential buyer who does not yet have loan approval.

  1. Buy the smallest property on the best street in areas with high tenant demand

Buying the smallest home in a popular block in a good area, as opposed to the biggest on a less popular or favoured street will reap big rewards when you choose to sell the property.

This is due to the fact that often the smallest property in a good neighbourhood sells for a better price than a bigger property in a less popular area, as its value is brought up by the price of the neighbouring properties.

Buying in areas with a history of strong tenant demand is an indication that the area is in demand and that it shouldn’t be a struggle to rent it out or sell when the time comes.

  1. Request to see two years’ worth of financials

The buyer of a sectional title property is entitled to a copy of the scheme’s financial statements. It is crucial to ensure that the financials of the sectional title scheme are not showing signs of discrepancy or debt.

Analysing the financial statements of the body corporate will ensure that the building is well-managed and financially stable. This will reveal how healthy the savings balance is, the number of creditors looming and whether you are about to purchase a share of debt already incurred, says Rebe.

  1. Investigate whether the building is being run correctly

Rebe says the success or failure of sectional title schemes is dependent, to a large extent, on both the body corporate trustees and their managing agent.

It is therefore important to conduct research on the body corporate and managing agents to establish whether they are running the property properly.

Both the body corporate and managing agent are responsible for administrative and financial systems and are in charge of the physical management of the scheme.

The managing agent provides the body corporate with regular financial and management information, assists with decision making, payment of body corporate debt and managing maintenance and repair projects.

  1. Have a survey done on the property

Surveys assist buyers in discovering the physical condition of the building and if there are any structural problems which may cause trouble in the future.

Rebe says should problems with the property be discovered before the sale is finalised, the buyer will have a powerful reason for negotiating the seller’s price down or asking the seller to fix the problems.

If the problems are not identified before the property is sold, some of these problems, and essentially costs, can become the new owner’s problem, he says.

  1. Familiarise yourself with the body corporate conduct rules

Management rules will include information concerning how administration, accounting, insurance, election of trustees and levies systems are run.

Conduct rules pertain to the day-to-day conduct of owners and occupiers, such as the keeping of pets, the number of occupants per unit, parking, waste disposal, washing lines and appearance of building.

These rules include information around whether buyers and tenants are allowed to sublet for short-term periods.

“Buying a property is a long-term investment, and the initial analysis into a property must be conducted before making a decision, as it will ensure that the sectional title scheme that you are buying into will ultimately be a good investment in the long run,” he says.

Category : Blog &Property News

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