Interesting Perspectives

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Property Owners: Your Rates Could Quadruple for Unauthorised Land Use

“The said penalty … was imposed due to the fact that the property was being used in contradiction to its zoning” (extract from judgment below)

Municipalities all have the right (and the duty) to regulate land use in their areas, and amongst other sanctions, properties that are used unlawfully or without authorisation can be subjected to rates and charges on a penalty tariff.

These penalties can be steep, and the Supreme Court of Appeal (SCA) has now held that they can be imposed without the municipality first having to change the property’s category on its valuation roll to “illegal or unauthorised” use. All it has to prove is that it acted in terms of a lawful rates policy.

The house whose rates bill quadrupled

  • A house valued (on the municipality’s valuation roll) at R1,650,000 had its monthly rates bill quadrupled from R898-01 to R3,592-05.
  • The municipality took this step after notifying the owners of their “wrongful and unlawful use of the property as a student commune, in contravention of the town planning scheme and zoning thereof without the necessary authorisation.” Authorisation was necessary, said the municipality, because the commune was a “commercial concern”.
  • This after the owners had let out two of their five bedrooms to “students or young professionals” and had continued to do so despite two years’ worth of notices from the municipality to terminate the unlawful use, and despite a High Court interdict against the continued contravention.
  • The legal challenge mounted by the property owners against the penalties was based on a series of legal arguments, and the Court’s analysis thereof (on appeal from the High Court) will be of great interest to property professionals.
  • For property owners however, the practical punchline is that the SCA upheld the penalty charges, and the owners must pay them.

If your neighbour breaches land use laws…

That punchline is also important for neighbours, because in practice unlawful land usage of this nature will often only come to a municipality’s notice when a concerned neighbour blows the whistle.

So, if you think your neighbour is about to open up an unauthorised office, commercial or other non-permitted operation next door, and if you can’t settle the matter peaceably over a cup of neighbourly coffee, call in professional help immediately. Just the threat of a quadrupled rates bill could be enough to make the problem go away.

Different strokes for different municipalities

Property owner or neighbour, find out what your local authority’s land use and rates policies are. This particular case related to the City of Johannesburg Metropolitan Municipality, and your local municipality will have its own land use bye-laws, which could well be less or more restrictive than Joburg’s.

Check the zoning before you buy property

Perhaps the property owners in this case planned all along to let out rooms, and perhaps that extra income is what put this particular house within their financial reach. If so, the mistake they made was in not checking the local zoning upfront.

Knowing the zoning and building restrictions in your chosen area is also vital if you want to avoid unpleasant surprises, like a new neighbour opening up a guesthouse or building a triple story which cuts off your sea views. Ask your lawyer to check for you before you offer.

This article originally appeared in LawDotNews and is reproduced with the permission of Gerings Attorneys and DotNews

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How the new Property Practitioners Act will impact property developers

Accreditation and compliance already dominate the operations of South Africa’s property developers – such as ensuring that the necessary certifications are obtained and that the property to be developed follows all the necessary zoning laws. Now, for some property developers, the Property Practitioners Act (PPA) will usher in a new era of additional compliance and certification requirements.

Wilco du Toit, associate, Barnard Incorporated Attorneys

Wilco du Toit, associate, Barnard Incorporated Attorneys

From 1 February 2022, the Property Practitioners Act repeals the Estate Agents Affairs Act and casts a wider candidate net that now includes property developers – including their directors, members, or trustees, who act as a facilitator on behalf of another in the sale and letting of immovable property for profit or gain.

The many property developers who will fall under the definition of a “property practitioner” defined in the Act will, among other legislation and provisions, need to ensure compliance with Chapter 8 of the PPA.

Fidelity Fund Certificate

Sections 47 and 48 of the Act compels property practitioners (including its directors, members or trustees, and its employees who act as property practitioners) to obtain and hold a valid Fidelity Fund Certificate. No property practitioner can act as a property practitioner unless a valid Fidelity Fund Certificate is held by that person.

Anybody that fails to obtain a valid Fidelity Fund Certificate may be required to repay any amounts received in respect of any property transaction.

Source: BIZCommunity
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Executive Premier Funding Solutions by Prevance Capital

Executive Premier Funding Solutions by Prevance Capital
Are you tired of waiting for lengthy traditional funding methods to be approved? We are excited to announce that have just launched our latest new property finance solution, the Executive Premier Funding Solution, targeted at the experienced, successful property developers and businesses in South Africa.

The Executive Premier Funding Solution is a first of its kind in South Africa as it breaks the conventional barriers of short term loans by enabling much larger facilities – up to R100 million – whereas before we could only offer up to R7 million! Yes, you read correctly, facilities of up to R100 million are now available to businesses and property developers who meet the standard requirements, the ability to demonstrate a credible repayment exit strategy and provide first line mortgage bonds over readily releasable property. In other words, if you have an excellent track record, strong balance sheet and access to your own tangible equity contributions, this is the alternative funding solution you have been looking for!

Whilst the concept of business loans and development finance are not new concepts, and are what the foundation of our business is built on, it is important to note that, other than traditional banks, there is no bridging finance company in South Africa that offers this kind of facility – that is until now of course!

Traditional funding methods secured through common financial institutions (such as banks) under conventional terms are often lengthy and time-wasting processes, with unfavourable results, and many additional hidden costs i.e., administrative fees, initiation fees etc. Thus, the magnitude of an alternative funding solution offering such large facilities in the landscape of short term finance solutions, is ground breaking for South African property developers and businesses. The Executive Premier Funding Solution is an alternative and viable short term funding solution aimed at providing a better overall Rand cost for your facility and giving you the freedom of advancing your project timeously.
Another advantage of choosing us as your preferred alternative funding provider (instead of laborious traditional banking methods) is that our process is quick and simple. From start to the end, you will be in the capable hands of industry experts and know exactly where you stand throughout the entire process. Our focus is to build partnerships and strong business relationships. By talking directly with decision makers your project or transaction is timeously assessed on merit and viability. Less red tape than traditional funding methods means we have faster processes and decision-making abilities, making the Executive Premier Funding Solution the perfect alternative solution for very successful businesses and property developers with a proven track record, experience and security to grow their businesses to the next level.

Take a look at the core highlights of the future of executive funding solutions for your development or business:
Approval of facilities up to R100 million.
More favourable and affordable interest rates.
Fast turnaround from our vast experienced credit committee.
Security in the form of unbonded/unencumbered with a 2 to 1 Loan to Value Ratio.
To apply, you will need to showcase your excellent track record with years of experience in the property development and business industry.
A strong balance sheet.
Access to own equity contributions is vital to qualify.
Preferably loans to be short term.
Each project or transaction is assessed on its merits.
Feasibility and viability of the project to be demonstrated.
Once approved and in place, rolling facilities can be approved for future phases.
Property developer council approvals to be in place i.e. approved building plans etc.
Tangible payback mechanism to be demonstrated.

We understand our clients’ needs are unique and varied and we are proud to continuously bring new and exciting innovative solutions to our clients. The Executive Premier Funding solution is unique in its offering as it is by far our largest facility on offer to qualifying enterprises and it breaks the mould of traditional short term property finance solutions. We understand time is money which is why we aim to build relationships and get to know your business so we can ensure that we are offering you the best funding solutions for many years to come. We are serious about you and your business.

Why not use the Executive Premier Funding Solution to unlock your development?
Our experienced, highly trained and qualified business executives are waiting to discuss the Executive Premier Funding Solution with you.
Get in touch with us today: 0860 987 987

220 150 Prevance - Bridging Finance South Africa

Buying Property from a Company – Should You Buy the Shares or the House?

“There is never a wrong time to buy the right home” (Anon)

You find the house of your dreams, agree on the price and get ready to put pen to paper. The house is in the name of a company, and you are offered a choice – either buy the house out of the company or take over the company (which owns the house and nothing else) by buying the shares and thus avoid the delay and cost of a normal property transfer and registration in the Deeds Office.

What should you do? There are a host of both practical and legal factors to consider before deciding. Holding property in a company can come with significant advantages, but there can also be major disadvantages, so professional advice specific to your own circumstances is a no-brainer here.

Some of the many factors you should consider are –

  • Tax and estate planning considerations. These are complex and no two cases will be identical, but consider the higher capital gains tax rates payable by companies (and the annual exclusion and “primary residence exclusion” of R2m for individuals), the differential income tax rates, possible VAT considerations, your own estate planning circumstances (including the estate duty angle) and the like.
  • Asset protection. Particularly if you run your own business or are in a profession at significant risk of litigation, it may be important to you to protect your major assets (like your house) from possible attack by creditors. Any assets held in your own name will be a natural target if you run into financial problems, whilst those held in another entity like a company or trust will generally be much harder to attack. Complicated multi-level structures such as having a trust owning your company’s shares have generally fallen out of favour for a variety of reasons, but you may still be advised to consider one in your particular situation.
  • Joint ownership. Joint ownership of property comes with its own set of risks and issues, and depending on your needs you might be advised to address them with a company/shareholder structure.
  • Costs and simplicity. Running a company comes with extra costs (accounting/auditing, statutory costs etc), formalities and responsibilities, getting a bond in your own name is likely to be a simpler process than taking it in a company, and so on.
  • The hidden risks. When you buy a company’s shares you get the company as it is, with all its assets and liabilities. If the seller is in any way unreliable, you could find yourself losing the house to an undisclosed company liability that suddenly crawls out of the woodwork. Suretyships are a particular danger here – there is no central register of suretyships you can refer to, and it is common for groups of companies and other entities in particular to sign cross-suretyships without necessarily keeping a record of them all. These are risks that can be largely managed with proper advice and due diligence, but a residual whiff of doubt is inevitable.
  • Other factors. There will be many other aspects to consider, depending on your circumstances and needs, and on the company in question.

Transfer duty – you pay it either way!

As a buyer you can never lose sight of all the costs you will incur in buying a house, and the “big one” is normally transfer duty. It’s essentially a government tax, payable by you as buyer (unless the property sale is subject to VAT), and it can be a lot of money.

Do not however fall into the old (and surprisingly still-common) trap of thinking that by buying the company you avoid paying transfer duty. That was indeed a commonly used loophole in decades past and it is still sometimes referred to. But in reality that all changed many years ago, and (subject to what is said below) you should budget to pay transfer duty as set out in this table –

Source: SARS “Budget Tax Guide 2021

So for example if you buy a house for R3m you will pay R146k in transfer duty. Or R916k on a R10m house. Finding a way to avoid or reduce such a cost is an attractive proposition, and indeed until 2002 it was a common way for buyers and sellers to save transfer duty and to instead pay only ¼% “Securities Transfer Tax” – a huge saving.

That loophole closed however many years ago – on 13 December 2002 to be precise – and since then the sale of shares in a “residential property company” (a company with over 50% of its asset value in residential property) attracts transfer duty on the “fair value” of the property. No savings there!

What about “buying” a property-owning trust?

Similarly, before 2002 a common transfer duty avoidance strategy was to hold property in a trust, then to “sell” the trust to a purchaser by substituting him/her as a beneficiary of that trust. That loophole was also closed in respect of beneficiaries holding “contingent interests” in the property – the situation here is a bit more complicated than it is with companies as there are various types of trust you could be dealing with, so specialist advice is essential.

“This article originally appeared in LawDotNews and is reproduced with the permission of Gerings Attorneys (Tel: (011) 440 1282, Email: ) and DotNews”.

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The write stuff – electronic signature of sale of property agreements – a sign of the times – by Steven Fisher

Rapid advances in technology, as well as more people working remotely and avoiding face to face meetings, has resulted in an increase in documents being signed electronically. When it comes to the signature of agreements of sale for immovable property, people are well advised to be cautious before putting their pens aside and embracing the various applications available for electronic signature of documents.

In terms of Chapter 1 of the Alienation of Land Act (AL Act), in order for the sale of immovable property to be valid and binding, it must be contained in a written document signed by all parties or by their agents acting on their written authority.

The Electronic Communications and Transactions Act (ECT Act) deals with electronic signature of documents, but it specifically states that it is not to be construed as giving validity to certain transactions, including “an agreement for alienation of immovable property as provided for in the Alienation of Land Act”.

It would therefore be fair to assume that our courts would hold that electronic signature of an agreement for the sale of immovable property would not be valid. This was, however, found not to be the case in the recent judgment handed down by the Eastern Cape High Court in Borcherds and Another v Duxbury and Others. The respondents in the matter, being the sellers of an immovable property sought to set aside a sale of immovable property agreement on various grounds, one of them being that the agreement was signed by them using an application used for electronic signature of documents. The sellers contended that by signing the agreement electronically, within the meaning of the ECT Act the contract was of no force and effect as it did not satisfy the requirements of the AL Act. Taking into consideration that there was no evidence that the parties intended the sale of property to be an electronic transaction, in terms of the ECT Act and that the words “sign” and “signed” are not defined in the AL Act, the judge took a pragmatic approach and found that the sellers had signed the agreement as envisaged in the AL Act with the intention of being bound to the contract as sellers, and accordingly held that with regard to the issue of signature, the agreement was valid and binding on the parties.

Each case of course depends on its own particular circumstances and facts, but until there is absolute clarity on the matter in the form an amendment to the relevant legislation, parties to the sale of an immovable property agreement should ensure that the agreement is signed in the old fashioned traditional sense. When in doubt, take your pen out.

Source: Fluxmans Attorneys.

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10 Things to know when purchasing a property

Buying a property, especially if it is your first home, is often an emotional and stressful experience. We have identified the top tips in making the process smoother and easier.


Contact a reputable mortgage originator who will assist you with a credit check and will determine your affordability. In South Africa every person can check their credit record free of charge once a year. By checking your credit rating you will be able to identify any problems and take the necessary steps to rectify the issue. Your originator will, based on your budget and expenses, be able to determine the maximum amount you will be able to purchase for.


Ensure that you are aware of all the costs involved in the purchase of a property and that you have enough cash available to cover these expenses. Certain amounts (e.g. transfer duty) must be paid prior to transfer and ensure that you always have a buffer for unexpected costs (such as Home Owners Consents). Costs to consider include transfer fees (i.e. legal fees), transfer duty (i.e. property tax), advanced rates & taxes (pro rata portion depending on the municipality), levies and occupational rent.

Also take monthly costs into account that will be payable after registration to determine your budget available for bond repayments (e.g. rates & taxes, levies, insurance and connection fees of DSTV and wi-fi).


When purchasing a property, you purchase the property with all latent defects. Latent defects are defects not easily picked up by a superficial inspection of the property e.g. leaking roofs, faulty geysers etc.  In South Africa it is up to the purchaser to inspect the property to determine any visible defects but it is the duty of the Seller to disclose all known defects. If the Seller was therefore not aware of a defect you will not be able to hold them responsible for the damages.

Ensure that you receive a written list of all defects and that you thoroughly inspect the property before signing the contract. In fact, it is in your best interest to have the property inspected by a professional although this cost will be for the purchaser’s account.


Disputes often arise between sellers and purchasers relating to fixtures and fittings removed after the purchase of a property. Ensure that all possible fixtures and fittings that can be removed (e.g. decorative items in the garden, DSTV Dishes etc) be included in the Deed of Sale.


Your transaction will be made up of a cash payment or a bond or a combination of both. Ensure that you have enough cash available to cover your deposit together with all other costs.  Furthermore, as your deposit and transfer duty will be payable by a certain date you have to ensure that the money will be available timeously.


One of the important documents that the Seller will have to present prior to registration is the compliance certificates (e.g., electrical, plumbing, beetle, gas, electric fence etc). Most certificates are legal requirements and will certify that the installation meets the legal requirements. Ensure that you know exactly which certificate you must be provided with and what exactly they cover.


There is a lot of paperwork involved in buying a property. Ensure that you request these documents (house plans, guarantees for appliances e.g., air conditioners, stoves, ovens, garage door motors etc.) from the Seller. You will also be required to present your FICA documents to the agents and the conveyancer.


A very important question when purchasing your property is when you will be able to move in. In general, if your contract determines that you can take occupation prior to transfer, a date will be specified in the contract against the payment of occupational rent. The rent will be paid in advance i.e. you can only move in once the rent has been paid. If no date is determined in the contract you will be able to move into the property on date of registration.


Mistakes on contracts can be time-consuming and expensive – confer with one of our experienced conveyancers before you sign any contract.

Source: Smuts and Co Attorneys
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Court finds against EAAB in battle for FFCs

In a scathing judgement handed down from the High Court on 15 March, the failure of the Estate Agency Affairs Board (EAAB) to issue Fidelity Fund Certificates (FFCs) to the applicant estate agents has been found without merit.

 Tony C

This comes after an urgent application from the Real Estate Business Owners of South Africa (REBOSA) as a last resort to assist real estate professionals still awaiting the issuance of their FFCs for 2021.

The EAAB was not only unable to provide any evidence supporting the lawful withholding of FFCs from the applicant agents and agencies, but its conduct during litigation was also such that it was explicitly called out in the court’s judgement as “further evidence of the disarray in the EAAB and the concerns raised by REBOSA”.

As a result, the court found in favour of REBOSA and its co-applicants, with costs. The EAAB has been given urgent deadlines by which they must either issue the outstanding FFCS to each qualified agent and agency listed in the application or notify them of valid reasons for not doing so.

Further to this, the EAAB has been ordered to file a report with the court within 30 days detailing the number of applications for FFCs received on or before 31 October 2020, how many of these applications were approved for certification, and how many certificates have been issued. The regulator must also disclose the total number of unresolved queries lodged by estate agents and the total funds currently held in its suspense account.

“REBOSA welcomes the judgement, as it highlights the plight of the average agent in our industry,” says REBOSA Chairman, Tony Clarke. “Even more importantly, we hope that it will open doors to collaborating with the EAAB on resolving its service delivery challenges once and for all. This would be a huge step towards achieving a mutually beneficial working relationship with our regulator and building a better professional future for the real estate industry as a whole.”

Source is
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Buying and Selling Property: Nine Important Questions

“Owning a home is a keystone of wealth… both financial affluence and emotional security” (Personal Finance Expert Suze Orman)

When you buy or sell your “Home Sweet Home”, particularly for the first time, the process can seem complicated, the terminology confusing, and the risks of making a costly mistake intimidating. You are after all dealing with quite possibly your most important asset!

To help you navigate the process, as either seller or buyer, here are some common questions, with answers.

1. Where can I get a simple guide to the process?

When you come down to the details it certainly is important to get everything right, but a simple, broad overview to start with will go a long way to de-mystifying the process and to setting you safely onto the right path.

Have a look at the Law Society of South Africa’s “Buying or Selling a House: What You Need to Know”. Download it in any of four languages here.

Simply and clearly written, the guide is full of really important information and advice, both practical and legal – take the time to read it in depth!

Turning now to a few of the other more common questions you will no doubt have…

2. Do I really need legal advice?

Our law reports are full of court disputes that could have been avoided with a simple upfront request for legal advice. The danger of not doing so is that many pitfalls await the unwary and you will be held to anything you agree to. It’s only sensible therefore to take advice early – well before you appoint an agent, start looking for a house, or get involved in submitting offers and negotiating sale agreements.

Not having your “offer to purchase” or “agreement of sale” legally checked is a recipe for disaster. Once you sign on the dotted line you are on the hook for everything in the document. With very limited exceptions our law holds you to your signature and it is no good saying later “But I didn’t read the document, it all looked like the normal standard stuff” or “I had no idea I was agreeing to term x or condition y” – tough, you are bound.

Bottom line – chat to your attorney before you do anything else!

3. Whose name/s should I put the property in?

Should you buy the house in your name or in your spouse’s name? Should you buy jointly? Does it matter what marital regime applies to your marriage? What if you are in a permanent cohabitation arrangement rather than a formal marriage? Or perhaps you are wondering whether you should put the house into the name of a company or family trust.

Your choice now will have far-reaching legal, tax and practical consequences; and with some complex areas of law involved, specialist upfront advice is a no-brainer.

4. What else should I ask my attorney?

Common areas of dispute and litigation include “bond clauses” and “72-hour clauses” in sale agreements, confusion over the need to identify or disclose both visible and invisible defects, disagreements over what is a “fixture” that comes with the house and what isn’t, misunderstandings over neighbours’ rights to build and encroach on views and the like, not checking for building plans and municipal Certificates of Occupancy (you will have a problem if a previous owner built or extended without proper plans), not checking the zoning and title deed restrictions (which could put a damper on any plans you have to extend, go up a storey, build a home office, or the like), servitudes or other rights of use over the property, limited “home business” options and so on.

(Tip: Take lots of “before and after” photos of the house and property with your cell phone – a dated picture is hard to argue with!)

Other “homework” items to ask about – what paperwork you will need (do you know where your title deed is?), how long your particular transfer is likely to take (and a linked question “what date of occupation should we agree on?”), to whom deposits and any occupational rental must be paid (and who gets paid the interest earned on monies held in trust), what compliance certificates you need, how to find the best bond rates, whether you might qualify for a FLISP (Finance Linked Individual Subsidy Program) subsidy, how to cancel and open municipal service accounts, the rights of any occupiers (not just tenants, also “unlawful occupiers”), and so on – you will have your own list.

5. What about planning my finances?

Ask your lawyer for a breakdown of who will pay what and when. Think deposits, bond and transfer costs, transfer duty, agent’s commission, bond settlement balances and so on. Cash flow forecasting, and a clear understanding of the timelines involved, are critical here to avoid unpleasant surprises down the line.

As a buyer, factor into your “affordability budget” not only bond repayments and your projected regular monthly costs (rates, services, insurance premiums, security costs etc) but also an emergency fund to cover any unexpected costs that may crop up.

On the subject of finances, cyber-fraud is a growing issue when it comes to electronic communications and payments so agree with your lawyer on measures to ensure that neither of you falls victim. Fraudulent “here are my new bank account details” emails are flavour of the month, but the scams are constantly evolving.

6. Should I buy-to-let in the current market?

Buying-to-let can be an excellent investment channel, and for a whole host of reasons this time of pandemic and disruption has opened up an abundance of opportunities to prospective landlords. Just don’t rush in blind – choose the right property in the right area, go into the process with your eyes fully open, and in particular beware the common pitfall of failing to minimise your risk of having to fight a difficult, destructive or non-paying tenant. Residential property occupiers enjoy strong protections against eviction even in normal times, and these protections are even stronger for the duration of the National State of Disaster.

It is essential also to understand the impact of the Rental Housing Act on the landlord/tenant relationship – do you know for example the specific requirements around rental deposits and joint property inspections? “Ignorance of the law” is no excuse, and non-compliance could cost you dearly.

7. Who appoints the conveyancer and why do I need one?

In a nutshell, you need to appoint a specialist lawyer (a “conveyancer”) to pass transfer of ownership from the seller to the buyer in the Deeds Office. That’s because only on registration of the transfer does the buyer become the legal owner of the property.

As a seller, insist on choosing the conveyancer – pick a firm you can trust to act with professionalism, integrity and speed.

8. What about buying into a complex?

Owing a house and living in a community scheme come with substantial benefits, just understand exactly what you are letting yourself in for both on a practical level and in regard to the various rules and regulations you will be agreeing to.

Our courts regularly have to sort out bitter (and unnecessary) disputes around owners desperately – and almost always unsuccessfully – trying to get out of complying with body corporate and Home Owners Association rules. Common areas of complaint are home businesses, pet ownership and control, vehicle parking, noise, nuisance objections and the like.

9. What records and paperwork should I keep?

One thing is certain – the document you don’t keep on file is the one you will be desperately searching for in 10 or 20 years’ time! So when in doubt about a particular item keep it, but at the very least have a file (backed up electronically) with –

  • Your title deed (also called a “deed of transfer”) from the conveyancer. If your property is bonded the bank will keep the original in which event keep a copy plus a note as to which bank has the original. If you lose your title deed you can get a copy but there are delays and costs attached which you really want to avoid when you come to sell again down the line.
  • The full signed agreement of sale and annexures,
  • The conveyancer’s final statement of account and associated invoices,
  •  All bank loan and bond documents,
  • Your municipal Certificate of Occupancy if you undertook any building work (construction, renovations, extensions etc),
  • A running list with supporting documents of all tax-relevant expenses. For example, keep a running Capital Gains Tax schedule with –
    •  A list of expenses relevant to the house’s “base cost” (purchase price, transfer costs and legal fees, bond costs, agent’s commission, costs related to the sale or purchase like advertising, architect’s fees etc) and
    • Ongoing capital expenses i.e. improvements and renovations (but not repairs or maintenance).
  • “Before and after” photos of the house and property,
  • Ask your lawyer if there is anything else you should keep relevant to your particular



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Prevance capital – Sellers Advance: Capitalising on the Buyer’s Market

The adage of “Cash is King” has never been more pertinent than in the year 2020. The Covid-19 global pandemic has left many investors digging the fleece out of their back pockets. As per Stats SA, the first quarter report for South Africa’s 2020 GDP is down by 2% for the period and the Consumer Price Index for April 2020 is showing a year-on-year increase of 4.6% for Housing and Utilities. This paints a pretty clear picture of the squeeze as South Africans are asked to do more with less.

As can be seen from the Lightstone prediction model below, these macro market forces are set to have a marked effect on the interest rate.

 Although the outlook on the property market is currently quite gloomy, the silver lining is that it is a great time to be bargain hunting. Property remains a sound long-term investment and your future self could very well benefit from a savvy move made in the present. If you’re looking to buy to rent, Sandton Central is a prime location to secure an investment property for future income generation.

In an era where cash flow is tantamount to a science, it can often give you the edge in any prospective financial dealing. Having liquidity on hand to capitalise on any opportunities that may arise could well be the difference between the winning offer-to-purchase, and the second-best offer.

Recent interest-rate slashes of 300 basis points in 2020 alone have led industry insiders such as Samuel Seeff, chairperson of Seeff Property Group, to believe that we may be seeing the start of the “best buyers’ market in over 35 years”. It is imperative that any would-be buyers are armed with the proper modern financial tools and knowledge for the job. Ignorance is not an excuse in the digital age, which is why we at Prevance, a specialist provider of short-term property finance solutions, are dedicated to ensuring that our products, such as Sellers Advance, are perfectly placed to meet our clients’ needs.

As we can see from the Lightstone property price forecasts below, the low value property range is set to drop substantially across the board. Music to the ears of prospective property investors looking to buy low and sell high into the inevitable upturn.

Whether you are looking to beat the rush to a hot, new-on-the-market property as an upgrade to your family home, or you are more concerned with increasing turnover efficiency by minimising costly delays in the transfer process of real estate, the Sellers Advance solution can give you up to 75% of your sale’s net proceeds on successful registration/transfer with minimal fuss and at an extremely low cost. The funds can be available as soon as the transfer bond documents have been signed and the transfer costs are secured.

Once the buyer’s purchase price has been secured, the process is seamlessly integrated into the transfer of ownership cycle. When we receive the undertaking from the transferring attorney and our agreement with the seller is secured, then the funds are immediately transferred into your designated bank account. Prevance will recoup their advance plus costs when the sale eventually goes through, often months later. But in the meantime, you are free to enjoy the fruits of your newfound fortune.

It is easy to see the benefits of having such a rapid cash injection i.e. to secure your next property purchase. You can rest assured in the knowledge that your capital will be on hand once you are done dealing with the stress of selling your home. There will be no administration nightmares awaiting you as you prepare for the next step of your journey.


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Sandton Rentals & Sales

Sandton Central offers prime property

Sandton Central is not only South Africa’s financial capital, it’s also home to high-rise apartment blocks, lifestyle estates and complexes, and some of the country’s most sought-after residential spaces.

Sandton Central – and its most immediate outskirts: Morningside, Rivonia, Benmore, Sandown and Strathavon – had been holding its own despite the implementation of the National Credit Act in 2005, the financial crisis of 2008-2009, the rolling out of load shedding in 2014, and high interest rates in the face of a weakening economy.

The last two years, however, have witnessed a growing lack of investor confidence, even in prime areas such as Sandton. This has seen desperate sellers reduce their selling price, which has created a buyer’s market. And as property prices are expected to decline further over the next few months, we will see some of the best purchase opportunities in more than a decade, whether you’re looking to buy a residential or investment property in Sandton.

The effects of the pandemic on the property market

The low interest rate – the lowest it has been in half a century – is expected to be lowered again by September, which will make it even easier to qualify for a home loan. The interest rate is expected to remain low for the next 18 months.

The gross household income needed to purchase a R1 million property has decreased by around 20% since 2019. This, coupled with the lifting of the threshold for transfer fees to R1 million that was announced in February’s Budget, has been favourable for first-time property buyers. The greatest activity has been in the low to mid-market range, around R1.5 million, with budgets stretching up to R3 million in prime areas, such as central and greater Sandton.

Despite the reduction in property prices, potential investors are playing a wait-and-see game as they opt to rent instead of buy, until they determine what the future holds.

Why now’s the time to buy an investment property

An over-supply of properties coupled with a lower demand means that now’s the best time to buy a property in Sandton Central.

As Baron Rothschild said: “Buy when there’s blood in the streets, even if the blood is your own.” This contrarian investing principle encourages investors to go against market trends – buy when others are selling and sell when others are buying. This results in the markets becoming temporarily over- and under-priced. Though it might be a risky strategy, it pays off in the long-term.

The poorer the market performs, the greater the opportunity for profit in the future. On average, property investors who had the courage to buy property after the last financial crisis of 2008-2009 have witnessed their property value increase by more than 50% in the last decade, with mid-value houses fairing the best.

What the work-from-home trend means for property investors

The Covid pandemic and national lockdown have changed work dynamics. Tenants now consider Fibre and WiFi as a non-negotiable – whether it’s inclusive in their monthly rental rates or an additional cost. After bearing the cost of installation, the property owner can either negotiate the ongoing cost with the tenant as a percentage of their monthly rental costs or allow the tenant to settle the costs with the service provider.

Vacancies and good standing tenants

An investment property in a well-located area like Sandton Central – that’s perceived to be safer, offers a comfortable lifestyle and is close to key amenities, such as good schools, private hospitals and shopping malls – is unlikely to stand vacant.

Prime areas remain in high demand, despite the fact that many tenants will downgrade or opt for co-sharing properties until financial stability returns. However, in many cases monthly rentals are becoming more expensive than bond repayments on the same property.

To give Sandton property investors an idea, 81% of residential tenants in Greater Sandton remained in good standing during the first quarter of 2020, according to the TPN Rental Monitor. When it comes to good standing according to rental value, 86.30% of tenants who pay between R7 000-R12 000 monthly remained in good standing. They appeared to be the least affected segment of the market during lockdown, with a post-lockdown vacancy rate of 8.6%. Meanwhile, 84.28% of tenants within the R12 000-R25 000 remained in good standing with a post-lockdown vacancy rate of 11.3%.

My predictions for the future

In the past, it might have been easier for an employee to get a home loan than it was for their employer, namely a self-employed business owner or a commission earner. I sincerely hope that lending organisations undertake a mindset shift when it comes to offering home loans to such entrepreneurs, especially if their business is growing.

Markets will remain depressed for the next year, due to the economic effects of the lockdown, a lethargic economy, an over-supply of properties, and prolonged online property shopping before a purchase is made.

Competition between the major lenders has resulted in a lean towards 100% bonds, while ABSA is offering a 105% loan to value ratio. . Buyers with available capital for a deposit should take advantage of this situation.

If you have taken the decision to buy a property in the near future, take the risk and you might pick up a well-priced bargain. You are likely to pay off your bond through rental payments and if you wait long enough for the market to recover before selling, you will likely profit for future investments. 

Stephen Brian Szewach

Stephen is the principal of an Estate Agency -Sandton Rentals & Sales and has been a property investor for 20 years with numerous properties in Sandton. He is the founder of the Property College ( launching August 2020), a learning and educational platform that assists property buyers with property investment strategies. He holds a Bachelor of Commerce and a Bachelor of Accountancy (Honours Degree) from the University of the Witwatersrand. Stephen is a Fellow member of the Chartered Institute of Management Accountants and a Chartered Global Management Accountant.

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