select
|

Don’t let council rate hikes slice your property sale profits

Municipal rates and service charges have just gone up again in cities and towns all around the country and that is not only going to mean higher running costs for homeowners, but higher holding costs for home sellers. (See table below for a sample of the increases imposed.)

So says Berry Everitt, CEO of the Chas Everitt International group, who notes: “At the moment, our experience is that there are many empty-nesters eager to downsize from their large family homes in order to cut their monthly expenses and put the savings towards their retirement plans, and we expect this round of municipal increases to amplify this trend.

“What is more, there is good demand for their properties from developers as well as younger buyers with growing families, so it is quite possible for them to sell quite quickly – provided that they seek the advice of a qualified and experienced estate agent to help them set a realistic, market-related asking price.”
 
Writing in the latest Property Signpost newsletter, he says that the latest round of municipal increases make it all the more important for prospective sellers to guard against overpricing.
 
“Potential buyers will just avoid any properties they regard as overpriced and these homes will then stick in the market, causing the owners’ holding costs to mount up and eat into their potential profits.”
 
Holding costs include everything you have to pay to own and run your home, such as the bond repayment, insurance, maintenance costs, any monthly levy that you pay and, of course, municipal rates and service charges.
 
And, as Everitt says, these can add up to a substantial total each month, so once you’ve decided to sell, it makes sense to do so as fast as possible and not keep paying that amount to live in a home you no longer require.
 
“Looked at another way, every month’s delay in selling your home effectively diminishes the profit you stand to make on the sale, and it does not make sense to hold out for an unrealistic asking price on the one hand while losing money on the other.
 
“If your holding costs total R25 000 a month, for example, and your asking price is R100 000 above the current market value, any benefit that you might have derived by achieving that higher price will soon be completely eroded.
 
“What is more, your property may still be unsold and still racking up holding costs, because even keen buyers with all their finances in order are extremely price and value conscious at the moment, and they will literally just ignore listings that they regard as overpriced in comparison to similar properties.”
 
On the other hand, he says, sellers who work with a reputable agent who can help them get their asking price “just right” will sell their homes in the shortest possible time and maximise their potential profit.

Municipal rates and service charge increases July 2016

City / % Increase

Rates

Water

Electricity

Refuse

Sanitation

Johannesburg

5,9

13,2

6,9

6

13,9

Cape Town

6

9,75

7,78

5,38

9,75

Ethekwini

6,9

12,5

7,64

7,9

9,9

Tshwane

10

12

9,5

10

12


Source: Chas Everitt International


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 19 Jan 2018
      Extending from Randfontein in the west to Roodepoort in the east and including the towns of Krugersdorp and Magaliesburg, the West Rand has a plethora of property available to residents who choose to make this unique area their home.
    • 19 Jan 2018
      When it comes to financial planning, doing the work to ensure you’re prepared for unexpected emergencies is just as important as ticking off your other goals and New Year’s resolutions. The beginning of the year is also the perfect time to review your various insurance policies.
    • 19 Jan 2018
      No surprises at the first Monetary Policy Committee of 2018, as Reserve Bank Governor, Lesetja Kganyago, announced that the interest rates would stay at their current levels.
    • 18 Jan 2018
      The Southern Suburbs make up some of the most popular residential areas in Cape Town, comprising charming groups of suburbs which lie to the south-east of the slopes of Table Mountain. It is seen as the city's most expensive residential neighbourhoods with a choice of various private schools, upmarket eateries, wine estates, beautiful homes and trendy apartments.
    • 18 Jan 2018
      New year, new goals! If you’ve resolved to purchase your first property in 2018, then this 6-step guide from the Rawson Property Group is a must-read. It will help you navigate and simplify what is often be seen as a confusing process of buying your first home – right from the house-hunt to the house-warming.
    • 17 Jan 2018
      While the current property market may still favour buyers, it doesn’t mean that they shouldn’t be well prepared before putting in an offer to purchase.
    • 17 Jan 2018
      Lightstone lists Blair Atholl as the most expensive suburb with an average house price of R11.2 million, followed by Westcliff (R10.5 million), Dunkeld (R9.3 million), Sandhurst (R9.1 million) and Inanda (R7.2 million).
    • 17 Jan 2018
      As it currently stands, there are four main ways in which a home can be bought in South Africa, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who adds that deciding in which legal entity to purchase the property is not a decision that should be entered into lightly, as each has its pros and cons.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK