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SOUND ADVICE WHEN BUYING SECTIONAL TITLE HOMES

Currently a wide variety of buyers are looking to sectional title units to meet their accommodation needs, says Carol Reynolds, Pam Golding Properties manager for the Durban area.
 
"Sectional title units appeal to a broad range of home buyers including both owner-occupiers and investors, and at present we see a demand from a mix of first time buyers, pensioners, retirees, young couples and families, single parent families and of course, investors as a buy-to-let investment.  We also find parents standing surety for their children – young people investing jointly in sectional title apartments and professionals pooling their incomes to buy in more than one person's name," says Reynolds.
 
She says buyers are attracted to sectional title complexes for numerous reasons. They offer good security, which is high on the priority list of most home purchasers, while external maintenance is taken care of by the body corporate and pools and gardens kept in good condition all year round.
 
"The sectional title sector of the market presents good buying opportunities right now. Interest rates are low, and from a buy to let perspective the tenant pool has grown – as many would-be purchasers are compelled to rent due to the banks' stricter lending criteria. Sectional title units are very suitable for letting and in fact are usually easier to let than freestanding homes.
 
"From a location point of view, here in Durban we find Glenwood has broad appeal because of its proximity to the university and hospitals, making it ideal for doctors, nurses, students and lecturers. On the Berea and in Morningside, sectional title units are popular among those wanting convenient access to highways and the CBD for easy travel to work, as well as those drawn by the number of good schools in the area. We are also starting to see renewed interest in the CBD from investors. For example, the Royal Hotel has been sectionalised and we are selling off units there with the advantage of excellent returns via the rental pool."
 
Reynolds offers some sound advice for those buying into sectional title schemes: Ask to see the financial report, which should be audited, and check that the body corporate is liquid. The body corporate should also have funds in reserve – if not, this is a concern as there will be no contingency budget for emergencies. Also ascertain if there is any talk of pending special levies – this would be recorded in minutes of meetings – if so, for what purpose. And look at the outstanding levies noted in the financials – at any given time there shouldn't be more than 5-10 percent outstanding; any more than this is a concern. Finally, take note of the general exterior maintenance of the buildings – a good body corporate maintains its block/s well and this is usually a good indication of a healthy bank balance.
 
She says first time buyers who have no experience of a body corporate need to familiarise themselves with the body corporate rules. "It's a good idea to investigate the profile of the other owners, for example, senior citizens may prefer not to move into a block that is predominantly owned by young families with children. It's always important to establish what percentage of the units is owner-occupied and what percentage tenanted. From an investment perspective, always ask your estate agent what rental return you can expect in a block and what the monthly levies are, to see whether the purchase makes financial sense. And in the current lending climate it's critical to ask your agent whether the banks are finding value in the block, and whether they are financing property in the building," adds Reynolds.
 
PGP Durban is currently marketing a range of conveniently located sectional title homes priced from an entry level figure of R250 000 in the CBD, to a range of well priced units on the beachfront starting at R330 000 and ranging into the millions. In Somerset Country Estate in the Glenwood surrounds is a recently listed, appealing two bedroom simplex in excellent condition with a garden and two parking bays priced at R795 000.
 
Issued by Gaye de Villiers


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