select
|

Do careful sums before adding to your home

Building on a flat or adding a cottage to an existing home has become an increasingly popular idea in recent times, as many families look to reduce living costs by housing more than one generation on the same property, or raise their incomes by taking in tenants.
 
However, says Martin Schultheiss, CEO of Harcourts Africa, homeowners should be very wary at the moment of overcapitalising, or pushing up the amount spent on a property beyond its sale value.
 
“As things stand, the banks are extremely wary of financing property additions and alterations, so homeowners who would have to extend an existing bond to pay for such a project will most likely be prevented from making this mistake.
 
“However, those who decide to put cash into a home addition are at risk because, given the fact that home values generally have declined over the past year, they may not be able to recoup that expenditure on resale of the property.”
 
Consequently, he says, homeowners should consult a reputable and experienced local agent about home values in their area before making any final decision. “If your home’s current value is below the average for your area, it may be worth spending the money to build on and make your home more attractive to potential buyers – especially if the addition is space that you can rent out for additional monthly income.
 
“But if your home is already valued at the average for your area or more, you should only spend more money on it if you are planning to live there at least another five years – or perhaps if you really need to accommodate an ageing parent.
 
“It is going to take time for home values to regain the past year’s losses and begin the upwards movement to levels that would enable you to recoup what you will spend now on a granny flat or cottage.”
 
In addition, says Schultheiss, there is the question of whether your local authority will even allow you to extend your home or create a second dwelling on the same stand. “And again, a good agent will be able to tell you about the subdivision and rezoning policies for your area, and the approximate costs involved.
 
“At which stage, you may just find that you would be better off selling your existing home and putting your cash towards the purchase of a new one which already has the additional space you want  - and which will gain proportionately more value as the market improves.”
 
ISSUED BY HARCOURTS


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 21 Jun 2018
      Anyone who’s ever been involved in a building project that’s gone wrong will appreciate the importance of adequate insurance cover in the construction industry.
    • 21 Jun 2018
      A recent news story about a blind tenant caught in a legal battle with his body corporate over letters and notices he was unable to read and consequently comply with has raised the question: what are the legal obligations for landlords with disabled tenants?
    • 21 Jun 2018
      A trend that’s taken the world by storm in recent years is that of hygge (pronounced: hue-guh), a Danish concept that is about creating intimacy, connecting with loved ones and taking pleasure in small, ordinary things.
    • 20 Jun 2018
      Buying or selling real estate isn’t as easy as it is portrayed sometimes, especially if there is a death of a party during the transaction which can make it awkward, tricky and inconvenient.
    • 20 Jun 2018
      With interest rates remaining at historic lows and banks continuing to compete for mortgage finance business, first-time buyers with funds at their disposal are currently well-placed to gain that initial foothold on the property ladder, particularly in the light of the slightly lower growth rates currently experienced in residential property values.
    • 20 Jun 2018
      The average size of bond granted in SA has grown 7,7% in the past 12 months to R934 000, according to BetterBond, the country’s biggest bond originator.
    • 19 Jun 2018
      In the current market, letting out a property can be a good option as rental demand remains strong, especially in the northern suburbs of Johannesburg. This is according to Chris Renecle, MD of Renprop. However he says that before homeowners let their property out, there are five key points they should make sure are covered before they market the property for rent and sign any lease agreements.
    • 19 Jun 2018
      The Capetonian dream is to live by the ocean with the iconic mountain making an appearance somewhere in the horizon. But, that dream comes with a hefty price tag that many simply cannot afford. But, should you venture some kilometres out of the city centre, entirely new realms of beachside bliss await you …
        
    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