Buying into security estates are a good move - provided the necessary checks are carried out

South African property journals today regularly feature articles stressing that homes in gated security estates have become more valuable and are appreciating faster than unprotected, freestanding homes.  

Generally, says Bill Rawson, Chairman of the Rawson Property Group, such homes — whether townhouses or individual units — are priced at roughly 30% more than the equivalent size and quality homes on their own freehold plots, outside an estate – despite gated estates charging monthly levies which can be punitively high.

Despite this, says Rawson, certain people shy away from purchasing in security villages because they fear that in some way the value of their home might be affected if developers land in financial difficulties.

While such financial mishaps can possibly affect the overall image of a scheme, says Rawson, serious examples of this happening in gated estates are relatively few and far between – and the prime reason for this is that at a fairly early stage in any development (i.e. often well before it is anywhere near completion) the control of the estate is handed over to a Home Owners’ Association (HOA).

In South Africa, says Rawson, such associations have to date generally proved effective.

“The reasons for this”, he said, “is that they are strongly motivated by the fact that those running them have a strong vested interest in ensuring that standards are maintained and the property is well cared for.  Home Owners’ Associations tend to enforce estate rules vigorously and ensure that they conform to the estate’s rules and ethics which are agreed to by the buyer on taking transfer.”

“In particular”, said Rawson, “South African law places a very big responsibility on members of Home Owners’ Associations to maintain ‘fiduciary discipline’.”

What this means is that, among other things, committee members of an HOA are, by law, prevented from having interests in any organisations serving the estate unless this interest has been declared upfront and been agreed to by the other members.  They are also prevented from pursuing their own interests instead of those of the other members, e.g. by monopolising the services of a gardening team or ensuring that repair teams give their property extra attention.

In particular, said Rawson, South African law stipulates that HOA committee members have to be exceptionally transparent about the estate’s financial affairs and have to report on these to members regularly.

Any undue delay in this matter, he said, entitles the other members of the association to take the committee to court where, if the delay is proven to be excessive, they can be in serious trouble.

In addition, said Rawson, under the new rulings, the HOA has considerable power to ensure that members abide by their financial obligations – especially by paying their levies.  Following a recent case, the committee can now prevent the sale of any property in arrears with its levy payments, even if it is in the hands of liquidators.

Asked what steps buyers should take before signing for a home in a security estate, especially if they are buying off-plan, Rawson said the best thing they can do is to check on the record of the developer by insisting on seeing the HOA accounts of previous schemes on which they have been involved.  By law, he said, developers are obliged to give these to any interested party. If the decision is then made to take the plunge and buy, the new purchaser should make every effort to get onto the HOA committee himself and then to influence the decisions in a way that will be beneficial to the estate as a whole. 

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 23 Mar 2018
      Durban’s rightful place on the ‘global map’ has been reaffirmed with the recent launch of the new Durban Monopoly board game. The second city in South Africa to be featured after Cape Town, the Durban edition features well-known landmarks such as Moses Mabhida Stadium, uShaka Marine World and The Pavilion Shopping Centre, among others.
    • 23 Mar 2018
      On Show Days, it's essential that you stand out from the crowd. Highlighting your home's finest features could help turn a browser into a buyer. We take a look at some tips to help you achieve the best possible result.
    • 23 Mar 2018
      After a distinctly lacklustre year during which a flood of new homes entered the market to vie for the diminishing attention of increasingly nervous investors, the housing market in Bedfordview kicked off 2018 with encouraging signs of recovery.
    • 22 Mar 2018
      Sustainability is currently a hot topic in the home and construction sector. In light of the progressing climate change and shrinking resources worldwide, it’s one of the most important issues to consider. Sustainable living is the practice of reducing your demand on natural resources by making sure that you replace what you use to the best of your ability.
    • 22 Mar 2018
      The 1% VAT increase which is set to take effect as of 1 April 2018 has set the country alight with many burning questions, most of which cannot be comprehensively answered by our knowledgeable friend Google.
    • 22 Mar 2018
      The picturesque and oft-misty town of Dullstroom in Mpumalanga belies its name. Judging by the rapidly increasing influx of weekend visitors, many of whom then look to acquire property here, it’s anything but dull, quips Anton Greeff, Pam Golding Properties area principal.
    • 20 Mar 2018
      Located close to the fast growing Fourways precinct, Dainfern continues to attract local and international interest from buyers seeking a secure lifestyle with affordable entry price of approximately R3 million.
    • 20 Mar 2018
      Property owners in the Durban CBD are addressing the affordability challenge that faces many prospective tenants in their area – and reconfiguring the inner city rental market in the process.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us