select
|

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
  
2000
Characters remaining


    Latest Property News
    • 16 Jan 2018
      The start of the new year is symbolic of new beginnings. A good time to take stock of one’s possessions as well as how necessary they actually are. However, seeing as the process may appear daunting – a plan goes a long way.
    • 16 Jan 2018
      The Western Cape is still in the throes of a severe drought and many households have to adjust the way they use and save water. It is a little more complicated in sectional title schemes, however, as it is not that easy to implement grey water systems for multiple users and it is also difficult to monitor water usage accurately if there are no separate water meters
    • 15 Jan 2018
      In ideal rental situations, when a lease is signed the tenant will stay for the full duration of his lease without any complications and the landlord will uphold his obligations, creating a win-win situation for tenant and landlord.
    • 15 Jan 2018
      The Atlantic Seaboard’s housing market has stoically withstood the brunt of the growing economic and political instability, consistently achieving double digit growth way above the national average, however, in 2017 South Africa’s most resilient market finally began to yield to the pressure.
    • 15 Jan 2018
      Sectional title insurance can be a little confusing and, as a new owner, you may be tempted to just assume your body corporate has you covered. While this may be the case, understanding the extent of your coverage and your personal liability is the only guaranteed way to protect yourself against potentially costly oversights.
    • 12 Jan 2018
      After an exceptionally good 2016 during which the Winelands residential market outperformed the national average by a considerable margin, 2017 was marked by a difficult winter which saw a notable slump in sales and demand.
    • 12 Jan 2018
      Small spaces can make a big impact. Irrespective of size, an aesthetically pleasing outdoor space can be a major selling point for prospective buyers. “Even if the outdoor area is small and only enough to sit and have a cup of coffee, it might just be the feature that makes the stand out from others in the neighbourhood,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 12 Jan 2018
      The boom of the digital age has opened up many doors to the way we buy and sell property. In the past we used to pop out and pick up the latest copy of the property magazines available, today we switch on the PC or grab our smart phones as online property portals & Facebook has become the new ‘go-to’ for anything, including shopping for your new home from the comfort of your couch.
        
    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