When drawing up the criteria for a property search, buyers will need to decide between sectional title or freehold ownership —both of which have their own sets of pros and cons. To decide which is better suited to their needs, buyers should aim to fully understand what each of these entails.
“When you buy into a sectional title complex, you purchase a section or possibly sections of the common property. This is basically where you own everything within the four walls of your property, but external hallways; gardens; elevators, and so on, are co-owned by the rest of the community and are cared for by everyone,” explains Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett.
He adds that sectional title homes are usually semi-detached houses, townhouses, flats or apartments, and duet houses. Unlike a sectional title, a freehold property entitles a buyer to the full ownership rights to the property, which includes all the structures, as well as the land that it is built on.
“When you own a freehold property, you have the right to change anything on your property pending municipal planning approval without needing the additional approval of a body corporate or HOA, as you would need within a sectional title scheme,” he explains.
However, with a freehold property, homeowners are responsible for all the exterior upkeep, maintenance, and security costs on the property. On a sectional title, these costs are shared by everyone in the complex in the form of a levy.
When it comes to deciding which option is better, Goslett explains that buyers need to decide what suits their needs best. Broadly speaking, sectional titles can be more affordable than freehold properties. According to the latest RE/MAX Housing Report, the nationwide average price of sectional titles for Q2 2022 is R1,049,437 while freehold properties' average price is R1,422,901.
Annual property price inflation also tends to be higher for freehold properties than for sectional titles, which means that freehold is more likely to show greater appreciation in value over time than a sectional title.
“This makes freeholds generally a better choice for those looking to invest in property as a long-term investment strategy. On the other hand, sectional titles generally are a better choice for those who want to generate a steady stream of income through a rental portfolio. Every situation is different though. Investing in property is always a good idea. It just depends on what you need from the property. Speaking to a local RE/MAX agent can give buyers an idea of what options are available to them, which can help them decide which ownership type is best for them,” Goslett concludes.
