Sectional title properties are a popular option for buyers wanting to get into the property market, says Carl Coetzee, CEO of BetterBond. “These properties are often more affordable and offer lock-up-and-go convenience. Investors also see great value in sectional title units, as they can generate rental income.”
Sectional title property is separately owned but within a complex or development, while a full title property is one in which the owner buys full ownership of the house and the land on which it is built.
“One of the more affordable ways of acquiring a sectional title property is to buy off-plan in a residential development. Not only is it more affordable, as there are no transfer costs, but you will move into a brand-new property that has never been occupied,” says Coetzee.
Advantages of buying a sectional title property
- It is easier to finance - Developments have to be approved by the major banks before construction starts. This means that when you apply for a bond, the process is often quicker and easier. “BetterBond puts you in an even stronger position because we negotiate with the banks on your behalf to get a better deal,” says Coetzee.
- Body Corporate - As the owner of a sectional title unit, you automatically become a member of the body corporate - the legal entity that manages common areas of the property. The monthly levy is used for a range of services, including conduct rules for residents, building insurance, perimeter security, cleaning, landscaping, and maintenance of common areas like gardens. Owners’ levies also cover water and electricity for common areas. “It would also be advisable to ask to see the financials of the body corporate prior to putting in your offer. This will give an assurance that the financials are sound,” says Coetzee.
- Security - Sectional title properties generally offer excellent entrance and perimeter security. In a freestanding house, you are responsible for installing and maintaining these systems, but in a sectional title property, the body corporate takes care of it and it’s funded from your monthly levy.
- Running costs - You only pay for municipal rates and taxes, home contents insurance, upkeep of your garden if your unit has such an area, and your own monthly water and electricity consumption.
- Rentals and resales - Sectional title property is popular with renters, which makes it a good option for investors. This also links to resale value, which often improves over time, says Coetzee.
- Connectivity - Sectional title property is usually fibre-enabled, so your only expense would be connecting to the infrastructure that already exists, and monthly usage. “Working from home is becoming more prevalent, so this is a big plus,” says Coetzee.
- Mixed-use - The so-called ‘live, work, play’ lifestyle is a feature of many sectional title properties where residential apartments are found near shops and workspaces, all within easy – and safe – walking distance. “This is a very appealing lifestyle to the environmentally conscious who want to cut down on commuting and desire the flexibility of working from anywhere,” says Coetzee.
Disadvantages of sectional title property
- Communal living - Sectional title property means living close to others and this could come with a few everyday irritations, such as noise. “However, these issues can often be resolved by being considerate and treating people with respect,” says Coetzee.
- Special levies - There might occasionally be a special levy. For example, if the exterior of the building needs painting. However, owners will always be informed of this well in advance, so you will be able to budget for it in good time, and ultimately it would increase the value of your investment.
While popular with first-home buyers, sectional title units appeal to a range of buyers, concludes Coetzee. “Those looking to downscale, possibly as a result of a shift in life stage requiring a move from a larger family home to a lock-up-and-go alternative, find great value in sectional title property.”
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