|Empowerment and how to implement it is a hot topic for any industry, and the property sector is no exception.|
In my view, the key issue for the property industry may be summed up in one word - education.
This is due to the widespread ignorance when it comes to the basic tenets of property ownership, especially with regard to sectional title. The latter is especially worrying in view of the growth of this sector of the market as the demand for high density accommodation grows.
Up until now education in property has largely been left up to the private sector. Banks, attorneys and estate agents have provided formal and informal training when it comes to first time home buyers. But, in my view, it’s not enough and it’s too piece-meal.
There needs to be a coordinated grass roots property education vehicle in place to open up the market to previously disadvantaged groups. The private sector still has an important role to play but it should be in support of an established education network.
Unfortunately, it is sometimes in the selfish interest of some stakeholders not to educate. Novice property buyers are often shocked by the so-called 'hidden costs' of property transactions such as levies, as they are not informed of these at the time of purchase. This would not happen if there were structures and legalities in place ensuring that the buyer knows of all these costs, and is qualified to pay them, before entering into a sales contract.
Critical areas requiring attention and education are:
· Lack of knowledge about the sale of immovable properties such as land, flats and houses being reduced to writing and signed by both parties. It is not unusual for conveyancers to be met/ instructed by a client who says he has bought a property and has paid the purchase price directly to the seller. When the conveyancer asks for a sale agreement, his is advised that the agreement was oral. In simpler terms, an oral agreement of sale of immovable property is as good as no agreement at all.
· First time buyers are not aware of the taxes paid to SARS e.g. If you buy the property above R500 000, you have to pay a transfer duty calculated at 5% above the R500 000. Donations tax - if the immovable property that is being donated is above R100 000, donation tax is calculated at 20%. Capital Gains Tax maybe payable if you dispose of the immovable property.
· Failure to understand that if you buy in a sectional title scheme you are bound by the Body Corporate Rules. The rules invariably limit your ownership rights. For example if the body corporate rules do not allow for a pet to be kept on the premises, the owner is bound to observe that rule.
· Payment of special levies to take care of special projects, which may not have been budgeted for when the normal levies are raised. E.g. The lifts in a block of flats breakdown and the body corporate does not have sufficient funds during that financial year to fix the lift. The Body Corporate can raise a special levy to cover emergency costs to have it repaired.
While not difficult concepts these are not obvious unless pointed out and explained to the buyer. Now, more than ever, it’s critical that first time buyers are properly educated on home purchasing and that it comes from both public and private bodies.