Encouraging individual ownership
Young Carr, CEO of Aida National Franchises, says today's Budget makes it clear that government wants to encourage individual property ownership - and to make this possible across as much of the economic spectrum as possible.
"This will begin with the implementation of the new housing subsidy scheme to provide prospective buyers earning between R3500 and R15 000 a month with subsidies of up to R85 000 and enable them to access mortgage finance for properties priced at up to R300 000.
"Then there is the proposed mortgage support scheme, which Finance Minister Pravin Gordahn confirmed is under consideration and is expected by the banks and others in the real estate industry to come into operation later this year. It is expected to make mortgage finance more readily accessible to first-time buyers and others in the low-income or small house sector for up to about R600 000.
"And thirdly, the Minister announced significant changes today to the rate at which Capital Gains Tax will be charged, from 50% to 66% on properties owned by trusts and other legal entities and from 25% to 33% for properties owned by individuals. This is further evidence of the fact that government wants to see residential properties mostly owned by individuals - as we saw with the recent granting of an extended transfer duty exemption for those willing to transfer their properties out of CCs, companies and trusts and into their own names. It is also underlined by the fact that the threshold at which CGT becomes applicable on primary residences has now been raised from R1,5m to R2m."
In the longer term, he says, home ownership will of course also be fuelled by the massive R845bn investment in infrastructure projects over the next three years, the government's much-sharpened focus on job creation and education, and the plans to root out corruption and money wastage, especially as it applies to home building, land restitution and the improvement of urban and rural living environments.
"Overall, we are also very encouraged, from a property point of view, by the largely positive financial position in which SA finds itself, in contrast to the situation in many more developed countries as well as the other developing nations. Now if the country can unlock its resources and reserves of talent through the development of its infrastructure and people as envisoned in today's Budget, there will undoubtedly be a very strong increase in home ownership - and individual wealth creation."