Digitalising Real Estate Lockdown Real Estate Guide | Page 14

LEGAL
Counter COVID-19
economic impacts
Options for sectional title levy relief
INVESTOR INTELLIGENCE
Here’s why you should be
planning to buy property now
Don’t shy away from investing
during lockdown
O
T
here are several actions that Sectional Title trustees
can take in these trying time, to ease the financial
pressure on owners who may be struggling to pay
their levies as well as their home loan instalments and other
debt commitments.

After receiving countless calls from owners seeking levy
relief in the light of the COVID19 financial fallout, national
property management company Trafalgar says something
needs to be done to numb the anxiety and fright from trustees.
, MD

Trafalgar’s Managing Director, Andrew Schaefer says they
are getting many enquiries from trustees worried about the
financial future of their Sectional Title schemes if owners just
stop paying levies as they are not receiving any income during
the lockdown and possibly afterwards as well.

Schaefer says “there are certain steps they can take and they
should do so as quickly as possible. Meanwhile owners should
not just unilaterally decide to stop paying levies but should
communicate with their trustees or managing agent to find
out if there are any measures already in place to assist them.”

According to the MD, the first thing that trustees can
do is to decide, on whether or not, to allow owners to
catch up their arrear levies by a certain date later in
the year and not take any legal action against them for
the arrears until that date, so there won’t be any extra
costs added to what is owed. They just need to sign
an amended handover resolution to this effect and
instruct their managing agent accordingly.

“Similarly, they can decide not to charge interest on the
specified arrears and pass a trustee resolution to this effect.
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COVID-19 - 2020
These decisions will then need to be communicated to the
owners, and should only apply to those whose levy accounts
were up to date before the lockdown,” He adds.

Secondly, Schaefer says, the trustees can decide
to draw up and sign a new levy resolution which
states that levies are only payable in certain months
or periods of the financial year, and give owners a
payment “holiday” now for April and possibly May.

“The outstanding amount for the skipped months can then
be divided by the number of months remaining in the financial
year and the levies for those months increased accordingly.

“They will need to take into account, though, that this will
affect the scheme’s cashflow as they will still have expenses to
cover, and make sure they have sufficient reserves to cover any
shortfall,” says Schaefer.   

Thirdly, the trustees can draw up a new annual budget
for the scheme with reduced expenses and thus
reduced levies for the remainder of the financial year.

“However, this is really a ‘worst case’ scenario and not what
we would recommend if it can be avoided, as it could easily
result in the scheme falling behind on proper maintenance
and other work needed to protect the value of owners’
investments,” He concludes.

Furthermore, the last stated measure can only by approved
by ordinary resolution at a meeting of all the owners, so it
would mostly likely take quite some time to implement.
SOURCE Trafalgar
ne of the most frequent questions being asked in
the real estate sector at the moment is whether
this is a good time to buy a home or an investment
property. “And the answer is yes, if there is any way you can
afford it, you should start planning to get into the market as
soon as possible,” says Berry Everitt, CEO of the Chas Everitt
International property group.

“The reason is not only that you will stand to make
substantial gains if you do buy but that you will also be helping
to build up our economy and create employment. Rising
demand for housing will eventually mean more construction,
which is a major employer, but in the meantime every property
bought will help to generate more jobs in sectors like transport,
the manufacture of furniture and other household goods and
the supply of various household services.” 

Ask anyone in real estate, he says, and they’ll tell you that
the people who have seen the best returns on their property
purchases in the past few years are those who bought soon
after the Global Financial Crisis of 2008/ 09 began. “These are
the buyers who didn’t hesitate, didn’t hang around to see if
property prices or interest rates would fall even further, and
definitely did not wait until other people started making a
move to dive into the market.

“And while we don’t want in any way to make light of the
Covid-19 crisis that is currently playing out around the world
or the economic impact - which could turn out to be worse
than that of the GFC in the short term - it is creating excellent
opportunities specifically for potential home buyers and
investors who do have access to funds now and are prepared
to take a five to 10-year view.”
In SA, we also have several more factors which are
specifically in our favour at this stage, the first being the higher
gold and platinum prices recently which has boosted our
balance of payments, and the second the dramatic drop in oil
prices which means lower inflation for us that will very likely
make it possible for the Reserve Bank to lower interest rates
again this year.
FACTORS IN FAVOUR OF
PROPERTY BUYERS
*Declining interest rates
*Lower property prices
*Rising demand for rental homes

So while it is a natural inclination to shy away from making
major decisions or financial commitments when markets are in
turmoil and things look gloomy, he says, it is important to note
that the most astute investors wait for exactly these conditions,
because they know that the biggest gains are made when you
are willing to risk going against the crowd.

“Consequently, we are urging those who were
contemplating a home purchase or a property investment this
year to proceed with those plans now if it is financially possible
for them to do so, and not to be deterred or distracted by
constantly changing news reports and shifting opinions about
what might happen.
“There is every indication that this pattern will repeat itself
– and for those who might say this point of view is insensitive
to those who find themselves suddenly unemployed because
of Covid-19, we say that building up SA’s property sector as fast
as possible will be one of the best ways of creating jobs and
making sure that they get back into employment.”
SOURCE Chas Everitt International