FINANCE
The increasing popularity of sectional titles is attributed to their affordability and the communal amenities they offer , which are attractive amidst rising property prices and stagnant wages .
Understanding Sectional Title Properties
A sectional title differs significantly from freehold ownership . Buyers of sectional titles own a specific volume of space within a building , extending from the midpoint of the outer walls to the ceiling , but not the land or common areas . The land and shared facilities are collectively owned by all residents in the scheme . This distinction is crucial for potential buyers to grasp fully .
Why Sectional Titles are gaining popularity
The rising cost of property and the increasing gap between asset prices and salaries have made sectional titles a more accessible option . They are generally cheaper to purchase and maintain compared to freehold properties . Additionally , sectional title schemes often provide communal facilities like swimming pools , gyms , and enhanced security , which can be financially out of reach for individual homeowners .
Essential Guidance for Buyers
1 . Financial Health Examine the scheme ’ s financial statements to ensure it is financially sound . The collective responsibility of managing finances means poor financial health can impact all owners .
2 . Commercial Solvency Confirm that levies are collected efficiently to avoid financial shortfalls . Check for any outstanding debtor balances in the financial statements .
3 . Management Quality Evaluate the competency of the trustees and the overall management of the scheme . A managing agent , required to be registered under the Property Practitioners Act , is typically preferable to direct trustee management .
4 . Exclusive Use Areas Verify the status of exclusive use areas like garages or carports to ensure they are as promised by the seller or estate agent .
5 . Resale Value Consider factors that affect resale value , including the property ’ s proximity to schools , medical facilities , and shopping centres .
6 . Improvement Restrictions Understand that you may not have the right to make external improvements , such as installing solar panels , due to the communal nature of the property .
56 REI MAGAZINE SEPTEMBER 2024