Real Estate Investor Magazine South Africa Dec/January 2020 | Page 39

P
roperty buying and home ownership is proving to be
one of the most common global trends among young
people around the world. In South Africa alone about
330 000 millennials bought property between 2015 and
2017. Approximately 70% of the millennial property-buyers
are first-time home owners. Considering the misinformation
that comes with informal research by excited first-time
home buyers, it is essential to take note of the processes
that must be followed in working towards sealing the
property purchase deal.
A large number of first-time home buyers purchase their
first property for residential purposes, and the process is
nothing close to smooth sailing – something that Richards
Bay’s Seeff licensee Elaine Chetty alluded to. She stated that
“The home-buying process is a bit more complicated in real
life, and in many markets the competition among buyers has
become intense. So, if you’re serious about homeownership,
you’d better get your act together.”
The property market has many dissuading complexities that
may seem tough to handle for a first-time home buyer. It is thus
significant that one seeks informed advice ahead of making
their decision. The advice will most certainly include the
important processes to follow when buying property, such as:
1. Doing comprehensive research
2. Organising your finances and get pre-approval
from lenders
3. Enlisting the services of a reputable real estate agency
4. Using the best advice to make the right decision
The property and real estate sector is vast and has diverse
investment opportunities, from residential and commercial, to
land and industrial investments. With a better understanding of
local property market and consumer behaviour, estate agents
play a crucial role in assisting clients getting the property they
want, in the area they intend to invest in, and help them study
the amenities in those areas.
To buy and/or sell property, both developers and property
buyers make use of estate agents to catalyse the marketing
aspect of selling their developments. To finance and aid
their projects developers often maximise on off-plan sales
– a property-selling technique that has become a popular
choice for buyers and sellers in South Africa. When purchasing
property, off-plan buyers choose their properties from plans,
elevations and computer graphics, and need to exercise their
imaginations to envisage the end product. It is in the interest of
every home buyer to purchase their home at a very good deal,
and purchasing off-plan in this regard is deemed the smartest
option.
Buying property off-plan
Like any other deal buying property off-plan has its high and
lows, and while anticipating all the benefits of it, it is only wise
to leave room for disappointments.
Financial benefits
When buying off-plan you are purchasing property that is
only existent on paper. Buyers are exempted from paying
transfer duties on purchase and save a significant amount of
money. Ten percent of the property cost price is to be paid
immediately and the rest can be paid on completion. Even
though VAT is included in the price, transaction duties are paid
by the developer and not the buyer. Lastly, profits from off-plan
properties can be free of capital gains tax if the property is sold
before completion.
Developmental benefits
Of the many benefits that come with buying off-plan, buyers
get the liberty to choose their home layout even before it is
built. Buyers decide the size and finishes. It is unlikely that a
newly-built home will need renovations and/or maintenance
in the first five years of completion. That said, during weekends
buyers enjoy their new home with no DIY.
Convenience & safety benefits
Off-plan properties are often found in sectional titles
bought mostly by young professionals seeking to start out
on their own or seeking financial security for the future.
Young professionals are technologically advanced and new
developments make provisions for the latest technology
trends in the way these young home buyers would prefer.
Things like wiring for high-speed internet connection, alarm
systems and sound-proofing. .
Disadvantages
When buying off-plan you are allured by the artistic impression.
The physical layout of the artistic representation of the
property may not be set out the same way it is represented on
the photographic plan. Some parts of the artistic presentation
on paper may be adjusted in the final product.
Developers reputation & finishes
Buying property is a huge venture and can be daunting for
a first-time property buyer. So, when buying property from
a developer, it is crucial for buyers to look at developer’s
reviews and their work before signing any deals. This is to
avoid any disappointments as fixtures and fittings laid out
for the development may be different to those that you end
up getting. Sometimes developers promise upmarket and
expensive features on the development to drive sales while
providing the total opposite. Make sure that all promises made
appear on the contract.
Successful off-plan property purchases
To acquire a financially beneficial off-plan property investment
it is crucial for home buyers to secure it early. Developers
normally offer great deals at the start of a project and buyers
need to take advantage of that. With steady growth in prices,
your investment should also increase in value by the time the
development is completed. Furthermore, the first investors
in a development have the opportunity to select the best
properties and choice units. They will receive the highest
capital appreciation in the shortest time. In addition, the best
units command a higher rental income.
SOURCES Lightstone property,
Portfolio Property Investments, Property24
SA Real Estate Investor Magazine DECEMBER/JANUARY 2020
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