Real Estate Investor Magazine South Africa February 2014 | Page 19

UPFRONT
Experts in the US predict that crowdfunding
will become a driving force in the country’s real
estate market, especially following the passing
of the Jumpstart Our Business Startups Act,
which reduces restrictions on crowdfunding. It
will allow, for example, developers to advertise
and market their property projects directly
to “accredited” investors. Just one example is
Fundrise, which facilitates crowdfunding for
local real estate development. Fundrise raises
money from hundreds of locals, who invest
on average $1 000 each, for the development
of a property. In return, the investors get an
ownership share of the property development, as
well as a percentage of the income from rent and
appreciation. Projects have been launched with
50 developers in 16 cities around the country,
encompassing all kinds of real estate.
In South Africa, IPS is also working on a
crowdfunding platform for property investment.
Says Picken: “By combining our collective buying
power through crowdfunding, we come together
to take advantage of the greatest buyers market in
the history of property investment.”

Anticretico
In South America, where the modern money and
banking system is not yet entrenched, the locals
have an interesting approach to access finance:
the anticretico system. Essentially, property
owners use the property as security for a loan. The
property is rent out for a year or two annual rental
paid upfront. This annual rental, paid upfront, is in
effect an interest-free loan, which must be repaid
at the end of the year. The security for the loan is
not only a year’s occupation of the property, but
the contract can also stipulate that if the loan is not
repaid at the end of the year, the ownership of the
property reverts to the lender/tenant.
It is based on the antichresis contract under
civil and Roman law, which conveys possession
but not title of real property to a creditor,
allowing the use and occupation of the pledged
property, in lieu of interest on the loan. It was
used in Ancient Mesopotamia, and by the
Greeks and the Romans. After the Western
Church banned interest loans, it became a
favoured method of securing loans in early
medieval society and was known in England as
the gage of land.
Of course, as with any other finance or loan, such
a contract needs to be drawn up by a competent
attorney with expertise and experience in local
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legislation and regulations, to protect the interests of
both parties.

Alienation of Land Act
An older, almost forgotten, law in South Africa also
provides investors with an alternative to the modern
banking system. The Alienation of Land Act no. 68
of 1981 (ALA) governs property sales transactions in
South Africa and allows the b