ACQUIRING
Buy or Build
Which is right for you?
BY PAUL STEVENS
When making your decision about buying vs. building, there are a number of issues to consider. Building your own home has the potential to be easier than before, particularly with so many developers offering a predefined set of floor plans and options. Building your own home also gives you the flexibility to have things just the way you would like. But even with the added convenience of a developer, there are some drawbacks as well. Price is the most important. Currently it is on average 20 % cheaper to buy than to build …
Pros of building vs buying Building your dream house offers tremendous sentimental value and advantages in the long run. When you build a home, you can have everything your way from the carpets to the cabinets and everything in between, both structurally and design-wise.
There are definitive feelings of emotional fulfilment and pride in a house that has become“ your baby.” Also, having everything brand-new and up-to-date is a tremendous advantage when you build instead of buying an existing home.
Furthermore, the construction materials and building code will be up to the latest safety standards. Modern society is also reflected in a newly built home: everything from wiring for high-speed Internet to the latest in spatial, acoustics and architectural trends can be added without much trouble.
If you are buying an existing home, Transfer Duty is payable on the purchase of a property from a natural person. In the event of purchasing from a developer, the developer will be VAT registered, and the price of the property will include VAT.
The VAT is payable to SARS by the developer at 14 % of the purchase price, but Transfer Duty payable on the purchase of an existing home is payable to SARS by the purchaser. On properties costing up to
R 500 000 there is no Transfer duty, but the more expensive the property, the more Transfer Duty is payable.
… and the cons Speak with anyone that has built their own home and most have horror stories about the project taking too long or exceeding cost expectations. Whether it is inclement weather, problems with obtaining the proper materials, delayed inspections or an overstretched general contractor, building your home from the ground up can come with significant delays.
Going the route of developers is popular but it often limits you to using their floor plans. Developers will typically quote six to seven months to build a home from one of their existing floor plans.
If you decide to buy If you decide to buy you should then decide whether to buy an existing home or from a developer in a new complex / development. If you prefer the latter:
1 You do not have to put up with the previous owners taste and have the choice of deciding what finishes you desire and make your dream home a reality.
2 When buying from a developer, VAT is normally included in the price.
3 You have a 5 year major structural defect warranty as well as a 1 year roof leak warranty.
4 Properties in your immediate are usually also new and still well maintained which will have a positive effect on the increasing value of your home.
5 The initial maintenance cost is low.
RESOURCES
Just Property
28 JUNE 2016 SA Real Estate Investor www. reimag. co. za