Interesting property related matters

Housing-market-could-struggle-until-2013
Selling your home? Give it the X factor
Ex Pats still excited about SA Home prices
Dim picture for 2012 house prices
House prices slow
Bethulie - part of the Karoo Riviera!
Is this really necessary?
Mistakes Sellers make
Serious sellers must accept reality
Home loan applications - the picture is changing
Still 3 years of home price decreases!!
Home prices continue to fall
SA rentals plummet

DON'T SHOW WHAT YOU DON'T WANT TO SELL

http://www.cyberprop.com/cyber1_26082011_13.shp

Had an offer on your house - read this
http://www.cyberprop.com/cyber1_19082011_15.shp

Dealing with non-paying tenants
http://www.cyberprop.com/cyber1_19082011_24.shp

More tenants not paying - interesting article to read.
http://www.cyberprop.com/cyber1_19082011_29.shp

It may seem attractive for property investors to acquire a property where a lease agreement is already in place. After all, investors may see it as a marketable feature of the property as buyers will not need to find a new tenant and therefore will avoid an initial vacancy period when taking transfer of the property.To enable the conveyancer to carry out the transfer of a home from one owner to another, traditionally Capetonian homeowners have had to get an Electrical and Beetle Certificate (for all exposed wood) prior to registering the transfer. The proposed Municipal Property Rates Amendment Bill is unconstitutional, the Democratic Alliance and lobby group AfriForum said on Monday.
"It appears that the redefinition of residential rental property as commercial property will amount to a form of income tax, which will be a violation of... the Constitution," said AfriForum head of community affairs Cornelius Jansen van Rensburg.
The Municipal Property Rates Amendment Bill proposes that people who own more than one residential property will be forced to pay more expensive commercial rates on additional properties.
Up until now, property tax has been based on the status of a property under municipal zoning.
"If the amendments are approved, the focus will shift to whether or not income is generated from a property," said Jansen van Rensburg.
DA eThekwini spokesman for finance Dean Macpherson said in terms of both the Constitution and the Municipal Property Rates Act municipalities may not exercise their power to impose rates in a way that materially and unreasonably prejudices national economic policies.
"The proposed amendment would certainly empower municipalities to breach the Constitution," Macpherson said in a statement.
The Constitution calls for the state to create an environment in which property is accessible to all inhabitants of the country and enshrines the right of access to housing.
"Given the economic impact of the proposed amendments, only the super rich and the state will be able to enter the property market due to higher administrative costs of property ownership," said Jansen van Rensburg.
"Rental properties will become unaffordable for people who do not qualify for mortgages, thereby increasing people's reliance on the state for housing."
He said "the proposals appear to come down to another form of nationalisation through taxation".
"The proposed amendments are likely to drastically limit property ownership among the middle class."
Macpherson said "the manner in which the amendment bill has been introduced has deliberately been under the radar to cut off debate and stifle criticism of the proposed changes by ratepayers associations".
He said the bill, if passed, could decimate the property market in cities like Durban where a number of people hold second properties.
"It is vitally important that the ANC puts the brakes on this bill to stop the wholesale freefall of the property market."
The deadline for public submissions on the bill, introduced by the department of co-operative governance and traditional affairs, is Friday 22 July.

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The Municipal Property Rates Amendment Bill - currently before Parliament - sets out to charge people who own more than one residential property commercial rates on the additional homes.

This means that anyone with a holiday home or who owns an investment property that is being rented would see property rates on those properties double and they would also lose any municipal rebates on those properties as well.

This will make housing unaffordable to a large part of SA's population. It will force landlords to increase rent by about R1 000 p.m. with the result of forcing people into informal settlements.
1. For many people the ownership of a property which is rented out 'for gain'' is specifically geared to provide additional income, either to support themselves and their families and as provision for their retirement years. The government is encouraging the public to save in order to be able to provide for oneself instead of being a burden on the state. If this amendment is enacted these persons will be severely disadvantaged as a result of substantial increases in the rates on these properties, possibly rendering the investment unviable and even unaffordable. Owners of income generating properties are already paying additional Capital Gains Tax seeing that they do not qualify for the same exemptions as those for whom their property is their primary residence if and when they sell their properties, and on rentals received, they are paying Income tax.

Many people make provision ahead of time for their retirement years by purchasing a retirement property when they can afford it and rent it out until they are ready to retire. If the proposed amendment is enacted it may well prevent people from making this provision - is the government going to subsidize retirement homes to make them affordable in people's latter years.

Furthermore in the current economic climate it is not uncommon for a property owner not to reside in his own property but rather to rent it out to earn income and reside elsewhere with relatives and contribute towards those household expenses - if this amendment is enacted then in such a situation property owners would have to pay rates at a commercial rate for their properties: The person who could not afford to continue to occupy his own property and the owner of the property that has taken on the boarder as he is now accommodating another person for gain.

2. Landlords will have to increase rentals to cover the additional expense which will result in the tenants having to carry the burden. The possibility of these persons renting property ever being able to save money to buy their own homes is further reduced. There is also a strong likelihood that increased rentals at the bottom end of the market will result in those tenants not being able to remain in occupation and ending up homeless - having to resort to informal settlements like squatter camps. Given the lack of housing in South Africa it is bizarre that anything that would lead to an aggravation of the situation would be considered.

3. The property market is already in the doldrums, and this proposed amendment will substantially reduce the number of investors of residential property as the additional rates burden will result in substantially reduced returns from these properties.

With all due respect the proposed amendment is unviable and will have major implications for many older people and those who are carefully making provision to support themselves and not being a burden on the State, for those using income generated by or through their properties to support themselves and their families and on those persons who are tenants and who will have to pay higher rentals for their accommodation.
That situation, says Ulrik Strandvik of Gunston Attorneys, is now much changed. Since the passing of new municipal laws and bylaws, it is now essential, in addition to the Electrical and Beetle Certificates, to obtain a Gas Certificate (issued by an authorised gas dealer) and a Plumbing/Water Certificate (issued by a registered plumber).
Both certificates, says Strandvik, are important because a gas leak can be both expensive and dangerous and water leaks have resulted in massive wastage in recent years - and are also expensive to the homeowner who will be billed for them.
“The problem, however, is that putting matters right can be expensive. I know of a case where a home seller recently paid out R20 000 to rectify certain fairly minor electrical faults and R3 000 for plumbing improvements to make his plumbing network compliant.”
Quite frequently, says Strandvik, the electrical contractors issuing the certificate report that the problems appear to have been caused not by the original builders, electricians and plumbers but by ‘others’ - particularly security gate, satellite and gas appliance installers. The work of these people, coming later on to the property, is not inspected by a clerk of works and quite often the installation is “irregular”. For example, the electrical fitting is not earthed or a geyser does not provide an extension overflow.
Strandvik suggests that whenever work is done on any electrical, gas or plumbing installation, the contractor should be asked for a certificate specifying exactly what his job has encompassed: he should provide a detailed report covering every aspect of the work completed. If the owners have doubts, he says, they should report these to the relevant authority and then ask them to check the installations comply with the regulations. If the work is non-compliant the authority will then take it upon themselves to ensure that it is put right by the contractor.

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How does this happen? Well, South Africa's law has a provision that states that "lease goes before sale", better known as "huur gaat voor koop".
This means that when a leased premise is sold before the lease of a current tenant has expired, the tenant may in terms of the "huur gaat voor koop" rule remain in occupation of the premises until the lease expires.
Investors: beware!
This may, at face value, make the investment all the more attractive. But property investors need to beware: it opens you up to a number of risks that would have been negated had you not inherited a tenant with an existing lease agreement.
So what are the problems? In one recent example, a tenant whose lease agreement had been inherited in exactly this manner requested to extend the lease agreement for a further period equal to the initial lease under the same terms.
The property investor was naturally inclined to simply sign the agreement, only to be told that the agreement in place was one which had been purchased at a local stationary store. Such agreements are notorious in professional circles for being out of date and often in contravention of rental legislation and provincial guidelines.
In breach of law
The property investor, in the old agreement, had taken on a long list of unnecessary obligations while he was also in breach of the law on a number of points.
He had also taken on some risks that could have presented significant financial risk considering the age of the property, the nature of the tenant and the duration for which the tenant had resided at the property.
For one, there had been no written inspection on commencement date for this tenant. This put the investor in a situation in which he could not lay claim for any damages caused directly by the tenant at the end of the lease period.
New agreement signed
Ordinarily, with proper procedure and adherence with Clause 5, Section (7) of the Rental Housing Act, the landlord would be able to claim for damages from the deposit, if such damage should occur, on the basis of a joint inspection of the property both on the start and the end of the lease period.
This is just one example of how a landlord may assume risks and responsibilities when taking over an existing tenant lease. In this case, it was fortunate that the tenant, landlord relationship was amicable.
The tenant agreed to enter into a new agreement based on the fact that the new agreement was current with local legislation and actually served to improve his rights as a tenant.
Necessary evil?
So why did the previous owner enter such a lease in the first place? After all, he had agreed to be bound by it when entering into the agreement.
The answer stems from two common perceptions that prevail amongst property investors. Firstly, there is the prevailing perception that tenancy in a buy-to-let investment is a by-product of the property investing business — a necessary evil, if you like.
Secondly, there's the belief that the letting agent takes care of the letting part, which means it's not necessary for the property investor to understand it. While many "gurus" often suggest the "hands-off" approach, making buying the focus of property investing, good management and understanding of the letting business increase profitability and therefore return on investment.
Each year an investor holds a property without due attention to the letting and management thereof is another year of letting risk — which means property investors need to learn more than just purchasing strategies, but also about the letting business and its consequences.
This information is provided by The Property Investor Network.

“But this can happen all too easily without a well-written sale agreement,” says Hano Jacobs, CEO of the Realty 1 International Property Group. “In fact we recently came across an instance where a seller tried to remove the wooden cottage-pane windows and doors before the buyer moved in, and claimed that he was entitled to take them because they were not part of the original structure of the house but a later addition.
“Of course this is an extreme example, but the issue of what is a fixture and what is not has always been a thorny one, and carries the potential for serious disputes between buyers and sellers that can easily cause a sale to be cancelled or at the least really sour the buyer’s enthusiasm about his new property.”
In general, he notes, prospective buyers viewing homes for sale will simply assume that anything that appears permanently fixed in place - including mirrors, ceiling fans, eye-level ovens and air conditioners – is included in the sale.
Sellers, on the other hand, may quite genuinely believe they have a right to remove such non-structural items to their new homes, as well as “loose” items such as water features, pot plants, curtains, bar stools, pool cleaners, TV aerials and even swimming pool and borehole pumps.
However, says Jacobs, it is obviously unfair to put a property on show complete with all the trimmings only to remove these after the sale, or to replace quality items with cheap alternatives. “What is more, this could have major implications in terms of the new Consumer Protection Act, which entitles buyers to withdraw from any transaction they believe has been based on false advertising or misrepresentation.”
“Consequently, our advice to sellers is to go through their homes before putting them on show and remove any and all items they do not want to include in the sale. In addition, we advise buyers who are viewing homes for sale to ask whether specific items they really like are included in the sale or not – and to ensure that these are individually written into the sale agreement.
“This way, both parties are far more likely to end up with a deal they feel is transparent and satisfactory.”