 TIPS FOR BUYERS
A BUYER’S MARKET : The property market operates on an imbalance which at any one time is either skewed in favour of the buyer or the seller. At present there is a very entrenched buyer’s market in place which some property experts and economists believe is at it lowest point and will begin to move gradually towards redressing this sharp existing imbalance in favour of the buyer. Therefore it is a fact that this is the very best time for a prospective buyer to enter the market. A buyer’s market is determined by the following factors : serious and in some cases desperate ,negotiable sellers, a large number of listed properties providing the buyer with an ample choice and sales prices which are often 15 to 20% below the listed prices.
In a buyer’s market the buyer has a significant amount of leverage and if one believes the age old adage of “Making money from property is all about when you get in and when you get out”, the time has never been better to get in. A low entry price into the market means that when the market turns, which it will do as surely as the sun will go down at the end of each day, the property owner will realize a profit quicker on his investment as the property prices start to escalate.
ACQUIRING BOND FINANCE FOR YOUR INTENDED PURCHASE : There has been a lot said recently about bonds and the difficulties of acquiring bond finance….and most of it has been true. A lot of this has had to do the introduction of The National Credit Act [NCA]and a lot to do with the deteriorating economic situation both here and world-wide.
- THE NCA basically enforced the banks to look at every loan application from the perspective of the clients affordability, as opposed to the client’s gross income. This meant that car repayments, other bonds held and being paid for, clothes accounts were taken into account and calculated by the bank to create a client profile against which the bond amount applied for was measured in terms of affordability.
- THE LENDING CRITERIA of the various national banks change regularily in response to varying economic conditions. Vacant Land is viewed as less desirable risk for banks and at present none of the banks will lend more than 75% of the purchase price of an undeveloped property [provided you qualify on your personal affordability rating] meaning that you would be required to come up with a 30% [of the purchase price] deposit. A bond of up to 90% of the purchase price [providing you qualify in terms of affordability] is possible from most of the banks for developed properties up to R1 500 000,00. To calculate what your repayment rates on a specified bond amount would be, visit www.betterbond.co.za and use their provided bond calculator.
- FACTORS WHICH MAY INFLUENCE YOU QUALIFYING FOR A BOND :
- Salaried applicants as opposed to self employed people are considered a lower risk for a bank. A self employed applicant would need bank statements which indicate a stable and established business to be considered
- Poor credit records, even the smallest unpaid account from way back can count against you as this all makes up part of your profile that the banks look at when considering your ‘risk’ level for bond finance
- Your total credit exposure i.e. how much you owe in relation to what you earn
- Non south African Residents cannot qualify for a bond exceeding 50% of the purchase price
OTHER ‘ONE OFF’ COSTS, BESIDES THE PURCHASE PRICE, WHICH A BUYER CAN EXPECT TO PAY :
- Transfer Duties : TRANSFER COSTS AS FROM FEBRUARY 23RD 2011
TRANSFER DUTIES are taxes paid to the South African Government and are applicable in the case of all sales of immoveable property except where the seller is a registerd VAT vendor.
TRANSFER FEES are the costs paid to a conveyancing attorney for his/her efforts at transferring a property into your name.
As from 23rd February 2011, the following transfer duties were made applicable
- PROPERTY SALES UNDER R600 000,00 [SIX HUNDRED THOUSAND RAND] ATTRACT NO TRANSFER COSTS. THIS FIGURE HAS BEEN INCREASED FROM THE AMOUNT OF R500 000,00 [FIVE HUNDRED THOUSAND RAND] PRIOR TO 23RD FEBRUARY 2011.
- A FURTHER CONCESSION IS THAT THIS APPLIES NOT ONLY TO SALES REGISTERED IN THE NAME OF A NATURAL PERSON BUT TO SALES REGISTERD IN C.C’S, TRUSTS,COMPANIES AND OTHER LEGAL ENTITIES.
- FROM R600 001,00 [SIX HUNDRED AND ONE THOUSAND RAND] UP TO A SALE VALUE OF
R1 000 000,00 [ONE MILLION RAND] A TRANSFER COSTS OF 3% IS PAYABLE ON THE VALUE OF THE SALE.
- FROM R1 000 001,00 [ONE MILLION AND ONE RAND ] TO R1 500 000,00 [ONE MILLION AND FIVE HUNDRED THOUSAND RAND], A TRANSFER COST OF 5% IS APPLICABLE ON THE VALUE OF THE SALE.
- FROM R1 500 001,00 [ONE MILLION FIVE HUNDRED THOUSAND AND ONE RAND] UPWARDS, THE TRANSFER COSTS WILL BE R37 000,00 [THIRTY SEVEN THOUSAND RAND] PLUS 8% ON THE VALUE OF THE SALE ABOVE R1 500 001,00 [ONE MILLION FIVE HUNDRED THOUSAND AND ONE RAND]
- Transfer/Conveyance Costs which include fees paid to the conveyancers, Deeds Office Fees,Postage
- Bond Costs not to be confused with your bond repayment costs .These are the costs incurred in the drawing up and registering of a bond
- Rates and Taxes up front for a minimum 3 month period. This will not be extra to the annual rates and taxes for the property purchased but for the transfer process needs to be paid up front
- Electricity/Water deposit paid to the local municipal
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