From March 1, homebuyers will no longer have to pay transfer duties on properties of less than R500 000 — that is, the tax paid to the government on these purchases. Though the saving will make buying a home a lot more affordable, there are still additional upfront costs you need to budget for.
Ben Stander, Old Mutual Bank product manager, suggests breaking the process of buying a house into four phases to help you budget properly and to guide you in your choice of a home. They are:
outlining your requirements and how much you can afford;
finding the right house;
doing the deal; and
understanding the legal process
.
One of the first choices you will have to make is what type of residential property you want. Stander says there are two basic types to consider: freehold or sectional title.
A freehold property, which includes cluster homes, is normally registered in your name and you can manage the property as you like, within the limits of the municipal bylaws. This gives you freedom to renovate, upgrade or otherwise enhance the value of your home.
A sectional title is usually a flat or a townhouse where you share common facilities. These are paid for by a monthly levy. The unit owners elect trustees to a body corporate, which handles administration, maintenance and other communal issues. A good body corporate is a distinct advantage, but poor management may affect your investment.
Sectional title is more restrictive than a freehold property, but this can be offset by benefits such as security, facilities and reduced maintenance costs.
‘When evaluating an area, consider how convenient it is to shopping centres, work, recreational facilities and schools. Find out what the traffic conditions are like during the rush hour, rather than on a quiet Sunday afternoon,” says Stander.
Look around the area. Is it clean and well maintained, are the roads in good repair, are there lots of houses for sale, are the residents barricaded behind razor wire?
The community newspaper should give you some indication of local issues and whether there are crime or security concerns. Speak to people who live in or near the area. Ask whether there are any new developments planned or if there is a problem with wind, noise or pollution.
After you’ve identified suitable areas, you can start looking at houses. Consider the age of the building, whether there is damp in the walls or any serious cracks. Make sure that woodwork is sound and don’t forget to check wooden floors for rot. Ensure the ceilings aren’t damp, cracked or sagging, and look at carpets, tiling and other floor coverings to ensure none need replacing. Check that taps work and drains aren’t clogged. Open and close doors and windows to make sure they don’t jam or present a security risk. Also check that electric gates and garage doors are working. Look around outside to evaluate the external security and check the roof and gutters.
Something that could save you a great deal of money in the future is to pay a house inspector such as Home Inspectors SA, who charge between R1 500 to R3 000, to do a 400-point check on your potential home.
Also, remember that once you have bought your house you may have to hire a removal company to assist you with your move. Phone around for quotes so that you can budget accordingly. On moving in, you may find items that need to be dealt with immediately. For example, your curtains may not fit your new home — it could save you money to offer to purchase the existing curtains with the house. Then you may want to repaint some of the rooms. Calculate how many litres of paint you may need to buy. Having carpets cleaned before you move in is also a good idea — again, phone around for quotes and build this into your budget.