Jacques du Toit of the Absa Group, looks at what factors you should consider when deciding whether to build a new house or buy an existing home.
This is the last of a series of three articles on building versus buying a
house. Previously we looked at the historical trends in new and existing housing
in South Africa, and at an overview of the advantages and disadvantages of
building as opposed to buying a home.
Here the focus will be on what important points you need to keep in mind when
either choosing to build or to buy. These factors, positive and negative, legal
and financial, should be thoroughly investigated and considered before you
decide on what path to take, as it is can be a costly and lengthy process with
possible unforeseen implications.
The financial aspects of acquiring property will impact an individual or
household for many years into the future. Therefore, it is important that you
should consider the possibility of an increase in interest rates and take this
into account if a property will be mortgaged.
A tax clearance certificate from the South African Revenue Service (SARS),
stating that the tax affairs of the prospective owner of a property are in order
with SARS, is one of many documents needed before the property can be registered
at the Deeds Office.
The following aspects also need to be carefully considered and checked:
Building a new house
Make use of a reputable building contractor or developer by obtaining
reliable references and checking up on previous projects (quality of
workmanship, delivery times, etc.). A contractor should ideally be
registered with the National Home Builders Council (NHBRC) and be a member
of the Master Builders Association.
Get a detailed and signed quotation from the building contractor or
developer.
Obtain a signed contract between the new owner and the building
contractor or developer.
Ensure the material is specified in the quotation and contract.
Obtain certainty that the land is zoned for residential development.
Apprise yourself of any servitudes and restrictions that may be
stipulated in the title deed.
Confirm the physical location, address and stand number as stipulated in
the title deed.
Check the size of the stand as stipulated in the title deed.
Determine the exact borders of the stand, making sure perimeter walls of
the properties bordering the stand are in the correct position.
Check availability of municipal services (water, sewage, electricity and
refuse removal).
Obtain a full set of building plans, officially approved by the local
government.
Ensure you have knowledge of all building restrictions and regulations
as stipulated by the local government.
Examine the slope and ground formation of the stand, which may require
levelling and excavation operations, special draining systems, retaining
walls, concrete reinforcement, special construction methods and the
involvement of an engineer. These could have significant cost implications.
Check the views onto and from the site.
Buying an existing house
Check the physical state of the property and get expert opinion if there
are any uncertainties.
Determine stand size and building area of all structures.
Examine the possibility of extensions to the house and outbuildings, or
the building of a pool, lapa or carport. Take into account existing
structures plus the availability of space on the stand and be sure you will
not be transgressing building restrictions or regulations.
Apprise yourself of the possibility of adding value to and possible
over-capitalisation of the property when doing renovations and extensions.
Take into account the position of the house on the stand with regard to
wind directions.
Note the direction and extent of the run-off rainwater in the event of
heavy downpours.
Check the extent to which structures such as walls and foundations are
or may be impacted by root systems of large shrubs or trees in the garden.
Confirm that building restrictions and regulations have not been
violated by obtaining a full set of approved building plans for all
structures on the stand.
Ensure that all municipal accounts for property tax, electricity, water,
sewage and refuse removal have been fully paid by the owner. A clearance
certificate, stating that all accounts have been fully settled and valid for
a period of 120 days, must be issued by the municipality.
Check the existence of any business rights on the property or other
properties in the area and the possibility of such rights being granted in
the future.
Take note of other properties in the area already being used for
business purposes, which may impact traffic volumes, noise pollution and
security.
Find out if there are any future plans that local government may have to
widen streets, open up cul-de-sacs or rezone vacant land in the vicinity for
high-density residential developments or commercial use. This may affect
traffic volumes, noise pollution and security.
Determine the extent of traffic congestion and noise pollution in the
area by visiting the property at different times during the week.
Take note of trends in property values in the area.