Purchasing a sectional title unit has proven to be very popular in South Africa for a number of reasons, says Adrian Goslett, CEO of RE/MAX of Southern Africa.
“Many buyers are choosing to invest into a sectional title scheme because of the level of security and community that this sort of property provides,” he says.
Another aspect that is making this option popular among buyers is that sectional title units are often more affordable than full title cluster homes, but generally offer similar security and lifestyle benefits. Goslett notes that aside from the fact that the prices of sectional title units are generally cheaper than full title homes, there are other aspects that bring down the cost to the homeowner once they have bought a sectional title unit. In most cases, homeowners are only responsible for the maintenance of the interior of their unit, while maintenance costs for the exterior of the property are generally for the body corporate account. Additionally, charges for resources such as water and electricity are shared among the homeowners living in a sectional title complex, which means the costs are normally lower than that of a freestanding property.
“Sectional title units are ideal for first-time buyers or those eager to get their foot onto the first rung of the property ladder. However, it is important for all buyers looking to invest in these schemes to apply the same golden principles they would to buying any property. Firstly, do the necessary research and secondly, buy in the right location,” says Goslett.
According to Goslett, a vital part of the research required when purchasing into a sectional title scheme is to obtain a copy of the body corporate rules and regulations and go through them. “Buyers can obtain a copy of the body corporate rules from the estate agent marketing the property, and should go through the document before signing a sales agreement. These rules govern the owners within the confines of the scheme and deem what the homeowner is allowed to do in the perimeters of that scheme once they purchase the property. The rules will deal with general conduct in and around the complex as well as specific issues such as pet ownership. The regulations of the scheme are an intricate part of the decision making process, as buyers will need to agree with the rules and abide by them in order to avoid complications,” advises Goslett.
When buying into a sectional title scheme, it is also important to ensure that the scheme is in sound financial order. Previously, when buyers applied for finance in sectional title schemes it was granted based on whether they could afford the bond repayments. However, that has changed and the financials of sectional title schemes are now checked by the banks in order to protect buyers when applying for mortgages. Only if the scheme is sound and solvent will the bond be granted.
“Buyers can request to see the financial statements of the body corporate to assess the liquidity of the scheme. The statements should reflect enough money to cover the daily expenses as well as surplus maintenance costs, whether planned or not,” says Goslett. “Checking the minutes of any trustees meetings and AGMs will also give the buyer some insight into the scheme’s financial position and any special levy allocations, as well as any problems or difficulties they may be experiencing.”
According to Goslett, sectional title units will continue to be popular among security conscious buyers in the future and provide a good return on investment if the principles of buying property are adhered to. “This type of property provides a low-maintenance, cost-effective opportunity for buyers wanting to purchase property and take advantage of market conditions,” he concludes.