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13 Apr 2023

Legal Speak Made Easy

“Bare Dominium”

“Bare dominium” is ownership of a property without the right to use it. To put that into perspective, almost all of us have “full ownership” in our properties, so we can both sell them and “use and enjoy” them as we please. But if someone else has a right of usufruct (usually provided for in a will, but sometimes by agreement) over your property they have the usage rights, and you just have the “bare dominium” i.e. ownership and nothing more. The terminology can be complex (you may also come across terms such as usus and habitatio) but the important thing from a practical point of view when buying any property is to check that you will have “full ownership” and not just “bare dominium”.

13 Apr 2023

Buying Property as an Investment – Some Strategies for Success

Few investment portfolios will be complete without an element of property exposure. Of course, how much that exposure should be is a function of your own particular goals and needs, of your investment horizon, of your tolerance for risk, of your current and projected financial status and so on.

The point is that property can be a great wealth-builder, particularly for investors after steady income combined with capital growth, but it does need a structured and informed approach to provide maximum benefit with minimum risk.

We share twelve strategies to help you on your way to a successful property investment.

“The only bad time to buy property is later.” (Steve Bolton)

Buying property – whether to live/work in or on a buy-to-let basis – could be one of the most important investments you make.

Here are some strategies to help you on your way.

Twelve strategies for success

  1. Map out your investment goals: Do you plan to “buy-to-let” to provide steady income? Or as a wealth-builder to hold for long-term capital growth? Or to “flip” (quickly resell, with or without renovation)? Formulate your strategy accordingly.
  2. Do your homework: Before making any big property investment decisions, research the property market, the area where you want to invest, and the type of property you want to buy (see below).
  3. Choose what type of property you want to buy: You have a wide choice here – vacant land (to develop or to hold), residential property (to live in or to let out), commercial/industrial property, agricultural land etc. You might also consider an indirect property investment via for example a REIT (Real Estate Investment Trust).
  4. Location, Location: Look for properties in areas with a high demand for rental properties (even if you are buying a house to live in, the time may come when you decide to rent it out), good infrastructure, and potential for capital growth.
  5. Consider diversification: If you plan to go big on this, you could invest in different types of properties and in different locations to spread your risk.
  6. “Buy Low”: It seems self-evident, but more than a few investors lose sight of the fact that a big part of success when it comes to property investment is “buying low”. Some ways to achieve that –

    a) Negotiate: Don’t be shy to negotiate on price, or to bring in a professional if your negotiating skills aren’t up to it.

    b) Consider a “renovation” property: Properties in need of renovation can be bought at a lower price and renovated to increase their value and rental potential.

    c) Look for bargains: Repossessed properties, properties in insolvent estates, distress auctions, sellers wanting to sell quickly (perhaps for financial or personal reasons) – all could be a source of well-priced property. But tread with care because this type of property can come with more pitfalls than normal.

  7. Take professional advice: For most of us, property should be just one element in a balanced investment portfolio, structured to meet our particular needs and goals, so ensure that you take competent financial advice upfront. Then go to the property professionals in your target area and market. Your first port of call in this regard should be your lawyer who can share valuable insights into the local property market and can in need refer you to other trusted professionals in the area.
  8. Choose wisely when it comes to financing options: Using mortgage finance to purchase property can provide leverage and enable you to invest in more properties than you would be able to with cash.
  9. Manage your cash flow: Ask your lawyer to help you draw up a full budget for your purchase costs so you plan properly both for your cash flow and for profitability.
  10. Manage the risks: If you have a bond, build into your calculations the possibility of interest rate increases in the future – a highly-leveraged property leaves you little room to maneuver if the market turns against you. If you are letting out to tenants, provide for vacancy rates and periods of low demand for rental property. Budget for worst-case scenarios!

  11. Property management might pay for itself: Consider using a property management company to manage your rental properties, as this can take the stress and workload off you and provide a more professional service to your tenants.
  12. Don’t forget the tax implications: This is vital – there are both potential tax benefits and tax pitfalls awaiting the property investor, and taking upfront professional advice to structure your investment for tax efficiency could make all the difference between an acceptable return and an exceptional one.

    Investing in property can be a great option for you if you are looking for long-term growth and a steady income. However, it’s important to do your research, to seek professional advice, and to consider all the available options before making any investment decisions.

13 Apr 2023

CHANGES TO GAS COMPLIANCE CERTIFICATES

Please be aware that as from 1 May 2023 a new prescribed, 5-page gas certificate of compliance (COC), will be required, in order to comply with the legal requirement to furnish a gas COC, should there be any gas installations on the property. The SAQCC Gas NPC has also been officially appointed and mandated by the Department of Employment and Labour to register gas practitioners within the various gas industries in South Africa. As from 1 May 2023, all gas COCs must be in the prescribed form and gas compliance companies may not use any other form. Here is a link to the said form.

As such, and as from 1 May 2023, conveyancers will not be able to accept any other format gas COC, for a transfer anymore.

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