To buy or not to buy a flat is the big question facing many potential
homeowners.
Neville Schaefer, of Trafalgar Property and Financial Services, says the
main benefit of owning your own home is that the monthly payments
contribute towards ownership of an asset which in turn can be sold, as
opposed to renting, where you are effectively paying off somebody else's
home loan.
Still, deciding to buy is a big step and you should consider several
factors when you're thinking of buying a sectional title property:
* Lifestyle: Make sure the flat or townhouse you are planning to buy will
suit your lifestyle and financial capabilities. Find out the rules of the
body corporate. These rules may place limitations on your lifestyle. For
example, the rules may limit the number of people occupying the unit, you
may not be allowed to alter the facade of your home or you may not be
allowed to keep pets.
* Viewing the property: Schaefer suggests popping in at various times, such
as around 5.30 pm to see your "new" neighbours returning from work as well
as during the day to see if passing traffic will be a nuisance.
* Levies: Don't forget to take account of the levies and the impact they
will have on your monthly budget. The levy is charged over and above your
monthly home loan repayments and covers rates and taxes on the property;
municipal charges, such as sewerage and garbage collection; insurance on
all the buildings in the complex against fire, flood, storm or riot damage;
maintenance of the common property; wages for body corporate staff, such as
gardeners and managers; water and electricity for common areas; security
patrols and contingency funds to be used, for example, for painting.
* Special levies: Find out if there are any special levies due to be
charged for maintenance projects. You can also get a levy clearance
certificate which will guarantee that all levies on the unit you plan to
buy are fully paid up when the property is transferred into your name. If a
special levy is imposed, even if it is the day before the sale is
completed, payment is the seller's and not the buyer's responsibility.
* Resale of the property: Resale value is important, particularly if you
are buying for investment.
Once you are satisfied that the property is right for you, contact the
estate agent and put in an offer to buy. Remember that the agent must
submit all offers to the seller.
The offer may be accepted or refused immediately, but in many cases, the
seller may countersign the offer and a negotiation process follows until
you are both satisfied.
Most offers to purchase are made subject to the sale of another property,
in which case the seller of the property you intend buying will give you a
certain period in which to sell your existing property. You should also
specify that you will buy the new property on condition you get a home
loan. If this clause is omitted you are obliged to buy the property even if
you do not get a loan, and fund it from your own resources.
The agent will help by liaising with banks and attorneys to tie up the
offer to purchase contract. The whole process may take months and often the
sale agreement will include a clause allowing you to live in and rent the
property you are buying at a market-related rental until the sale is
finalised. This is known as occupational rent.