Nussey says costs associated with the purchase and development of vacant land include land survey costs, maintaining the land to an acceptable standard and obtaining a building permit, above and beyond regular rates and municipal charges.

PROSPECTIVE buyers of vacant land for commercial or industrial property development often underestimate the true time and capital requirements involved.This is according to Lloyd Nussey from Baker Street Properties, who identifies three main aspects for prospective buyers to consider.

This is according to Lloyd Nussey from Baker Street Properties, who identifies three main aspects for prospective buyers to consider:

1. Cash is King

To be eligible to buy vacant land, major banks and financial institutions typically require that the entire property be paid cash, and if not, a significant portion thereof.

The reality is that banks are generally quite reluctant to grant 100% bonds on vacant land, and furthermore considering the cash flow dynamic involved, Nussey says the prospective investor needs to be reasonably “financially sound” before considering buying land for further development.

2. The time and costs involved

The process of buying vacant land takes some careful cash flow planning. Depending on your intended plans for the development of the vacant land, banks typically offer finance systemically as a particular building project progresses.

Nussey says costs associated with the purchase and development of vacant land include land survey costs, maintaining the land to an acceptable standard and obtaining a building permit, above and beyond regular rates and municipal charges.

Furthermore, he says if your building plans do not comply with zoning restrictions or you want to apply to have the land rezoned from, say residential to commercial, there are further costs and valuable time involved in getting approval from local council – time which costs money and needs to be budgeted for.
There are exceptions, such as the prime vacant land currently for sale in Falcon Crescent, Airport Industria, which offers prospective investors great flexibility with the option to us the area for a warehouse, distribution centre, offices or yard space at R2 100 per square meter.

3. Location, location, location

The well-known importance of location applies more to vacant land than any other type of property, says Nussey.

Before investigating any vacant land for sale, it is important to clearly stipulate your business objectives and goals you want to achieve with the vacant land.

A logistics operation typically requires secure, central access to main arterial routes, whereas a retail operation needs to be closer to its customers with ample parking.

“For example, vacant land for sale in Airport Industria offers central access to the N2, N1, R300 and Borcherds Quarry Drive, making it ideal for an established logistics company.”

Furthermore, it is important to know what is going on in and around the area as new or adjacent developments may influence resale value of the property and business, he says.-Property24.com

Old Mutual’s Eastgate Complex in Harare.

Cyril Zenda

THIS week, the Institute of Architects of Zimbabwe (IAZ) holds its annual conference, an event that gives the body a platform to highlight the importance of the profession, and also to honour some of the practitioners who have contributed immensely to development of the sector.
Last week IAZ president, Arthur Matondo, told the Financial Gazette that the event would give members of the profession a chance to interact and share ideas as well as with other professionals and members of the public.
“The conference seeks to promote public awareness on the role architects play in the development of the country,” Matondo said.
“Just like with doctors or lawyers, this is a guarded profession. A person cannot wake up and start practicing. For one to be an architect, they have to be trained and registered.”
Delegates to the conference will be drawn from various professions that include architects, engineers, quantity surveyors, the government, local authorities as well as from tertiary institutions.
At last year’s event, the institute honoured Michael (Mick) Pearce and the late Vernon Mwamuka; the duo were among the finest architects, not just in Zimbabwe, but globally.
Pearce, born on June 2, 1938, has undertaken projects in Zimbabwe, Zambia, South Africa, the United Kingdom, Australia, Belgium, Qatar and China among other countries.
His signature project in Zimbabwe is Old Mutual’s Eastgate Complex in Harare, a biomimicry project that has become a Mecca for students of architecture from the world over who are fascinated by this seminal project that was inspired by a termite mould.
The uniqueness of Eastgate is that — just like a termite mould — it is ventilated, cooled and heated almost entirely through natural means.
In his colourful career spanning over five decades, Pearce has worked in many countries, which saw him designing Melbourne’s Council House Two (CH2) complex in Australia.
Also in Australia, he designed the Vortex Centre at the Gippsland Water Factory. In Qatar, he designed and constructed the Doha Eye while in Belgium he designed the Centre for the Environment at Zolda.
For several years he was based in China where he designed and constructed a number of projects.
Locally, he designed the theatre at the Harare International School, Chinhoyi Hospital complex, the Hindu Temple in Harare among others.
And Vernon Benele Mwamuka, Zimbabwe’s first black architect, still stands out as one of the foremost and most prominent architects the country has ever had 15 years after his death.
He is credited with almost single-handedly transforming the country’s urban skyline with his unique designs.
Included in Mwamuka’s architectural work portfolio, is the imposing Joina City in Harare’s Central Business District, ZB Life Towers (first known as Southampton Life Centre, then Intermarket Life Centre), Construction House, Kopje Plaza, Old Mutual Centre as well as the Four Ways Mall in Johannesburg, South Africa.
Other most significant projects that brought him praise and respect include Africa University in Mutare, the National University of Science and Technology (NUST) campus in Bulawayo, the Harare Domestic Airport, Bulawayo International Airport, the School of Hotel and Catering in Bulawayo and a chain of post offices strewn across the country.
Although most of his projects were completed posthumously, all these completed commissions attest to Mwamuka’s creative identity. His peers agree that his works have left a very unique aesthetic impact on the immediate environment of the structures, revitalising the surrounding urban expanse as in the case of the Kopje Plaza (west of Harare’s skyline).
The Kopje Plaza changed the sky of the Kopje area where a number of neglected buildings had become an eyesore and a sign of urban decay.
Not only did the Kopje Plaza succeed as a retail and office centre, but it also helped to propel the Kopje area into its phenomenal redevelopment boom.
This, in the years when there was a lot of construction activity, at least helped to reverse urban decay.
Mwamuka’s distinctly identifiable commissions have become a source of pride, which gives Zimbabweans a huge cause for celebrating one of the country’s philosophical and architectural icons.
The buildings he designed stand today as a tribute to the renowned architect’s attention to buildings that also capture his passion to blend the intimate relationship of topography and materials in site planning.
He is also credited for building elegant residential homes and small-scale works for top Zimbabwean business executives such as Pindi Nyandoro, Charity Murandu, Albert Nhau, Shingai Mutasa and Kennedy Mandevhani, among others.
He also designed his beautiful house in the leafy Borrowdale suburb but unfortunately died before he could move in.
Mwamuka’s blossoming career was cut short when at 46 years old, he perished in a road traffic accident on December 30, 2001 on his return to Harare from the ground-breaking ceremony of the re-building of the Bulawayo International Airport — now renamed the Joshua Mqabuko Nkomo International Airport.
Mwamuka was one of the driving forces behind the call to establish a school of architecture in Zimbabwe. (A dream which has since been realised with the establishment of the school at NUST).
newsdesk@fingaz.co.zw

The construction industry remained subdued throughout the year as liquidity constraints continue to affect construction projects.

RADAR Holdings says in light of the depressed construction sector, the company will pursue market growth through private developers who currently are the main drivers in the sector.

The group’s turnover for the year ended 30 June 2015 was 17 percent down on prior year at US$6,86 million from US$8,23 million due to an 11 percent decline in sales at Macdonald Bricks. The division’s revenue was at US$6,7 million, a 17 percent decline from US$8,1 million in 2014.

“The construction industry remained subdued throughout the year as liquidity constraints continue to affect construction projects,” Chairman Zondi Kumwenda said in a statement accompanying the group’s financials.

He said sales volumes continued to be dominated by individual developers as well as the retail sector which contributed 73 percent of sales volumes for the period.

According to Kumwenda, average selling prices realised also softened resulting in lower margins.

Impairments totalling US$179 302 were recognised for an available for sale investment and receivables. As result operating profit declined to US$124 302 compared to US$1,34 million achieved same period prior year.

In terms of the property unit, Radar properties, occupancy was near flat with rental income increasing marginally driven by residential properties while commercial property occupancy was flat.

“Voids and rental defaults continue to be high in the period”, he said

Zondi said the group will continue to pursue the land development strategy to take advantage of the company’s existing urban land while further progress has been made in securing approvals for the property development project.

The group’s net finance costs marginally declined to US$971 324 from US$1 million on the back of a nine percent reduction in borrowings and consequently, the group made a loss of US$288 071 for the year.

Zondi said the group will continue to generate positive operating cash with net cash from operations increasing to US$1,84 million while net cash also increased by US$334 957. FinX

South African buyers are astute and they can see past the contents of a property to understand its potential

WHEN you are selling your home, correctly pricing it is of the utmost importance. Equally significant, however, is to present the property in such a way that prospective buyers would want to live in it. This includes creating a lasting favourable first impression.
This is according to Charles Vining, Seeff’s MD in Sandton, who says although staging is not yet a major trend in South Africa, people are increasingly aware of the value of a presentable home. As a result of this, he says more sellers are interested in and enquiring about professional home staging services.

Vining says home staging in Sandton is most prevalent when developers or speculative builders are looking to sell property at a premium price, or are looking to sell a specific “lifestyle”.

“They realise the importance of presenting the property in an enticing manner. We listed an exclusive cluster some time ago, for example, where the seller had invested in top class furnishings and décor in order to achieve a great price,” says Vining.

“The home was irresistible with its exclusive furnishings and décor, but it must be noted that staging a home and decorating and furnishing it entirely in order to sell will in most cases be a significant cash commitment.”

Vining continues that although staged homes certainly have their benefits, many ‘lived-in’ properties also have fantastic appeal because buyers can imagine themselves living a similar lifestyle in the home.

“South African buyers are astute and they can see past the contents of a property to understand its potential,” he says.

“A property that is well priced in a good area, and has potential to be improved or give a good return on investment will be sold even if it doesn’t have the best curb appeal or interior finishing.

That being said, however, when two similar properties that are similarly priced are on the market at the same time, and one is better presented than the other, there is no doubt that it would sell before the ‘messy’ property.

Vining says it is the responsibility of the seller to absorb the costs of home staging as the seller is the person who will reap the benefits of the staging when achieving a better price when the home is sold.

“The necessity of home staging is relative to the type of property and the expected pricing by the seller,” he says.
“We do, however, always appeal to all our sellers to declutter, tidy up and make an effort to improve the property’s aesthetics before selling, and especially before a show day.” -Property24.com

The government has already indicated that it plans to build a new Harare city in the Mount Hampden area, where a city planned on modern ideas would take shape while the current city remains.

Cyril Zenda
TOWN planning experts last week grappled with the subject of regeneration of decaying cities, with debate on whether it was prudent to create new urban centres or upgrade existing ones.
The town planners, who gathered in Harare for the Institute of Architects of Zimbabwe (IAZ) conference, were drawn from various professions involving urban development and included architects, engineers, town planners, quantity surveyors, local authorities, government officials and representatives of tertiary institutions
The conference ran under the theme, “Regeneration of the Inner City”.
Sasha Jogi, a renowned town planner, made it clear that he was for the idea of setting up new towns and cities instead of trying to make the old urban centres vibrant and attractive.
While some participants said that it was still possible to make the cities like Harare friendly again, others like Jogi were adamant that there was no point of investing limited resources on urban renewal projects that would, in the long run, see the same problems of congestion coming back.
They argued that Zimbabwe was unlike other countries that resorted to costly urban renewal programmes and the maximum utilisation of the vertical space because they had serious shortage of land for new urban developments.
Michael Pearce, one of Zimbabwe’s leading architects, insisted that from his experience in the work he has done in Melbourne, Australia, dying cities could be brought back to life.
He said dilapidated buildings could be revamped at minimal cost while roads and other infrastructure could also be upgraded, making it possible for the old cities to adequately serve current and future needs of citizens.
The government has already indicated that it plans to build a new Harare city in the Mount Hampden area, where a city planned on modern ideas would take shape while the current city remains.
The phenomenon of “old cities” is not new as several countries that found themselves unable to revitalise some of their urban centres left them intact to start new ones on fresh land.
Keynote speaker at the event, Wesley Mulungushi, the president of the Zambia Institute of Architects, suggested in his presentation titled, “Positive Resolve in a Negative Environment” that instead of waiting for projects to come their way, local architects should think innovatively and identify areas that needed facelift.
They should design the facelifts, seek funding partners and present to local authorities comprehensive proposals.
This, Mulungushi said, was one way of ensuring that architects always had some work to do.
“You should be team leaders, instead of just waiting for someone to walk into your office with a project; you should come up with brilliant proposals that you present to local authorities,” he told local counterparts.
However, architects who spoke to Property News said while Mulungushi’s suggestion was sound, it was not feasible because of the current state of the Architects Act, which strictly prohibits practitioners — just like lawyers, doctors and other regulated professions — from canvassing for business in any way.
“The ideas are always there, but the (Architects) Act does not allow us to approach clients. It only allows us to wait for clients to come to us, anything outside that is canvassing,” said one senior architect with a Harare practice.
“The Institute and the (Zimbabwe) Council (of Architects) would have to approach the Ministry (of National Housing and Public Works) for a possible review of the law to bring it in line with modern trends, but from our experience, it would take many years before the amendments become law.”
There are about 30 architectural practices in Zimbabwe, most of which are thin on work due to economic hardships the country is facing.
Even though most of them could have brilliant ideas, they cannot sell them to prospective clients as this would be in breach of their strict code of conduct.
Until the law is changed, the architects would have to wait for local authorities to approach them.
Harare City chief architect, Leornard Chirombo and the city’s director of works, Phillip Pfukwa, said the capital city was ready to partner architects as it embarks on a number of projects that were set to transform some of the capital city’s oldest suburbs like Mbare.
The IAZ, which has managed to convince local authorities, starting with Harare, to insist that only qualified and registered architects should design specified projects such as public buildings and commercial properties, passed a resolution that the institute should jealously guard the profession.
newsdesk@fingaz.co.zw

CABS is finalising preparations to re-launch the US$10 million Kurera/Ukondla Youth Fund

THE Central Africa Building Society (CABS) says uptake of the Budiriro housing project has remained low with only 20 percent of the houses sold to date.

In an interview, CABS managing director, Simon Hammond however said uptake is slowly improving after the firm relaxed most of the conditions of sale for the project and opened it up to the diaspora market.

“To date we have sold over 500 houses from the 2800 that have been constructed which comes to about 20 percent of the total project. The uptake of the project although still low is slowly improving after we opened it up to multiple home owners and those not on the waiting list. CABS continues to implement strategies aimed at improving the uptake of the houses, “he said.

Hammond said CABS is finalising preparations to re-launch the US$10 million Kurera/Ukondla Youth Fund in the coming months with a lot more emphasis on cautious lending. Hammond said CABS is currently looking at various models that could be used in dispersing the remaining US$5 million.

According to statistics, 22 000 applications were received, with only 3608 applications being approved. Total amount approved was at US$5,187 003, with US$4,898 773 million having being disbursed. The average loan size was at US$1 438.

The statistics also show that 34 percent of the approved applications went to women, 65 percent went to men while one percent went to hermaphrodites. The agricultural sector received the highest number of approvals with 53 percent (US$2,931808), followed by Distribution 22 percent (US$984 650) and Manufacturing 16 percent (US$764 750).

Manicaland received the highest number of approvals at 15 percent amounting to US$827 933, tied with Mashonaland East which received US$807 350, followed by Mashonaland Central 13 percent (US$676 285) and Harare 12 percent (US$739 000).

The court agreed with the arbitrator’s ruling that none of the agents had suffered any patrimonial damages.

FIVE estate agents who wanted commission from the sale of a warehouse in Harare that they had failed to get a buyer for, lost the fight after the High Court ruled that they did not have an exclusive mandate to sell the property and therefore cannot claim to have suffered any financial loss.
High Court judge Justice November Mtshiya ruled that Robert Root, Gabriel Real Estate, Kennan Properties and Knight Frank had no right to demand that another estate agent, Chappel Property Sales, hand over the US$300 000 it pocketed in agency fees for facilitating the sale of a US$10 million warehouse in Harare, since the four firms, together with another one that was not named in court papers, did not have exclusive mandate to facilitate the sale of the warehouse.
After the dispute was taken to an arbitrator, former High Court judge, George Smith, who had ruled that the deal did not violate any sections of the Estate Agents Professional Conduct Rules, four of the estate agents took the matter to the High Court.
The court agreed with the arbitrator’s ruling that none of the agents had suffered any patrimonial damages because the mandate to get a buyer for the property was open to other players in the industry.
“Given the open mandate, the property could have been sold by any one of the estate agents so mandated.
“There would be no question of commission being shared and hence the arbitrator’s finding that ‘if one of the estate agents with a mandate had sold the property, all the others would have lost the chance to sell it.’ Having ruled out the violation of the rules on the basis of factual findings, I do not see how this court can fault the arbitrator’s award to the point of setting it aside,” Matshiya ruled.
newsdesk@fingaz.co.zw

The Prescription Act could not be used to give the new owners of Bulgargeomin EAD the right to the properties

Cyril Zenda
THE High Court of Zimbabwe has ruled that a Bulgarian mining firm, which acquired its government’s business rights in Zimbabwe, cannot invoke the Prescription Act to demand and take ownership of two Harare properties belonging to Bulgaria’s government.
Bulgargeomin EAD had approached the High Court of Zimbabwe demanding that the government of Bulgaria hands over ownership of two immovable properties in Highlands and Avondale suburbs of Harare.
The privately-owned firm, which took over the business interests of a Bulgarian state-owned mining and geological firm, including the name Bulgargeomin EAD, was arguing that under the Prescription Act, it was entitled to take over ownership of the two up-market properties.
The company based its court application on Section 4 (d) of Zimbabwe’s Prescription Act, which reads as follows: “…. a person shall by prescription become the owner of a thing which he has possessed openly and as if he were the owner thereof for — (a) an uninterrupted period of 30 years; or (b) a period which, together with any periods for which such thing was so possessed by his predecessors in title, constitutes an uninterrupted period of 30 years.”
The properties in dispute were bought by the government of Bulgaria in 1981 for use by its then parastatal, Bulgargeomin EAD, since the laws of Zimbabwe then did not allow foreigners — be they private individuals or businesses — to purchase immovable properties.
However, after the Bulgarian government sold Bulgargeomin EAD to private Bulgarian investors in 2013, the buyers argued that since they had acquired all the firm’s rights in Zimbabwe, these rights also included the 33 years the former Bulgarian parastatal was in physical possession and control of the two Harare properties, hence the decision to invoke the Prescription Act in seeking ownership of the immovable assets.
However, High Court judge, justice Priscilla Chigumba, ruled that aside from the fact that the Bulgarian government was covered by diplomatic immunity, the Prescription Act could not be used to give the new owners of Bulgargeomin EAD the right to the properties since the properties had always been under the control and management of officials who were acting on behalf of the government of Bulgaria.
“While it is correct that applicant did indeed acquire full juristic possession of the properties when Bulgargeomin EAD purported to cede its rights of possession to it, it is my view that neither the applicant nor its predecessor possessed the properties “without recognising the title of the owner”. The papers filed of record were replete with admissions that the properties had always been registered in the name of the Republic of Bulgaria.
“We have accepted that all State acts are performed on its behalf by the government of the day.
“The applicant fails to prove that its possession was adverse to the rights of the State of Bulgaria, even though its possession was open. In the absence of proof that possession was in dispute of the title of the owner, the essential elements of adverse possession are simply not established.”
Justice Chigumba added in her September 17 ruling: “…the properties were used for the needs of the embassy and managed by representatives of state Bulgarian foreign trade enterprise (Bulgargeomin).
“During the period when applicant or its predecessors had a representative in Harare, the properties were at its disposal; since the properties were acquired by the Bulgarian state, they did not pay local taxes and fees pursuant to the Vienna Convention. By no stretch of the imagination can it be said that the applicant or its predecessor’s possession of the properties, which is common cause, was adverse possession in the sense of being possession, which does not recognize the title of the owner, the Republic of Bulgaria.
“The applicant has failed to discharge the onus on it to prove all the requirements of acquisitive prescription, on the papers filed of record.”
newsdesk@fingaz.co.zw

“One person’s vision of the ideal home may not be the same as the others’. Everyone has their own unique idea of their dream home, which often makes finding the perfect home for both individuals a difficult task,” says Goslett.

BUYING a property with a spouse or partner can be an exciting time, however, choosing a home that meets both parties’ needs is not always easy.

“One person’s vision of the ideal home may not be the same as the others’. Everyone has their own unique idea of their dream home, which often makes finding the perfect home for both individuals a difficult task,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

He says while difficult, it is not impossible, provided that both parties are willing to work through it together to find a home that makes everyone happy.

Goslett provides 9 tips that can make the process a little bit easier:

1. Write a list

Putting pen to paper is an ideal way to organise one’s thoughts and have a clear vision of what each person wants.

Goslett says both partners need to sit down and make a list of the top ten features they would like in their next home. They might be surprised to learn that their wants are not as different as they seem at first.

2. Determining wants from needs

Once each person has made their list, they should categorise each of the items into wants and needs.

Goslett says that a want is something that the buyer would like, but could live without if necessary, while a need is something that they cannot live without. An example of a want is a view from the home, while a need could be office space or an extra bedroom for a growing family.

3. Put the items in order of priority
Arrange the features on the lists in order from the most important to the least important.

4. Discuss the lists

Communication is a key element for a successful relationship between two people, says Goslett.

This means that sitting down and discussing the motivation behind each of the items on the lists, which will give the other person some insight into why those aspects are important.

5. Be open to making compromises

Although both parties may not agree on certain items, it does not mean that homes with these features should be completely discarded from the search.

Goslett says buyers may be more inclined to change their mind about a feature once they have seen it in person and have heard the other person’s motivation behind why that element is important to them. Keep an open mind and be prepared to make some compromises.

6. Real estate professionals can be a sounding board

A real estate agent can provide an objective point of view that can help both parties find neutral ground.

Goslett points says an experienced real estate professional will be able to give unbiased advice regarding which features will be able to fit into their budget and which won’t work.

7. Run the numbers

Calculate the cost of adding the features to the home at a later stage. Just because the home does not currently have all the features, it does not mean that it cannot be changed.

Part of the compromise might be waiting a while before the home is upgraded, but not necessarily completely letting go of those wants.

8. Take a break

Searching for a home can be an emotional experience, so if discussions become too heated, take a time out from the search and focus on something else for a while. Sometimes stepping away from a situation can give a new perspective and renewed energy to deal with it.

9. Keep an eye on the big picture

Buying a home together is about embarking on a new adventure. It should be more about moving forward together than pulling in opposite directions. Compromising is worthwhile if it means that the relationship is strengthened.

“Buying a property with someone may mean letting go of the dream home vision to find the right home that fits both partners,” says Goslett. -Property24.com

Chetty says some homeowners enjoy holding on to their ability to live in their current home until they find a better alternative. Others don’t want to make a financial commitment to a new home until their current home is sold or under contract.

SOME homeowners enjoy holding on to their ability to live in their current home until they find a better alternative. Others don’t want to make a financial commitment to a new home until their current home is sold or under contract.

This is according to Elaine Chetty, licensee of Seeff Richards Bay, who says factors like whether a homeowner is moving locally versus to another province or country, whether or not he or she has children in a particular school, and the homeowner’s deposit play a crucial role in this decision.

Are you not sure whether you should buy another home before you sell your current one, or sell your current home first?

Chetty shares the advantages of both options so you can make the choice that is right for you:

Advantages of selling your home first

Deposit

The most obvious advantage to selling your current home first is that you’ll cash out the equity in your current property. You can then use this money as the deposit on your next home. This is one of the most common reasons for selling first, says Chetty.

No contingency (subject to offer)

Many agents will write offers with a ‘subject to home sale’ clause, meaning the offer is contingent upon the buyer selling their current home within an allotted timeframe in order to free up the deposit.

Chetty says if you can avoid writing this contingency by selling first, you’ll make a stronger offer, which could be a trump card in a competitive market.

In other words, selling first might help you to land your dream home before someone else has a chance to snatch it up.

Predictable home loan payments

By selling first you remove the possibility of needing to make two home loan payments simultaneously.

In fact, if you’re able to live with friends or family during the short-term gap between selling and buying, you may be able to pocket a few months’ worth of home loan payments too. This can help you to build up cash reserves to cover various moving and other expenses, she says.

Greater focus

If the idea of selling and buying simultaneously is overwhelming, you may find peace of mind in focusing on one step at a time.

Chetty says by selling first, you can concentrate on improving and staging your property to make it show-ready, and stay in your home while you patiently wait for the best offer.

Advantages of buying a new home before selling your old home

You only move once

If you sell your home first, you’ll need to move twice: first to temporary accommodation and later into your new home. This doubles the hassle and results in the process dragging out longer.

In contrast, buying first ensures that you’ll only need to move your belongings once, and you won’t need to bother finding a storage unit or a month-to-month rental, she says.

Shopping time

If you buy first, you give yourself ample time to shop around for a home you love. You won’t feel pressured to close on another home quickly just because your short-term lease is about to expire, you’re tired of staying on your sister’s couch, or the school year is about to start.

Chetty says if you’re in a competitive housing market in which you might need to make offers on multiple properties, enjoying the luxury of time can be particularly valuable.

As can be seen, both options hold distinct advantages and disadvantages. The bottom line is that there is no ‘best’ answer to this question, each option includes trade-offs and your personal circumstances and preferences will be the deciding factors, she says.

McKinon says she suggests weighing up the financial implications of buying your own property versus the long-term impact of renting when determining which one would work better for you.

THE rising interest rate environment is making it increasingly difficult for South Africans to afford buying a home. However, renting in the long term also has a financial impact.

This is according to Careen McKinon, Provincial Sales Manager for ooba, who says she suggests weighing up the financial implications of buying your own property versus the long-term impact of renting.

McKinon says to consider the following when comparing renting to buying:

1. Consider your long-term goals

Consider whether you see yourself renting or owning your own home within the next five to 10 years. This will help you in putting a plan in place to be able to afford the type of home that you want to live in, should you want to buy.

Remember that buying a home may offer you more security in the longer term, as you do not have to answer to a landlords, leasing agents, or similar third parties.

“If you are renting and the owner of the home decides to sell, you may be forced to move, which may negatively impact your stability. Living in your own home gives you more freedom than having to answer to third parties,” says McKinon.

2. Does buying offer you a return on investment?

Property is likely to accrue value over time so, if you buy, you’re in a better position to make a return on this investment.

“As an owner, the increasing value of your property affects you positively whereas, if you are renting, you are essentially helping someone else pay off their bond,” says McKinon.

If you rent out your property, you can invest the rental in your bond, but you won’t be able to sublet a property that you are renting from someone else, as most rental agreements prohibit this.

3. Your own home gives you freedom of choice

“Often, when you are renting, the owner needs to give you written consent to change anything within the property, such as putting in hooks for pictures or replacing an old rail. The fact that the owner has the final say may feel very limiting to a renter,” says McKinon.

By owning your own home, you can decide to make additional income either by building onto the existing property, or renting out a granny flat or something similar.

Also, if you are a business owner, you may be able to use your home as a start-up office. You’ll be able to save on business property rental by factoring this into your business plan.

4. No more rental increases

Standard rental agreements allow for annual increases of between 5% and 10% per year, which could leave you out of pocket and potentially looking for a new home as time goes by, says McKinon.

When it comes to owning your own property, you won’t be liable for annual rent increases, and you may be able to fix your interest rate during a rising interest rate environment. This will help with keeping costs down.

“In addition, owning a home offers you financial security and benefits your credit risk profile. This is especially important when it comes to acquiring finance for things such as a motor vehicle or even a second property,” says McKinon. Property24.com

IN last week’s edition, the Financial Gazette reported that incidences of violence were on the increase in some parts of the country.
The paper made reference to reports compiled by non-governmental organisations (NGOs) namely the Zimbabwe Peace Project (ZPP) and Heal Zimbabwe Trust, which have established themselves as campaigners of human rights.
The reports came just weeks after this paper ran a story to the effect that the country had slipped into a premature election mode following the mushrooming of a multiplicity of opposition parties some of which are already on the campaign trail.
In other countries, elections offer a perfect opportunity for political parties to market their policies to the electorate so that they would get elected into office.
It is not just in the developed world where citizens have seen the light. Even in some African countries, democracy has been on display as parties are now engaging in robust competition for ideas as opposed to brawn.
Nigeria had its elections in March this year where incumbent Goodluck Jonathan gracefully accepted defeat in an election that was devoid of violence.
Tanzania will also be going to polls this month and the atmosphere has been quiet.
In Zimbabwe, this has never been the case.
An election here is more like a declaration of war, whereby lives and limbs are lost. People also get displaced from their homes, especially in rural areas, while others lose their property and livestock for thinking differently, politically.
With the elections three years away, it is frightening that violence has broken out this early in certain parts of Zimbabwe.
ZPP says it has recorded a total of 336 cases of political violence in August alone. This might as well be a tip of the iceberg considering that most NGOs are not adequately funded to enable them to collect data from every inch of the country. One shudders to think what the situation would be like closer to the polls.
These cases are an indictment of the leadership’s failure to protect its citizens as is required under the supreme law of the land.
It is regrettable that talk about dealing with the scourge of violence has been nothing but hot air.
Government has been running a Ministry of National Healing and Reconciliation for over a decade but its existence has counted for nothing. Created by the new Constitution, the Zimbabwe Human Rights Commission has been another huge disappointment.
That the perpetrators of violence from one particular party have been allowed to go scot free has perpetuated a culture of impunity.
With violence becoming ingrained in our society, the resultant polarisation, hatred and divisions are making it difficult for the country to function cohesively. As a result, the country’s economy is in ruins and society has been afflicted by all kinds of vices.
A country endowed with vast mineral wealth, good soils, satisfactory climatic conditions and an educated populace like Zimbabwe deserves better than this.
Government cannot afford to be a bystander. It must act fast before the situation spirals out of control.
Those with ears let them hear.

Harare’s drainage nightmare

Cyril Zenda

THE City of Harare admits that the capital city is thoroughly decayed and that urgent measures are needed if the “Sunshine City” it is to achieve its goal of becoming a world-class city by 2025.
The city’s officials revealed this when town planners gathered for the annual conference of the Institute of Architects of Zimbabwe held in Harare recently.
Acting Harare City Town Clerk, Josephine Ncube, said efforts were currently underway to revive most parts of the city, including the Central Business District (CBD), that are now in a dilapidated state.
“Our city needs regeneration and we will look up to you architects as well as engineers and town planners to see that this comes to fruition. The city’s vision is to attain world-class city status by 2025. The city is taking the initiative to be responsive and assisting in improving ways of doing business,” she said.
“Council has partnered with various organisations in slum-upgrading projects in Dzivaresekwa and Mbare, as a solution for a slum free city.”
Ncube added: “The city has also come up with new complexes and projects such as the Shawasha Business Complex in Mbare, Harare Bazaar Shopping Mall along Simon Mazorodze in Mbare, Mbudzi People’s Market at Mbudzi (roundabout on the road leading to Masvingo), Mupedzanhamo Market Phase 2 (Mbare Musika redevelopment), the Biogas Recycling Project at fresh produce market (two-in-one: clean-up and energy production), solar street-lighting project. These initiatives are meant to empower our citizens and create employment.”
Town planning experts agree that as the capital city, Harare’s problems are a result of the rapid inward movement of people since independence in 1980, which has resulted in a huge population growth that has not been matched by the city’s development programmes.
A presentation by the city’s experts, Phillip Pfukwa, the director of works and land management and development manager, Booker Masasi, painted a gloomy picture of the city.
The presentation showed that Mbare — Harare’s oldest suburb — and the CBD were the worst affected areas by the problem of urban decay.
They said Mbare faced the problem of dilapidated housing units, collapsing water and sewerage infrastructure, while the CBD faced the problems of serious traffic congestion, dilapidated buildings, garbage collection, dysfunctional street lighting systems as well as a blocked rain-water drainage systems, among others.
All these are signs of serious neglect.
The central government has plans to build a new Harare city in the Mount Hampden area, to the northwest of the existing capital.

newsdesk@fingaz.co.zw

O’Mahony says with property, it’s best to push your financial envelope as much as possible. Therefore, don’t just consider your income today, you should be looking five years ahead.

THROUGHOUT  the course of our lives, there are three important lifestyle decisions which nearly all of us are likely to face, and all three have huge financial implications. These are the car you choose to drive, the school you send your children to and, possibly the biggest decision, the house you choose to live in.

This is according to Barry O’Mahony, founder of Veritas Wealth, who says property is everyone’s favourite asset class, particularly in South Africa.

“First of all, it’s a brick and mortar investment that we live in, making it more tangible than nearly all other investments. This gives us the legitimate feeling that we are getting something for our money,” he says.

“Property also has the potential to be a terrific investment, which we have seen over the past 20 years with South Africans having made more money off property investments than any other.”

O’Mahony says what everyone forgets is that property is normally the only asset class that you borrow money for in order to purchase.

Buying a home? Make sure it’s an investment

FThroughout the course of our lives, there are three important lifestyle decisions which nearly all of us are likely to face, and all three have huge financial implications. These are the car you choose to drive, the school you send your children to and, possibly the biggest decision, the house you choose to live in.
or example, if you invest R300 000 in an equity fund, let’s say you get a return of 15 percent per year on your money. But if you put R300 000 down as a deposit on a R1,3 million home and bond the extra R1 million, when it comes time to sell your home you will probably have made a lot more than the 15 percent on your R300 000.

However, he says you need to remember that you will have paid interest on your R1 million home loan.

So what all this means is that when you buy a property, debt is a huge part of the equation, and the level of debt you commit to is critical, he says.

O’Mahony offers the following advice to buyers considering property as an investment:

1. Get into the market as soon as you can

“The earlier you start buying property, the greater the long-term benefit. Good advice to young adults, especially if they’re single, is to buy a property and get friends to help pay the home loan.”

He says you can do this by taking on roommates who will pay rent. It may be tough at the start, but well worth it in the long run.

2. Project your income in five years’ time

O’Mahony says with property, it’s best to push your financial envelope as much as possible. Therefore, don’t just consider your income today, you should be looking five years ahead.

For example, if you are a young management consultant, article clerk or new in any business, look at what someone five years ahead of you is earning and use this as a benchmark.

Equally, if you are an established professional and you are close to capacity, he says you must realise that the likelihood of getting increased income is lower, and you need to cut your cloth accordingly.

“It’s worth noting that within the professions, pressure to keep up with the Joneses is prevalent. In both cases, being realistic about your future earning power will prevent you from having to sell and buy repeatedly, a costly mistake that can hinder your long-term financial well-being,” he says.

3. Stretch yourself – then stay in place

Changing houses costs money and property transactions are hideously expensive, he says.

O’Mahony says you want to aim for making as few moves as possible and grow into your home, rather than continue to change homes.

“The first five years of owning any property are tough, but it is critical that when you are young, you put yourself under pressure to buy as big as you can. Within reason, try and borrow as much as possible from the bank, and get a house that, ideally, you could stay in forever,” he says.

“This is not always practical, but will make a massive difference to your overall financial position in retirement. The problem with changing houses, especially when kids come along, is that you then have to stretch yourself again about 10 years after your first purchase.”

4. When can a property investment go wrong?

O’Mahony says things go wrong when you don’t meet the income requirement you have set for yourself.

“If you work in a cyclical business, that is building, engineering or architecture, you need to be prepared for downturns, as they inevitably come. Your investment can also take a dive if the property price takes a tumble,” he says.

“If interest rates go up, property prices go down. If there is an interest rate hike in the early years, this could be detrimental, although banks will usually come to the table in order to avoid foreclosure.

He says to remember that when borrowing money, you should be prepared to afford at least a 2% interest rate hike. When buying, it’s imperative that you shop around for the best interest rate.

While banks are not that easy to negotiate with, even a rate that is a quarter of a percentage point lower will make a massive difference to you over the next 25 years.

5. Don’t continue chasing up the property ladder as your earnings increase

“The Joneses are your enemy, not your friends. Buying homes is an expensive exercise, so take one big leap as early as possible and try to stay the course until you are ready to move to the retirement village.”

6. Strike a balance

O’Mahony says while these are the main financial guidelines they advise, it is important to remember that they are not just about property, they concern your home. It will be a place of memories, childhood dreams, social interactions and occasions as well as a comfortable base for your family.

“For all of us, there is also a varying degree of social status attached to our property,” he says.
“What’s important is to take a balanced view in making this decision, take the finances seriously, but also make sure you are tapped into what matters to you in your home and your neighbourhood,” he says. – Property24.com

While packing, it’s possible that you’ll find a number of hidden treasures that might not make sense to take to your new home. There are several charitable foundations that do amazing community work and could benefit from a donation of household items.

WHETHER it’s because you’re retiring and buying a smaller home, moving in with roommates or have just bought your first start-up home, finding ways to maximise the space you have is a big advantage.

Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, shares tips on how to achieve this:

1. Declutter

Ideally, when it comes to downsizing or maximising small spaces, it is best to reduce clutter as much as possible and only keep the items that are essential. Holding on to unnecessary items will only make it harder to find space for the necessary ones.

Goslett says to confront the ‘everything drawer’, see what’s useful and what’s just taking up space. Often the reason an item lands up sitting in a drawer for months is because there is no longer any use for it, he says.

2. Sort stuff into ‘yes’, ‘no’ and ‘maybe’ piles

If possible, it’s always best not to have a ‘maybe’ pile as this means dealing with items more than once. Homeowners should try to deal with each item once and make a decision as to whether they are keeping it or getting rid of it.
While this may seem like a difficult task, especially for those who struggle to let go, ask yourself whether the item could be replaced if it got lost and how often it really gets used.

3. Donate

While packing, it’s possible that you’ll find a number of hidden treasures that might not make sense to take to your new home. There are several charitable foundations that do amazing community work and could benefit from a donation of household items.

Adrian says a great deal of charity organisations can only do the work that they do due to donations made by the public. He says making a donation is a great way to reduce clutter and provide assistance to members of the community who are less fortunate.

Remember to only donate items that will be useful and are still in good working order.

4. Make some money
According to Goslett, selling off items is another excellent way to get rid of unwanted items while making some money to put towards the move or towards buying more suitable items to fit the new space.

5. Be seasonal

Although it might not always be practical, only have the current season’s clothing in the cupboard. Large winter coats and winter boots take up a lot of space, so if possible, these items should be left in storage or stored in sealable containers and packed away until needed.

6. Get organised

Although the object is to get rid of items, buying an organisation system or containers that can help reduce the amount of space needed for your stuff makes sense.
Goslett says organisation goes a long way to decluttering an area without having to throw any items away.

7. Follow the trend

Getting rid of clothing and unwanted items means you may no longer need a large set of drawers. Large pieces of furniture can be sold or donated to make space for more suitably sized furniture.

8. Be strategic

Instead of aimlessly shoving items away, have a plan when packing them into cupboards and drawers. If an item is not used often but is an item that is going to be kept, pack it into a box and label it. Stack these boxes and containers to make more space. These will also help to protect the items inside.
“Having a plan and ensuring that only the necessary items are moved across to the new home will ensure that you can make the most of a small space. Maximising the space available will make the home a more comfortable space to live in.” -Property24.com

Chetty says some homeowners enjoy holding on to their ability to live in their current home until they find a better alternative. Others don’t want to make a financial commitment to a new home until their current home is sold or under contract.

SOME homeowners enjoy holding on to their ability to live in their current home until they find a better alternative. Others don’t want to make a financial commitment to a new home until their current home is sold or under contract.

This is according to Elaine Chetty, licensee of Seeff Richards Bay, who says factors like whether a homeowner is moving locally versus to another province or country, whether or not he or she has children in a particular school, and the homeowner’s deposit play a crucial role in this decision.

Are you not sure whether you should buy another home before you sell your current one, or sell your current home first?

Chetty shares the advantages of both options so you can make the choice that is right for you:

Advantages of selling your home first

Deposit

The most obvious advantage to selling your current home first is that you’ll cash out the equity in your current property. You can then use this money as the deposit on your next home. This is one of the most common reasons for selling first, says Chetty.

No contingency (subject to offer)

Many agents will write offers with a ‘subject to home sale’ clause, meaning the offer is contingent upon the buyer selling their current home within an allotted timeframe in order to free up the deposit.

Chetty says if you can avoid writing this contingency by selling first, you’ll make a stronger offer, which could be a trump card in a competitive market.

In other words, selling first might help you to land your dream home before someone else has a chance to snatch it up.

Predictable home loan payments

By selling first you remove the possibility of needing to make two home loan payments simultaneously.

In fact, if you’re able to live with friends or family during the short-term gap between selling and buying, you may be able to pocket a few months’ worth of home loan payments too. This can help you to build up cash reserves to cover various moving and other expenses, she says.

Greater focus

If the idea of selling and buying simultaneously is overwhelming, you may find peace of mind in focusing on one step at a time.

Chetty says by selling first, you can concentrate on improving and staging your property to make it show-ready, and stay in your home while you patiently wait for the best offer.

Advantages of buying a new home before selling your old home

You only move once

If you sell your home first, you’ll need to move twice: first to temporary accommodation and later into your new home. This doubles the hassle and results in the process dragging out longer.

In contrast, buying first ensures that you’ll only need to move your belongings once, and you won’t need to bother finding a storage unit or a month-to-month rental, she says.

Shopping time

If you buy first, you give yourself ample time to shop around for a home you love. You won’t feel pressured to close on another home quickly just because your short-term lease is about to expire, you’re tired of staying on your sister’s couch, or the school year is about to start.

Chetty says if you’re in a competitive housing market in which you might need to make offers on multiple properties, enjoying the luxury of time can be particularly valuable.

As can be seen, both options hold distinct advantages and disadvantages. The bottom line is that there is no ‘best’ answer to this question, each option includes trade-offs and your personal circumstances and preferences will be the deciding factors, she says. -Property24.com

For more than two years, Ignatius Chirenje and his wife Rutendo, have been fiercely resisting eviction.

Cyril Zenda
THE Deputy Sheriff this month finally evicted a Harare couple that has been resisting eviction from what used to be its matrimonial home before it was attached and sold by Genesis Bank.
For more than two years, Ignatius Chirenje and his wife Rutendo, have been fiercely resisting eviction from the Emerald Hill property, after it had been sold when Chirenje and his business partner failed to repay a loan obtained from the now-closed Genesis Bank.
In 2011, Genesis Bank obtained a default judgment against Chirenje and his business associates, clearing the way for the sale of the house, which had been bonded for a loan.
The house was auctioned by the Sheriff on March 18, 2013, and Maxwell Chisvo’s US$116 000 bid was the highest and he was therefore declared the winner.
Chirenje appealed against the sale of the immovable property arguing that it had been sold at a give-away price. He claimed that the property was worth at least US$215 000.
His appeal was dismissed by the High Court in July 2013, after he failed to bring a buyer who was ready to pay the price that he claimed the property was worth.
In January 2014, ownership of the house was transferred to the name of Ladrax Investments (Pvt) Ltd, a company owned by Chisvo and his wife, Joyce. The Chirenjes were given notice to vacate the house, but they resisted, arguing that Ladrax Investments had not been the winning bidder at the auction sale for the house.
The courts quashed their argument and in October 2014, High Court judge, Justice Amy Tsanga, ordered the Sheriff to evict the Chirenjes from the house.
They resisted, claiming they were challenging the original 2011 court ruling made in favour of Genesis Bank. Chirenje’s wife claimed that her husband’s business partner, Christopher Mawere, had fraudulently registered their family home as collateral for the loan from Genesis Bank.
However, the couple could not produce any documentary evidence to prove that indeed there was a fraud case they had filed against Mawere. It emerged that Chirenje had actually used his US$94 000 share of the Genesis Bank loan to buy mining equipment.
Genesis Bank surrendered its operating licence in 2012 after it failed to meet the capital requirements set by the Reserve Bank of Zimbabwe.
The couple continued resisting eviction, lurching from one legal argument to another.
In May this year, Justice Tsanga issued another High Court order for the couple’s eviction within 48 hours, but defiant couple took their matter to the Supreme Court.
Chisvo’s lawyers applied to the High Court for permission to proceed with the evacuation pending the outcome of the Supreme Court appeal, arguing that their client was losing income because of the continued occupation of the property by the Chirenjes.
Justice Loice Matanda-Moyo granted the request for the eviction after noting that the chances of the Chirenjes succeeding in the Supreme Court were nil.
“I am of the opinion that the (Supreme Court) appeal has been noted for purposes of delaying the day of reckoning,” said Justice Matanda-Moyo in her October 1 ruling allowing the eviction.
Chisvo’s lawyer, Dennis Matimba of Matipano and Matimba Legal Practitioners told this paper this week the Sheriff had finally managed to evict the couple from the Emerald Hill property.
However, this is not the end of the couple’s troubles as they face a monumental bill in legal costs and damages.
Matimba said his law firm was calculating what their client spent in legal costs while trying to take physical possession of the property from the Chirenjes. This is in line with the High Court ruling that the Chirenjes pay for the cost of the lawsuits at the attorney and client scale.
In addition to this, Matimba said they would shortly be engaging an estate agent to evaluate the property and give a guide on rental charges so that they can pass the bill to the Chirenjes for financial loss suffered during the period they had been illegally occupying the house.
newsdesk@fingaz.co.zw

Landlords have been forced to reduce rentals as the tenants’ default rate has reached unprecedented levels

ZIMBABWE’S property market is stagnant and is not expected to improve in the near future, a property expert last week.
Brian Kashoni, an executive director at Dawn Properties told the Financial Gazette on the sidelines of an Institute of Chartered Accountants of Zimbabwe’s business valuations seminar in the capital that the sector had witnessed an unprecedented increase in vacant and unrented commercial and residential properties in the last few years.
Kashoni, who has more than 20 years experience in the property market, noted that a significant number of tenants had huge arrears in rentals due to a depressed economy, a situation that has affected the property market.
In his overview of the property market in the country, Kashoni said: “There is stagnant growth in the property market. The market is not going up because we have very low occupancies. The central business districts (CBD) are dying to an extent that people always drag to get into (building) lifts.
“Buildings are degenerating, and the market has also been significantly affected by increased tenants’ defaults on lease obligations. People are not paying rents. People are also asking for concessions and there is a huge arrears list.”
Despite this, Kashoni said the cities could be re-generated.
“Give tax concession to corporate or individuals owning buildings, who are doing re-developments,’ said Kashoni.
“Also, do quality work, especially on the services like air conditioning, water reticulation, power back-up, using alternative energy and look at energy management systems. It saves a lot of money once you start consuming things that are efficient. That saves money.
“There is also need to encourage tenants to do away with excess space because some tenants always want to cling on to legacy issues. One can cut big offices into suites.”
Landlords have been forced to reduce rentals as the tenants’ default rate has reached unprecedented levels. This general decrease in retail rentals is expected throughout this year and next year.
The sector witnessed increased returns in 2011, especially in Harare, due to high demand for smaller shops in the CBD.
But now, due to lack of demand, the interest in CBD office space has decreased, particularly in Harare.

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“The wealthy don’t invest in property because they are rich, they are rich because they have invested in property,”

ONE of the common financial fallacies that keep many South Africans from building real wealth is that property investment is an investment alternative exclusively reserved for the rich, the educated or the experienced.

This is according to Gert van Staden, CEO of the P3 Investment Group, who says it is a fallacy perpetuated, perhaps, by the fact that property is the preferred asset class of the world’s wealthiest, and the reality is that property investors are generally wealthy.

“The wealthy don’t invest in property because they are rich, they are rich because they have invested in property,” he says.

“The truth is that you don’t need to be rich, or even educated or experienced, to invest in property successfully.”

There are two reasons for this, says Van Staden. Firstly, property investors do not need a lump sum investment, or even large monthly investments to acquire an income-producing property asset.

For example, an investor does not need to have R500 000 in cash to acquire a R500 000 buy-to-let property. This is because an investor can get a mortgage bond, allowing him or her to buy a property with money borrowed from the bank.

“In investment circles, this is called leveraging or gearing, terms that most people assume are only for highly-educated investment specialists,” he says.

“But buy-to-let property investment allows ordinary South Africans earning ordinary salaries to also implement the highly effective practice of gearing, which the world’s wealthiest have used for decades to create wealth without using their own money and to significantly increase their return on investment.”

Of course, Van Staden says the bond has to be repaid every month, but the property generates an immediate and ongoing passive monthly income: the monthly rental. The rental keeps pace with inflation as the rental increases year after year, which allows the investor to use the tenant’s rental to repay the bond.

It is entirely possible, if the right property in the right area is selected, to obtain a 100 percent mortgage loan to acquire an income-producing property and earn a monthly rental from this property that will not only cover the bond repayments, but the other monthly property expenses too, he says.

“So, you don’t have to be rich to invest in property – you can acquire an income-generating property asset without spending your own money.”

Secondly, Van Staden says buy-to-let property investment is based on a proven step-by-step system that delivers virtually guaranteed success. This allows ordinary South Africans earning ordinary salaries to become successful property investors with no qualifications or experience, and very little time, training or effort.

Because it is based on a tried-and-tested system, with built-in risk management and contingency measures, he says a successful buy-to-let property investment does not depend on the skills or qualifications of any person.

It can be compared to owning a franchise: you don’t need qualifications or experience to run a franchise successfully, you simply have to implement a proven system.

So, in reality, Van Staden says a successful property investment requires little more than learning how the simple, streamlined property investment system works and implementing this system following step-by-step guidelines.

“Don’t let the fallacy that ‘property investment is only for the rich, educated or experienced’ prevent you from building real wealth this year,” says Van Staden.

“All that is really required to build wealth through buy-to-let property investment is the willingness to learn how to implement a simple, tried-and-tested system that allows you to acquire and pay off income-generating properties spending little or nothing of your own money, time or effort”. Property24.com

“Before applying for a home loan, an applicant should tally up their account payments, credit cards and other monthly payments. This information will be required by the lender in order to determine the applicant’s debt-to-income ratio, which will be used as a tool to determine the appropriate bond amount,” says Goslett. Pic by Property24.com

SINCE the introduction of the Credit Act, consumers have needed to be financially prepared before applying for a home loan. Banks and financial institutions will perform extensive research on a bond applicant’s financial history before they approve the application.

This is according to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who says it is vital for consumers to assess their financial situation.

Goslett says potential home buyers should know the answers to the following questions before they meet with their bank and apply for finance:

1. What is your credit score?

According to Goslett, it is important for potential home buyers to know their credit score and take a look at all the items on their credit record to ensure that there are not any mistakes or unexpected issues.

He says consumers are entitled to a free credit report each year, so they should be sure to check it.

“Consumers need to ensure that any accounts or bills that have ended up in collections are paid and sorted out before they apply for finance. Any default or slow payment will have a negative impact on the consumer’s credit score, so it is important to make payments timeously,” says Goslett.

2. What is your annual income?

A consumer’s income will determine the bond amount they qualify for. For this reason, Goslett says that it is important to include any bonuses or annual investment returns when making this calculation.

Annual tax return documentation will assist the applicant in determining their actual yearly income.

3. How much debt are you in?

Home loan amounts are largely determined by the amount of disposable income the applicant has available, so where possible, consumers should try to pay down their debt levels.

“Before applying for a home loan, an applicant should tally up their account payments, credit cards and other monthly payments. This information will be required by the lender in order to determine the applicant’s debt-to-income ratio, which will be used as a tool to determine the appropriate bond amount,” says Goslett.

“Having a lower debt-to-income ratio will be highly beneficial to a consumer who wants a higher bond amount.”

4. What is your financial worth?

Banks will want to see documentation that relates to any assets, such as vehicles, investments and income-generating properties, applicants might have.

Goslett says that all of these aspects add to the applicant’s nett worth and will have a bearing on the amount that the bank is willing to grant.

5. What kind of deposit can you put down?

In most cases the bank will require the applicant to put down a deposit. Depending on the situation, the required deposit can vary from 10% to around 30% of the purchase price of the property.

Goslett says that applicants will also require additional funds for all the costs associated with a property purchase, such as transfer fees, attorney fees and bond costs.

6. What can you afford?

Ideally, the monthly house payment, which includes the bond, interest, taxes and insurance, should not take up more than around 30% of the applicant’s income before taxes.

“Potential home buyers will be able to get an idea of their affordability levels from an online bond calculator or with the help of a financial professional. Bond origination companies will be able to provide potential home buyers with a guideline as to what bond amount they can comfortably afford,” says Goslett.

“Financial preparation is the key to homeownership readiness and will make the bond application process far smoother.” Property24.com