As a first-time buyer, you might be wondering whether you should buy a freestanding home or a unit in a sectional title scheme – we find out why buying a sectional title could be a great choice for you.
Transfer duties in new developments
For those first-time buyers who are buying into a new sectional title development, paying transfer duty is usually not a worry. They will pay VAT instead, but this will usually be built into the purchase price, so they will only need cash to cover their bond registration fee and the legal costs of transfer – and some developers will even cover these amounts.
No construction worries
Buyers in new sectional title schemes don’t have to worry about managing the construction of their homes. The construction company building a sectional title complex is usually directly contracted to the developer, rather than the individual buyer, and for real estate newbies this is the way to go, because they will not be responsible for the builders’ performance or payments – or for getting them to return if necessary to rectify any defective work.
No financial surprises
The third good reason for first-time buyers to choose a sectional title is that there is less likelihood of any “nasty surprises” when it comes to the ongoing costs of home-ownership, which is always a risk for those new to the market.
The monthly levies payable in all sectional title schemes won’t cover their municipal rates and utility charges, so they will still need to budget for those, but they should look out for schemes where each unit has separate water and electricity meters – and preferably prepaid meters for electricity.
Before they make an offer to purchase, buyers must ask for a breakdown of exactly what the levy does cover, which should include security, maintenance, building insurance, and any contribution payable to the reserve fund. At the same time, they need to check if there are any additional fees payable – for parking, for example – and if there is any special levy in force.
This last item is very important because the recent introduction of a large special levy, which they would ‘inherit’, may be exactly what has prompted the current owner to sell.
Rules to help manage the complex
And finally, a big advantage of sectional title schemes is that there are very specific rules about how they must be managed and run, as set down in the Sectional Title Schemes Management Act (STSMA). This legislation really helps to protect and increase the value of owners’ investments in sectional title schemes.
Article Source: https://www.myproperty.co.za/news/market-and-opinion/4-reasons-why-you-should-buy-a-sectional-title-02-03-22
