Brand-new – or an es­tab­lished prop­erty?

There are plenty of pros and cons to con­sider when buy­ing a home

Weekend Argus (Saturday Edition) - - PROPERTY - BONNY FOURIE

WITH many de­vel­op­ments spring­ing up across the West­ern Prov­ince, buy­ers must choose whether to buy brand­new homes or ex­ist­ing ones.

Each op­tion has its pos­i­tives and neg­a­tives and it de­pends on what you want from your new home.

But for many, buy­ing di­rect from a de­vel­oper and not pay­ing trans­fer duty is a big at­trac­tion.

“This could save you hun­dreds of thou­sands of rands,” says David Co­hen, di­rec­tor of Sig­natura prop­er­ties. “For in­stance, a prop­erty cost­ing R4 mil­lion will see trans­fer duty of R277 500 payable.”

Buy­ing prop­er­ties off-plan has its plusses as it ef­fec­tively means ac­quir­ing a prop­erty at cur­rent prices, but only pay­ing for it af­ter it is built, which Co­hen says is typ­i­cally be­tween 18 and 24 months later.

“Of course, you have to pay a 10% de­posit when you sign the deed of sale, but there are no other pay­ments un­til trans­fer.

“And dur­ing con­struc­tion, buy­ers ben­e­fit from cap­i­tal growth, which has been cal­cu­lated at over 20% a year in the At­lantic seaboard and City Bowl sub­urbs of Cape Town.”

Buy­ers of new homes are get­ting prop­er­ties with no hid­den main­te­nance is­sues, and the prop­erty comes with var­i­ous guar­an­tees and war­ranties, in­clud­ing build­ing struc­ture, waterproofing, ma­jor ap­pli­ances and LED light­ing.

Co­hen says other ben­e­fits of new homes in­clude safe park­ing and good se­cu­rity and con­tem­po­rary de­sign.

Buy­ing a home off-plan also means you can of­ten cus­tomise the prop­erty ac­cord­ing to your own needs and pref­er­ences, adds Shaun Rade­meyer, chief ex­ec­u­tive of Bet­terBond bond orig­i­na­tors.

“In apart­ment and town­house de­vel­op­ments, buy­ers can usu­ally choose their in­te­rior fit­tings and fin­ishes, while in plot-and-plan schemes they can of­ten also choose the sizes and floor plans.”

And buy­ing a new prop­erty from a de­vel­oper means it comes with a Na­tional Home Builders Reg­is­tra­tion Coun­cil five-year guar­an­tee, says Lew Gef­fen, chair­per­son of Lew Gef­fen Sotheby’s In­ter­na­tional Realty.

“Buy­ers have a stip­u­lated pe­riod af­ter mov­ing into the

Build­ing costs in­fla­tion

prop­erty dur­ing which any snags will be made good by the de­vel­oper.

“And if you buy from a de­vel­oper the Con­sumer Pro­tec­tion Act will pro­tect you, whereas if you buy from a pri­vate seller the CPA doesn’t ap­ply.”

But Gef­fen says while ex­ist­ing homes cost­ing less than R900 000 have no trans­fer duty, there is still 14% VAT payable on new homes in this price bracket.

“So a new home will ef­fec­tively have 14% less floor space for your money than if you buy a pre-owned home.”

Trans­ac­tion costs such as le­gal fees and bond reg­is­tra­tion fees are the same for both types of prop­erty, and are not al­ways cov­ered by the de­vel­oper.

“Build­ing costs are in­creas­ing at more than twice the rate of in­fla­tion, so newly built homes now tend to be about 30% more ex­pen­sive than ex­ist­ing homes of the same size. This means newly built homes are around 30% smaller at the same price.”

Buy­ers who are still try­ing to de­cide which route to go should ex­plore the sub­urbs where they want to buy, ad­vises Her­cu­lene Visser of Lew Gef­fen in Tokai.

“Take note of the in­fra­struc­ture and ameni­ties as well as the price struc­tures the area com­mands, and if you are buy­ing an in­vest­ment prop­erty, you need to know the mar­ket-re­lated ren­tal price bands in the area and what types of prop­er­ties will of­fer the high­est ren­tal re­turns.

“The ma­jor ad­van­tage of buy­ing an ex­ist­ing home is that the sur­round­ing sub­urbs are usu­ally es­tab­lished so you won’t have to live with the dis­rup­tions of on­go­ing con­struc­tion.

These ar­eas also of­fer de­vel­oped in­fra­struc­ture and ameni­ties, and gar­dens are usu­ally es­tab­lished.

Dis­ad­van­tages though, are that buy­ers may have to do ren­o­va­tions to up­grade ex­ist­ing prop­er­ties.

Older homes also re­quire more main­te­nance, and this can prove costly over time.

“How­ever, if you in­spect the prop­erty thor­oughly be­fore buy­ing, you will elim­i­nate the risk of be­ing un­pleas­antly sur­prised by de­fects which only be­come ev­i­dent later, re­sult­ing in ad­di­tional ex­pen­di­ture.”

LEW GEF­FEN SOTHEBY’S IN­TER­NA­TIONAL REALTY

This brand-new three-bedroom Tokai home, with a dou­ble-vol­ume en­trance hall and well-pro­por­tioned open-plan liv­ing ar­eas, could make buy­ers seek­ing preloved homes re­think their de­ci­sion.

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