Brand-new – or an established property?
There are plenty of pros and cons to consider when buying a home
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.”
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.