Building your dream home for less
ZIMBABWEANS value ownership above all things. From domestic animals, motor vehicles to the roof over their heads, they all understand the importance of having a title over what they own. With the expansion of urban areas and the aspiration to be upwardly mobile, owning a home in the city is important. However, several socioeconomic challenges have resulted in few attaining the dream to actually build and live in their own homes.
When it comes to real estate, location is everything. This means that where one’s property is located will determine the value of their property.
Affluent, upmarket residential areas have a higher return on investment compared to high density areas. In addition, areas that increase development with offices, schools, recreation areas and shopping areas increase in value. What seems to be an obstacle to achieving this for the ordinary citizen is capital.
Most buyers are forced to settle for less expensive property in unorganised developments where land is less expensive. Even if they make a substantial investment, this will have a long-term effect on the value of their home.
This problem occurs as a result of our cultural predisposition for freehold ownership, but in other countries, property may be built at a considerably cheaper cost under leasehold ownership.
Our cultural aversion to leasehold is primarily due to a lack of understanding of the legal consequences, with many people assuming that they will not be legitimate owners of the land.
This is not the case, in fact let us change our perception with this notion that one can build now for less, and still participate in the property market.
It is possible to build and own property that can be passed down generations without having to pay for the land upfront. In so far as the financial implications are concerned, leasehold is an inversion of the freehold system. Instead of paying for land upfront to acquire it before building, leasehold allows you to build now and spread the cost of the land over decades. For instance, at US$100/month the cost of a US$60 000 stand is spread over 50 years.
Given that leasehold can stretch into perpetuity, as is the case with West Property leasehold title, one could argue that the ultimate cost is higher as the payments will continue forever. US$60,000 deposited into a fixed return investment at a modest 6% generates US$3 600 of interest per year, which works out to US$300 monthly.
Given that leasehold can stretch into perpetuity, one could argue that the ultimate cost is higher as the payments will continue forever. Such an investment would also stretch into perpetuity.
It is not a wise financial option if you have US$60 000 to acquire a stand. This is before you consider the cost of leasing the stand for the next eight years while you strive to save up enough money to buy it.
This rental money loss may be readily avoided by obtaining property on a leasehold basis and rapidly constructing an expandable cottage to accommodate your family. Instead of paying rent to a landlord, these funds may be spent into developing your house at your own pace.
In the Zimbabwean context, Leasehold interest has always been in existence, under farms, industrial, commercial and government residential leases. The registered Deed provides an undivided share relating to the property, coupled with the exclusive right of occupation.
West Property has an exclusive mandate over Pomona City, where over 6 000 stands are available for Freehold and Leasehold titles. This is an exceptional piece of land, located at the heart of Harare’s northern suburbs and with quick access to the CBD, schools, shopping centres and health facilities. This option is available in Phase 1B, which has stands ranging between 600 and 800sqm. Potential buyers have an opportunity to invest in their dream homes for less.