Why new developments can be a home run

Money | Life

Young professionals across South Africa are entering the housing market for the first time. Affordable, secure, lock-up-and-go homes with modern designs and built-in luxuries are in high demand.

New developments are proving popular as it offers all this and none of the constant maintenance and surprise costs of stand-alone homes.

Let’s take a look at the pros and cons

You get an early foot in the door

New property developments give you the opportunity to buy a new home before it’s even built.

Developers usually offer great deals at the start of a project. Properties normally sell at reduced prices during this phase and go up once construction is completed. Usually, developers only require a 10% deposit and the rest of the payment is only due on completion.

With construction normally taking between 18 and 24 months from launch to completion, a home bought off-plan can already be worth 10% more when it is ready for occupation. Buying a property at today’s prices and only start paying for it months later after the transfer is done, could also make great financial sense.

You don’t pay transfer duties

Just one of the advantages of buying a development property is that you don’t pay transfer duty. It is included in the sales price of the property.

The transfer cost is the tax payable by property buyers over and above the selling price. To give you an idea of how much you’ll be saving, here is how the transfer cost is calculated.

 

As 1 March 2018 to 28 February 2019

 

​Value of the property (Rand) ​Rate
0 – 900 000 0%
900 001 – 1 250 000 3% of the value above R900 000
1 250 001 – 1 750 000 R10 500 + 6% of the value above R 1 250 000
1 750 001 – 2 250 000 R40 500 + 8% of the value above R 1 750 000
2 250 001 – 10 000 000 R80 500 +11% of the value above R2 250 000
10 000 001 and above ​R933 000 + 13% of the value above R10 000 000

 

If you decide to sell your property before it’s completed, it can be free of capital gains tax.

It’s all brand new

With a new development property you get to personalise it – you can choose your property location, layout, size and finishes. Check your sales agreement carefully as it will describe your unit in detail and specify the fittings and finishes you have chosen. Best of all – you won’t need to spend your time and money to fix someone else’s questionable decor decisions.

New developments also incorporate the latest technology and enhancements, for example high-speed internet connection, alarm systems, soundproofing and insulation, even high-end appliances.

Security is also a big consideration and most developments will have controlled access, security guards and high walls.

Your new home will also come with a warranty after the transfer of the property to ensure that all possible defects are dealt with. It should require little to no maintenance for the first few years. No nasty surprises with faulty wiring, damp walls or broken door handles.

The cons

Beware of unscrupulous developers. It a good idea to check out the developer and the projects they have completed. Rather buy from an established developer with a proven track record. All deposit payments should be held in a reliable attorney’s trust account, and not by the developers.

If you’re buying off plan, the sales person will typically show you an artist’s impression of what the finished property will look like. It might be hard to imagine the finished product, especially it’s relation to other units, space and views etc.

Remember that fixtures and fittings in the show house on the development is usually the priciest option available, and you may choose different options. Make sure that your contract specifies your fixtures and fittings and be aware of any clauses that allow the developer to use cheaper substitutes.

Keep an eye on sites such as www.privateproperty24.co.za for an overview of the latest developments.

Get approved for a home loan up to 100% financed as a young professional. Read here on Investec Private Banking and your home loan.

If you are an Investec Private Banking client, your Private Banker will attend to your home loan – personally.

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