Policy Adjustments – Do It Now

“Thousands of homeowners in South Africa are returning to the daily grind of earning a living so that they can pay their monthly bills and one of the financial chores that must be tackled early in the New Year is a revision of the short-term insurance cover that applies to the property and its contents.”

Policy adjustments – do it now – Home Owners, Advice

What You Must Know About Your Managing Agent

One of the biggest growth areas in the real estate industry at the moment is the management of rental property on behalf of landlords – despite the fact that buy-to-let investments now only account for about 7% of property purchases, compared with about 25% in 2004.

“The main reason is that owners as well as tenants have come under increasing financial pressure in the past two years, and simply cannot afford to risk rental defaults,” says Berry Everitt, CEO of the Chas Everitt International property group.

“Many people still own several rental properties that they bought during the boom years and are in a situation where one bad payer could jeopardise their whole portfolio.

“But the most vulnerable in this respect are homeowners who, having found themselves in financial distress but unable to sell their properties in a soft market, are renting them out to cover their bond repayments while living somewhere cheaper themselves.”

Writing in the Property Signposts newsletter, Everitt notes that while falling interest rates have steadily reduced the incidence of non-payment or part-payment among tenants since last year, this is still around 20% (one in five) in most areas and income brackets, according to the latest Rental Payment Monitor compiled by TPN.

“In addition, low inflation and rising municipal service charges are going to make it very difficult for landlords to raise rents by much next year, which means that they will have little or no cushion if a tenant does default.”

In short, he says, the need and demand for expert help in managing rental properties is set to grow even more. However, there are some important things for owners to check before entrusting the management of their properties to an agent. These include:

• Ensuring that the agent is registered with the Estate Agency Affairs Board and has a trust account for holding tenant deposits;
• Ensuring that the agent is at least working towards obtaining an NQF4 or NQF5 qualification by the end of 2011, when these will become essential for an agent to practice legally;
• Ensuring that the agent has proper systems in place to check on the creditworthiness and payment history of prospective tenants, and will also establish that they are not currently under debt review;
• Ensuring that the agent will not under any circumstances hand over keys to the property until the deposit and first month’s rent have been paid; and
• Ensuring that there is a clear, written contract detailing exactly what services the agent will provide in return for his or her management fee – and whether this is a set amount or a percentage of the rent.

This article has been reprinted with the kind permission of Chas Everitt International.
Barry Davies
011 801 2500, or visit
www.chaseveritt.com
Page Link: http://www.chaseveritt.com/html/press.html

Healthy Green Lawns

Have a green, lush lawn simply by putting a bit of planning before putting in a lawn and pay attention to a few details in order for the grass to grow well and stay healthy. Everyone can do this.

If the grass around your home isn’t meeting your desires, don’t worry, because there are numerous reasons for this. A few of them, for example, are:

• The needs of your lawn have changed. Perhaps you didn’t have kids and now you do, so you had a lawn that liked low traffic, but now it gets tons of traffic, and the grass is not able to cope with it
• You may be trying to grow the wrong type of grass for your area
• Trees and shrubs have grown up, and your yard is now shady, rather than sunny.

Repairing Your Current Lawn

There are two ways you can repair an existing lawn: Over-seeding or Patching

Over-seeding
This is a great solution if your current lawn is more than 50% good grass and you would like it to be thicker, greener, and more vigorous. Simply reseeding it with a variety that is new and improved will help immensely.

Determine the Trouble Spots:

Take a look at the trouble spots and determine what may have caused the deterioration in the first place. Was it too much foot traffic? Shade, drought, disease? Once you have thought about this, choose an appropriate new grass for over-seeding.

For example: Select a shade-tolerant seed blend for shady lawns, or a blend that takes more foot traffic.

1. Mow your existing lawn as short as you can, almost to the point of scalping it
2. If your mower doesn’t have a bag, rake up the clippings. This helps expose the soil
3. Use a metal garden rake and scratch the soil as hard as you can to rough it up and create a good seedbed
4. Sow the seed at 2 to 3 times the recommended amount on the seed bag
5. Cover the seed with 1/4 inch (.64 cm) of topsoil or finely ground compost
6. Water every day to keep the seeds moist until they germinate – letting seeds dry out only once can reduce your germination rate greatly
7. Allow the seedlings to grow to 3 to 4 inches (7.6-10 cm) and then mow
8. When mowing, remove only 1/3 of the height; don’t cut it too short

Patching

This is the best solution if most of your lawn is looking great, and you have only a few trouble spots, such as a weedy patch or a bare spot. You won’t need to go to all the trouble of installing a new lawn, or over-seeding; just patch the problem spot.

As with over-seeding, it is best to first diagnose the problem before taking the next step, to determine what may have caused the deterioration in the first place. Is it a chronic spot, or a one- time accident, like spilling gasoline or bleach on the grass? If it is a chronic spot, take a look at what may be causing it.

• For spills, you’ll want to flush the soil thoroughly in order to leach out all the chemicals
• For a shady area, consider patching with shade loving grass blend
• For a compact area, aerate the area, add in some compost, mix into the soil and put down some gypsite to help the drainage

 

Home Loan Talk – Access / Flexi Bonds

Banks offer a home loan package with an access facility should you wish to take it up – but what does it mean? It provides you with access to the cash you already have invested in your home. The difference between the value of your home and the amount that you owe the bank is the EQUITY in the property. Equity can be as a result of paying in a deposit, or through the appreciation in value of the property, or even the savings that you have invested in your home loan by paying it off at a faster rate.

It is advisable to request an access facility when applying for a home loan. What are the benefits?

• Most banks offer access to your equity in the property via internet banking or even from an ATM, which makes accessing cash very convenient and easy.
• By depositing your savings into your home loan account, you can enjoy tax-free savings at the prevailing bond rate that you are eligible for at that particular point in time. Take a good look at the interest that you earn in your savings account and compare it with what the bank charges you to lend that money back to you. Then consider that you will also pay tax on the interest that you have earned in your savings account.
• You have flexible access to equity in your home loan for those high-value items that traditionally you would have financed through hire-purchase, lease or rental agreement. Advantages include flexibility i.e. you could pay your car off over 20 years and save on interest. Repayments are calculated at the bond rate that you are enjoying, which could be as much as 5% lower than lease or HP rates!
• You now have flexibility with your repayments – you can double the bond repayment, but still have access to that ‘extra’ cash.

When you need to access the funds you will still go through a similar re-advance approval process with the same forms and proof of earnings. The bank needs to assess your ability to service the additional amount.

This article has been reprinted with the kind permission of Masilo Freimond Inc.
Tel : 011 958 0488
Fax : 086 610 0276
E-mail : info@masiloincjhb.co.za

Controlling Speeding in Residential Estates

For those of us who have paid the premium attached to living in a South African lifestyle estate, the issue of safety (for both ourselves and our children) is often a primary reason behind the decision to financially leverage ourselves to the hilt and take the plunge. 

A component of that safety issue (outside of the traditional security reasons) is the idyllic notion of our children being able to roam around our peaceful estate on foot or bikes, and enjoy the luxury that we experienced as children “back in the day”, or as my children note…in olden times.  

The reality is somewhat different as very often, and particularly in the larger estates, our very own local Grand Prix wannabes with vehicular horsepower levels rated at 10X their IQ levels, turn the imagined tranquility into the proverbial accident waiting for a place to happen. And in all seriousness this can be a deadly problem.

The posted speed limits within the estates are there for a reason, they are in place to keep the residents (and visitors) safe, and the Home Owners Association has a responsibility and duty to take all rational and reasonable measures to protect the residents. Now whilst this is often not a popular topic for many, its one which has to be addressed and enforced, and there are a number of control measures which can be adopted to achieve the desired result.

If necessary a Safety Panel or Committee can be elected to research the speeding problem and provide solutions to reduce speeding.

Most estates utilise newsletters and communications, both printed and electronic, these days, which are ideal for constantly driving (pardoning the pun) the speed control issues on an ongoing basis. Many estates these days also maintain contact with residents via the use of websites, text messaging, intranets and Social Media pages, another ideal medium for regular resident speed reminders.  

Entrances to estates are another contact point where prominent signs together with notices which can be handed to visitors. Regular visible reminders of the speed limit as well as the penalties for exceeding them can also be displayed here as well as at strategic points within the estate.

If there are identified speeding hot spots, placing a speed radar unit at these points which display a driver’s speed to remind them of the need to abide by the regulations. Estates these days also need to ensure that speed signs are well posted and clearly visible and the likes of speed bumps and traffic circles are correctly positioned to limit speedsters.

Many estates use radar devices via their own internal Home Owners Association’s which are empowered to fine residents, or in the case of visitors, fine the relevant resident they are visiting to enforce the rules. Whilst these are never popular, a roaming authorised “Estate Traffic cops” with the ability to hit the pocket can be effective!  

Whilst this is by no means a comprehensive list of all the measures available to HOA’s, and there are a number of others by which more stringent and practical controls can be implemented in estates, whatever methods are adopted, they need to be clearly contained in the rules and all residents, or the required quorum need to have agreed to them – in writing. This, together with ensuring the buy in and participation of the owners and residents, will prevent tragedies and make the estate both safer and more enjoyable for all.

This article has been reprinted with the kind permission of Chas Everitt International.
Berry Everitt
011 801 2500
www.chaseveritt.com

Factors that boost a sale – Top Stories, News – Property24.com

Factors that boost a sale – Top Stories, News – Property24.com.

“It is still very much a buyers’ market out there and sellers must be shrewd and wise in order to sell their property and get a fair deal.

Ya’el Geffen, Lew Geffen Sotheby’s International Realty’s executive director, says the main factor influencing how long it will take to sell a home is price. ‘If the property is priced right, it’ll sell quickly, if not, the seller is in for a long wait and risks not being able to sell the property at all.’ “

Tax Implications for Trusts

Purchasers used to be able to avoid transfer duty by simply buying a trust that held a property thereby effecting transfer and avoiding transfer fees. The South African Revenue Service (SARS) has issued assessments against these trust and they now face payment.

So what are the facts when buying property in a trust?
Trusts can be expensive from a tax perspective because:

• Income tax is at a flat rate of 40% – The 40% on Income is only payable if the income does NOT vest in the beneficiaries. IF the Income is vested/distributed to the beneficiaries then the beneficiaries pay tax;
• The trust must pay transfer duty of 8% of the purchase price. Again, that is more than you would pay if you acquire an asset in your own name because individuals pay transfer duty on a staggered basis, with a portion being exempt from transfer duty.

However, trusts are still used for estate planning purposes because:

• The assets held within a trust are not subject to estate duty – (when you die);
• Capital Gains Tax (CGT) can be less than for an individual taxpayer because a trust limits the growth of the value of the property to that as of the day it is acquired by the trust. So no CGT is payable by the planner when the trust disposes of the property.
• CGT is payable on properties upon the death of the person who owns them. That CGT can be avoided too if the property is held in trust.

Each Purchaser has to examine the facts before deciding to Trust or not to Trust.

This article has been reprinted with the kind permission of Masilo Freimond Inc. 
Tel : 011 958 0488
Fax : 086 610 0276
E-mail : info@masiloincjhb.co.za

Explanation on early termination penalty

Any bond holder intending to sell or cancel their home loan should take heed of the following information.

When the home loan is granted the normal period that the client will take to repay the bond is 20 years and the prevailing bond rate at that time will apply. The Usury Act permits a bond holder to make payments in addition to the stipulated monthly instalment at any time.

However, should the bond holder wish to pay the full outstanding balance of the loan in one amount prior to the due date (the bond has to be in the books of the bank for 3 years), the following provisions will apply:

• The bond holder is required to give the bank 90 days notice in writing of the date the payment will be made.

• The notice may not be given before the expiry of a period of 90 days from the date when the loan was registered.
• The act clearly stipulates that the bank has the right to have an account on their books for a minimum period of 180 days from inception i.e. 90 days have to lapse after registration of the bond and then 90 days notice, which should be furnished to cancel the bond within the 3 year period.

This allows the bank to recoup some of their origination costs as a result of the potential interest income that will be lost. It takes anything up to 3 years before a loan becomes profitable to the bank.

The early termination fee is not a penalty imposed by the bank, but a recovery of interest income, which is specifically provided for in legislation.

Accounts to which early termination would apply:

• When a bond is cancelled within the first 3 years after registration with effect from 1 October 2001.
• All home loans with a fixed or capped interest rate agreement.

This allows the bank to recoup some of their origination costs as a result of the potential interest income that will be lost. It takes anything up to 3 years before a loan becomes profitable to the bank.

Process to determine finance charges debited to your home loan account:

• 90 Days interest is calculated on the outstanding balance at day of notice.
• The provisional figure is added to the outstanding balance together with other allowances such as insurance/assurance and admin fees, etc.
• On final cancellation, the unexpired portion of 90 days interest will be charged and debited to the bond account, and will be due by the bond holder.

Refund of early termination interest charged:

• Should the customer take out a new bond with the bank within 6 months of settling the previous home loan account, the client needs to advise the cancellation department of the new account number.
• The refund will not be considered until the new bond is registered.
  To avoid early termination – give 90 days notice!

This information may be valuable to investors as they often buy off-plan and sell on once the project is completed, which means they have not paid a single bond repayment and penalty interest will apply. So, take heed of the above information to avoid these costs, or make sure you factor the cost into your new sale price.

Please note: This information may vary from bank to bank and it is recommended that you check the rules with your bond consultant.

Chas Everitt Randburg Office
Tel: 011 801 2500
Website: http://www.everitt-randburg.co.za

Rescissions of Judgement – What is it?

“When a debtor does not defend the actions instituted against them (a summons) this results in the court granting a default judgment and the debtor is blacklisted.

So how  does the person get “unblacklisted” (the judgment rescinded)? Only by a court order – where the common law requirements and the provisions of the court rules are met and defaults rectified.

You are only entitled to apply for the rescission of Judgment that was granted against you if whoever blacklisted you consents thereto in writing or, failing that you can show that at the time of judgment you were not in willful default and you had a valid and bona fide defense to the action instituted against you.

If you get consent it is a simple matter to set aside judgment – your attorney brings a substantive application to obtain a rescission and the cost is approximately R1500 plus VAT for your attorneys services.

What happens if you don’t or can’t get consent?

You need to show the court that at the time of judgment you were not in willful default and had a valid and bona fide defense to the action instituted against you.

So what is Willful Default?

Before a person can be said to be in willful default, he must have known that action was being brought against him and deliberately ignore and not defend himself because he could not care less about the consequences of not dealing with the matter. PLEASE bear in mind that at present, the rules of the court do not require a summons to be personally served to yourself – it can be given to someone else on your behalf or merely fixed to the address which you declared your domicile address.

So what is a Bona fide defense?

Once you satisfied the court that you were not in willful default in allowing the judgment against you, you must demonstrate to the court a substantial defense. Was the judgment made in error? How? Did you make right with the party who blacklisted you?

In conclusion –  A Court has an inherent power to control the procedure and proceedings in its Court thus enabling litigants (the Creditors) to resolve their differences in as speedy and inexpensive a manner as possible. Judgments are there to protect the Creditors against bad Debtors.  Therefore a judgment is seldom placed to against a person without just cause. It is the Courts way of bringing a successful conclusion to a dispute between a Creditor and a Debtor. “

This article has been reprinted with the kind permission of Masilo Freimond Inc.
Tel : 011 958 0488
Fax : 086 610 0276
E-mail : info@masiloincjhb.co.za 

Advantages of Solar Power

Although solar power is a relatively new energy source, it may very easily become the most important energy source of our time and also, the future. The advantages of solar power are far-reaching and below are some of them:

• Solar power is a renewable resource, meaning that we are not in danger of depleting its reserves. Though it may disappear behind clouds momentarily and is unavailable at night, it generally returns in full force.
• The energy and heat from the sun is free. Once solar panels or solar thermal collectors are set up, there are no electrical expenses necessary to power them, meaning no unpleasant bills come the end of the month!
• Solar power is non-polluting. Unlike oil, solar power usage does not emit any greenhouse gases, nor does the acquisition of it harm ecosystems through spills or dredging. This is probably one of the primary advantages of solar power.
• Solar cells require very little maintenance, mostly because there are no moving parts that must be maintained.
• Solar cells can last a lifetime.
• In remote locations, solar power may be a more realistic energy option than running large lengths of electrical wires to connect to a grid.
• Solar power is incredibly versatile. A variety of inventions may be powered by it, including cars, water heaters, fountains, buildings, and satellites.

Overall, it seems that solar power is simply a more harmonious energy resource. To obtain other energy sources, there is a requirement of harvesting fossil fuels, animal matter, or plant matter. This is a great source of energy, not only because it is much healthier for all, but all in all it is also more reliable, not having to stress about black-outs and load shedding and even if we’re not using the energy it provides, the sun will come up again tomorrow and everyday after that.

Along with the advantages of solar power, it is worth remarking upon the disadvantages. These include sunlight not being a readily available resource in some areas of the world. Also, solar cells are still not particularly cheap. Of course, technology for this is improving, and it will continue to improve as the cost of other forms of power increase.

What can they do?

Solar panels can heat your swimming pool, your geyser, and in certain cases, depending on your annual energy expenditure, even power your entire house. Solar panel use in an average home will reduce annual energy costs by around 75%, largely paying for the installation, and with energy production that will only decrease generally 25 years after purchase to 80% of its peak level you have many years before replacement will be necessary. (This is referred to as the longevity rating, and there are varying degrees for different manufacturers and types of solar panels.)