January 7 2024 12:30
This is an article for Seeff Property Group.
Buying a house in an estate differs in a number of ways from buying a freestanding house in a suburb. While you gain a lot in terms of security and lifestyle benefits, there are also added costs and rules that you need to adhere to.
Estate living is not just about security and lifestyle, but estate property is generally regarded as a good investment, according to the Seeff Property Group. Estates are the fastest growing housing trend, and buyers are increasingly prepared to pay more for a home in an estate for reasons such as security, lifestyle and the better managed environment.
Tiaan Pretorius, manager for Seeff Centurion, said there are often added lifestyle amenities such as swimming pools, clubhouses, and some even have a school or a retail store. Many come with open spaces for residents to enjoy an outdoor lifestyle such as play areas for children, green areas, and hiking, jogging and cycling trails, all in a secure environment.
Buyers are not always aware of the nuances attached to estates. The first thing to know is that the types of property in an estate can be either freehold or sectional title, or a combination of both as is sometimes the case to provide for different price points. A big difference is that there is usually an element of shared ownership in the form of an undivided portion of the communal property, depending on the type of estate.
If you purchase a sectional title in the estate, then you only own your section and not the land that it is on. If it is a freehold house, then you are usually purchasing the house as well as the piece of land within the estate that it is on. These properties would then be for your exclusive use, but the property in general would be subject to the rules of the estate in terms of use of common property, and general aesthetics.
Security is generally a big feature and could include aspects such as electrified perimeter walls or a fence, access control, and additional measures such as guards and CCTV.
Maintenance and management of the estate is another feature, said Gerhard van der Linde, MD for Seeff Pretoria East. Property owners are responsible for the maintenance of their respective properties, while a Homeowners Association (HOA), is responsible for common areas. Painting and exteriors of properties are generally regulated by the estate and must be adhered to.
All property owners form part of the HOA, but a committee of members or directors is usually elected to manage various aspects in the estate such as maintenance, security and so on, says Van der Linde.
Estates are regulated by law (Community Schemes Act), and subject to certain procedural aspects including annual meetings, financial management, and so on which are managed by the HOA as a self-governing body. It is also common for the HOA to appoint a management agency to assist with managing the estate including the monthly accounts.
In addition to property taxes, and utilities, homeowners in estates pay levies to maintain the estate to cover the management and maintenance costs. Accounts are sent to each property owner and must be settled on time, or the homeowner can face legal action.
There is usually a Memorandum of Incorporation (MOI), or a Constitution which governs the estate, and will include a particular set of guidelines or rules which deal with aspects relating to the design and aesthetics of properties, including improvements or renovations, building plans, as well as general conduct in terms of noise, parking, and so on.
Van der Linde says there may also be certain regulations pertaining to renting out the property which are important for those looking to invest in a buy-to-let property in an estate. Airbnb and short-term rentals in particular may also be subject to certain regulations.
Homeowners are usually required to attend meetings of the HOA, or to provide a proxy (which should be stipulated in the MOI or Constitution), in the event that certain matters need to be voted on, for example approval of financial statements, maintenance matters or the raising of special levies.
When selling a property in an estate, sellers must ensure that all levies and costs are up to date as Van der Linde says a clearance certificate will need to be obtained from the HOA before the property can be transferred. This includes any special levies.
Appropriate arrangements should also be made for access for the estate agent for viewings, as well as how marketing materials may be displayed. Copies of all documents pertaining to the estate including the MOI or Constitution and any rules should also be provided to the agent.
When purchasing a property in an estate, Pretorius recommends that prospective buyers ask for a copy of the MOI and rules beforehand so that they are aware of what they are buying into. They should check the rules, and ensure it aligns with their lifestyle needs.
The buyer should also check that they are purchasing in an estate with well-managed financials and a maintenance plan for the estate. Also ascertain whether the property is sectional title or freehold. It is also important to verify the cost of the monthly levies as well as the cost of general utilities so that you can budget correctly.
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