Sectional title vs freestanding

2014-04-27 15:00

Ownership, bills and security are just some of the factors to consider before deciding on whether you want a flat or apartment, or a freestanding home

If you are contemplating buying property, one of the many choices you will face is that of whether to buy a sectional title property or a freestanding one. But what is the difference?

The main difference is that a sectional title property is usually a flat or an apartment rather than a freestanding house. You can also buy a cluster or freestanding home within a sectional title development.

Purely on a cost basis, sectional title property is often cheaper than freestanding property. Paul-Roux de Kock, the analytics director at Lightstone, says of the nearly 850?000 sectional title scheme properties in the country, 82% are located in major metropolitan areas.

“The average sectional title property is currently valued at about R850?000, while the average freehold property is currently valued at about R1.2?million. This equates to a 41% price difference,” he says.

But the price difference drops in coastal areas such as Durban, Cape Town and Port Elizabeth.

“High sectional title property values in coastal areas are mainly due to the investment potential of those properties as holiday destinations,” says De Kock.

He adds that while a freestanding property might provide you with privacy and a back yard for your children, the security aspect in a dense urban area can significantly add to the costs.

For example, a freestanding property in Sandton, northern Joburg, will cost you about R3.2?million, on average, while a sectional title property in the same area will cost you R2?million less.

But aside from the price difference, there are other factors you need to take into account, such as:

»?Ownership – If you buy a freestanding property, you have full ownership of the entire property, including the land it is built on. If you buy a sectional title property, you only own up to the middle or centre lines of the outside walls, the floor and the ceiling.

» Bills – With a freestanding property, you are responsible for all the bills and maintenance. This will include taxes, insurance, maintenance, electricity, water and rates bills. In a sectional title scheme, the administration and maintenance of the common property is the responsibility of the body corporate.

The body corporate comprises the sectional title owners who then elect trustees to handle the management of the complex.

You will have to pay a monthly levy, which goes towards the care of the complex. Common areas typically include roads, shared gardens, entertainment areas, outside walls and outside plumbing.

Usually, a managing agent will handle the collection of levies and maintenance of the common property.

Abel Mngadi, the head of new business and sales at First National Bank, notes if you buy a sectional title property and you have exclusive use of an area, you are responsible for the maintenance of that area. “You may also have to pay a special levy for high-maintenance costs such as painting the entire complex,” he says.

» Security – A sectional title property offers you the option to “lock up and go” when you need to. A number of sectional title schemes today prioritise security and you may pay a premium for a scheme where there is a 24-hour security manned entrance.

But if you own freestanding property, you will be faced with security concerns when you go on holiday. Options include getting a house-sitter or asking your neighbour to check on your property.

Buying property is probably the biggest purchase you will make. Take time to consider your options and make the choice that is right for you and your purse.

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