Buying home gives security

2018-04-11 06:00

There is never a bad time to buy property if you do your homework, plan your budget and get the right help.

Just Property gives tips on buying property and lists points to consider as motivation for buying.

If you find a property where your bond repayments would be close to what the market-related rent would be, consider it to rather buy than rent.

Make a list of the advantages and disadvantages of committing to long-term bond repayments, affordability, costs and the impact on your flexibility.

Brian van Wijk of Just Pro­perty says rent is typically around 0,75% of the value of a property. This will help one to identify the readiness to make the commitment.

  • Upfront and recurring costs

Rental costs include security deposits, non-refundable deposits, rent and utilities (none of which gives you any return on investment).

The only time this makes sense, says Shaun du Bois, principal of Just Property, is if a person is on a short-term contract in a new city.

“In such a case it would be best to rent, as the cost of finance and transfer fees make purchasing a property unwise in almost all such cases.

“Buying and selling every few years makes little sense once you consider all the costs. For many years, most of the bond repayment is interest and it is only far down the line that the capital starts to be repaid in any meaningful way.”

  • Little or no creative freedom to renovate and decorate

As a tenant, one needs to get permission to paint, for example, the cupboards of the kitchen in the rental home.

Even if one wants to install a rainwater tank, approval must be asked. The landlord may agree to improvements, but the tenant will only benefit as long as he or she lives there.

Every beautiful curtain rod the tenant installs to replace the cheap ones when moving in, every plant planted and every cupboard or wall painted improves the home of the owner, and the tenant has to leave it behind when moving.

It is a much better idea to buy a home and make it yours.

Any improvements to an own home equate to long-term investment. Any improvement made on someone else’s home, offer short-term gains for the tenant, but long-term benefits for the owner.

  • No control over annual rent increases

Rent increases annually and the increase is usually set at 10%; way above inflation.

“If you wait for the perfect time to buy, you may wait forever,” says Du Bois.

“Don’t stay out of the property market because you are worried about the future; your concern is the best reason to get into the market. One must be careful of becoming too fearful because of temporary political or economic issues.

“Property will always give good returns in the long run. The property market is optimistic that interest rates will be lowered again in the next cycle, which will take some of the pressure off consumers.”

  • Property being let might be sold

It can be stressful when the tenant expects the lease to be renewed, to instead be given one or two months’ notice to pack up and find another place.

Not all tenant-landlord relationships are good. If the tenant gets into a disagreement, he or she could find security threatened and may even face eviction proceedings in the case of serious dispute.

  • Settling into responsible “adulting” difficult

The longer one puts off entering the property market, the harder it will be to do so.

Most middle-class tenants are renting properties that they could not afford to buy, consi­dering that rentals are usually only 75% of bond repayments.

One gets used to a certain standard of living, and every year it is harder to make the sacrifices needed to buy a property.

Paul Stevens, CEO of Just Property, says right now there is a great opportunity for buyers. Interest rates are likely to fall very soon, but the property market is under pressure and buyers can take advantage of current market conditions.

“The market should recover when interest rates fall, giving buyers lower interest rates on their bonds and a healthy profit when they sell.

“This is a long-term view. But one only needs to look at what properties sold for 20 years ago to know that the sooner one purchases, the better.”

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