Sectional Title: A preferred option among home-buyers
Category Newsletter: Article
Sectional Title properties have shown resilience in the market and are now one of the most popular residential property types in South Africa, especially in the Western Cape.
The latest statistics show that Sectional Title properties have developed significantly throughout the country. At the beginning of the millennium building plans approved for this property type accounted for just 10.9% and in 2015 this percentage had soared to 38%. Affordability is the central reason South Africans are moving away from freestanding homes and into their own units on common property. The price range of these homes according to HomeBid is R500 000 to R1 000 000.
Another appealing feature is its advanced security measures around its perimeters that offer residents a more secure and safe lifestyle amid rising break-ins in freestanding homes. Sectional Title homes are typically found on the outskirts of municipalities and in or near city centres.
Data from Homebid has indicated that major metropolitan areas that show growth in sectional title transactions include, Durban, Johannesburg, Pretoria and Cape Town. The Mother City has witnessed a total 25.1% of sectional title transfers in 2015 and according to Absa, this property type accounts for approximately 63% of all home loans over the last five years. With such trends and the affordability and security perks that encompass Sectional Titles properties, it is predicted to grow in popularity with an increased number of South Africans choosing it as their preferred choice.
The Sectional Titles Act recognises the concept of vertical ownership and recently two new Acts have been signed into law and this includes: The Sectional Titles Schemes Management Act 8 of 2011(STSMA) and the Community Schemes Ombud Service Act 9 of 11 (CSOSA). These Acts will come into operation once its Regulations have been enacted.
The STSMA states that the Body Corporate must create and maintain a reserve fund to cover the cost of future maintenance and repairs of common property. These amounts may be prescribed by the Minister of Human Settlements but it is not confirmed how the reserve amounts will be established as the STSMA regulations have not been confirmed.
The main feature of the CSOSA is the establishment of an Ombud Service and include establishing and maintaining a service to resolve disputes, train stakeholders and checking, holding and promoting good governance of community schemes. The Ombud Service will ensure that rules comply with the STSMA - A function that the Deeds Office currently does not perform.
Coastal Property Group specialises in Sectional Title property management and the sale and rental of both residential and commercial properties in Cape Town.
Author: Coastal Property Group
