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South African buyers seeking security and a fuss-free lifestyle are increasingly opting for brand-new homes in property developments. Driven by demand for community living and increased security, numerous residential developments and lifestyle estates have popped up over the years and CEO of ooba Group Rhys Dyer predicts that these developments will dominate the property landscape for years to come. “Newly built homes in developments appeal to potential homebuyers for many reasons.”
Dyer breaks these down as follows:
If you are interested in a specific new development, but the developers have not completed or begun the construction of the houses yet, one option is to buy ‘off-plan.’ Buying ‘off-plan’ means buying a property before it has been built and instead basing your decision off of the developer’s vision and architect’s drawing.
This option does require a level of trust but can often work out to be much cheaper as deposits are lower than if you were buying an existing unit and bond repayments are delayed until construction is complete – giving you up to 24 months to put money aside and budget accordingly.
No Transfer Duty
Drive past the site of any new development and you’ll often see marketing banners advertising ‘No Transfer Duty’. This is because the payment of transfer duty only applies when a property changes ownership, and this is not the case when purchasing a newly built home.
In South Africa, any existing property priced over R1 000 000 requires the payment of a Transfer Duty, which increases exponentially with the cost of the house. Therefore, buyers stand to save significantly when purchasing a home in a new development where Transfer Duty does not apply, especially if it is a multi-million-rand property.
With the Transfer Duty on a R3 million freehold home calculated at R146,000 and R256,000 for R4 million freehold home using ooba’s free Transfer Cost calculator, exemption from these fees is a major financial benefit for prospective buyers looking to buy an upmarket home.
However, Dyer does caution that buying a newly built home in a development is still subject to VAT.
“You will still need to pay VAT in the absence of Transfer Duty as the house is registered in the name of the development company and still subject to tax,” he says. “But if you are buying a new build, you will still pay less tax than if you were buying an existing property from a VAT registered private seller. This is because a new development property is registered at the minus-VAT value as an incentive to buyers.”
Aside from the financial rewards, there are numerous benefits to buying in to a new built development:
- The home is a blank slate that you can furnish and fit to your personal taste and requirements.
- Less maintenance and upkeep are normally required on new houses.
- Newly built homes are constructed with energy efficiency in mind, often incorporating green technology.
- Security measures such as access control, biometric access, perimeter fences and CCTV.
- Community living.
Developments on the Rise
“We’ve noticed a huge uptick of new developments popping up across the country that cater for a range of buyer needs, including family-friendly estates, coastal developments and lifestyle estates,” says Dyer.
Dyer mentions that developments recently completed or under construction in 2022 to watch include Acrewood Estate in Hout Bay and Brooklyn Forest Estate in Ballito for those seeking a coastal lifestyle. “The recently completed Lion Pride Lifestyle Estate in Fourways and Matumi Valley appeal to those who want that ‘semigration’ outdoors lifestyle without having to leave the city, while The Kenilworth in Cape Town and Madison Estate in Sandton are targeted at those looking for an urban oasis in the heart of the city.”
Dyer’s final piece of advice is to ‘shop around’ for a bond. “Choosing to purchase a home in a new development is a savvy financial decision, but you should still maximise your savings by using a bond originator such as ooba Group to secure the best possible interest rate and home loan.”
The post Everything You Need to Know About Buying in to a New Development appeared first on Everything Property.
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