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Choosing between Property Buying Vs Building


Many people have challenges when deciding between buying or building a home. A local property analyst stated that, “Both options have cons and pros. However before making a final decision it’s important to conduct comprehensive research,”

Factors to consider when building a home in South Africa

Research has revealed that new built homes have lower repair costs as opposed to old ones. Stats SA 2018 mid-year report revealed that the North West is the most affordable province, when it come to the cost of construction in South Africa.

With reference to the data building cost in the North West amount to R10, 130 per square meter (sqm). This is R9, 100 less then what it cost to build in KwaZulu-Natal. KwaZulu-Natal is one of the most expansive province   ranging from R19, 230 per square meter. Hence making the North West the best place to build a home in South Africa

Before a plan is drawn, it is vital to understand that at times new complex developments and vacant stands are usually on the outskirts of urban areas. This can makes access to amenities an issue.

Many people like having full control of the building process. Building your property from scratch allows you to customise your home. This in turn gives the individual a variety of options with regards to the layout, finishes and design. In accordance to their preferences. 

Building usually takes more time and at times may result in additional expenses that might be required by the   architect or engineer. In addition Land preparation and excavation for unseen ground formations should be considered.

The size of the stands in complex developments is usually smaller that of houses that are built in older established areas. It’s also very important to work with a construction team that has a reputable record. Working with professionals is highly recommended to avoid delays or additional costs in building your dream home.

What to consider when buying a home

Buying a home in an established neighbourhood has many advantages. For instance buying a home in an established neighbourhood means that the security might be better. This is because some neighbourhoods have security companies that patrol all the time.

Established neighbourhoods have all vital amenities such as, access to public transport, schools, shopping malls, hospitals within close proximity of one another. Buying a home is also a fast process in comparison to building a property.

When the house hunting is complete, you secure the bond, the deposit is paid and buyers move in within a period of 3 to 6 months. Buying a home is a big step and it’s a rewarding process.

However it is also important to take note of the disadvantages. A Fitzanne property agent noted, “You may move into a beautiful established house in a nice leafy suburb but be surrounded by homes that are deteriorating, this will have a negative impact on your property value.

Look out for broken windows, fences and neglected gardens. Check out the designs, layout and finishes. If there is a requirement for you to make major renovations do not buy the property.”

“Some defects are invisible when you are viewing a property hence it’s important to ask many questions and make use of professional property inspectors. Before making a final decision between buying and building make sure that you consider all important factors,” he concluded.

Is 2019 a good year for first time home buyers?

According to a Fitzanne Estates property agent 2019 is a good year for first time home property buyers. He noted, “2018 was a challenging year for the property market in South Africa, but so far 2019 is looking more positive.”

He explained that during the last quarter of 2018 the property market activity was hampered by economic challenges, political uncertainty and the increase in the prime lending rate to 10.25% which contributed to the slow property growth.

Better News For First Time Buyers

He said, “Although general market conditions for the first quarter of 2019 are not showing significant changes , competitive bank lending conditions and slow property price growth show a better opportunity for first time homebuyers who want to enter the home market.”

A local property analyst reflected on the demand of residential property, “ We now have a lower demand in the residential property market but despite this demand banks are competing strongly against each other making  loans more affordable and accessible.”

He added, “A Real property price growth that is negative means that the property market is affordable as wages increase by more than the property values. Property prices that are cheaper and favourable lending conditions are beneficial to first-time home buyers.”

What is the best time home property buyers to enter the market?

Rhys Dyer CEO of Ooba a home loans provider explained the best time for home property buyers to enter the market.

 “This is the ideal time for prospective first-time homeowners, including those without deposits, to enter the property market. 80% of our 100% bond applications in Q4 18 were approved compared to 72% in Q4 17.

While applications to Ooba by First-time Buyers increased by 3% year-on-year, our 100% bond applications showed an almost 7% increase over the same period.

“Although this is indicative of the demand for 100% bonds from first-time buyers, we are also seeing more second-time buyers successfully applying for 100% bonds. Buyers are finding it increasingly difficult to raise a deposit due to the challenging economic conditions and banks are more prepared to offer customers 100% bonds,” adds Dyer.

What is the #1 tip for first time home property buyers?

A Fitzanne Estates property management agent the most important tip for first time property buyers in South Africa, he said, “We advise first time home property buyers to shop around to get the best home deals available. Potential homebuyers must use free home loan comparison services that are available online for free.”

Rhys Dyer concluded by adding, “Prospective homebuyers should take advantage of this positive lending environment. Given the competition, amongst banks for new customers. We pre-qualify our buyers to make sure they shop in the correct price bracket, allowing them to confidently negotiate a satisfactory price knowing that getting bond finance is a mere formality.”

2019 Ten Tips for Purchasing Real Estate in South Africa

A real estate agent from Fitzanne Estates recently shared vital tips that you can use if you want to buy real estate in South Africa.

1. Make use of professional real-estate agents.

“People who want to buy real estate must make use of the best real-estate agents in town. Real-estate agents are professionals. They provide advice and guide you through the entire process of purchasing a property.

If you work with a reliable real-estate agent company, you are bound to get the best possible price in the shortest amount of time,” he said.

2. Conduct research on the current market.

Real-estate values fluctuate due to various reasons. Value fluctuations can be caused by broader national economic considerations. Its important to arm yourself with all the relevant market information before making any decision to buy hence conducting thorough research is essential.

3. Choose the best location available

According to the Fitzanne Estate agent, selecting the best location is essential. To ensure that your property investment continues to grow in value choosing the best location is key. “Explore the surrounding areas to check what sort of infrastructure exists. How bad or good is the security of the area?

Does the property have access to various modes of transport? Are schools around the area? Your reasons for the purchase can help you determine the best location.”

4. Understand the seller’s situation.

“Do not be afraid to ask sellers of the property questions. Get as much insight as you can to understand the motivation behind the selling of the property. Ask the seller and the estate agents any questions,” he noted. He explained that if a seller is in a hurry or under pressure to sell chances of them accepting a low offer will be high.

5. How long has the property been on the market?

The duration that a property has been on the market is essential. “If a house has been on the market for a longer period, it might be overpriced for current market conditions. Astute buyers normally get price cuts especially from buyers who are very desperate.”Knowing how long a property has been on the market can be to your advantage.

6. Research comparable homes.

The value of a home is governed by the current market. Most property markets are usually localised hence understanding prices of similar homes is essential. Comparative research can be easily done online. “Inventory of homes for sale in a specific location gives the house hunter the leverage to negotiate aggressively on the price.”

7. Think beyond price

The price is not the only negotiable. “Buyers must consider asking for concessions on items of repair or improvement or transaction costs” Its difficult to make any negotiations with newly built homes or developments. Buyers can gauge how fair an asking price is by purchasing a property valuation report or consulting an estate agent.

8. Choosing a mortgage

Make sure that you select the best mortgage that is available. Many banks in South Africa have recently eased their lending requirements. A deposit will enhance chances of home loans being approved at a quick and favourable rate.

This is where originators are invaluable, as they are able to approach multiple lenders, ensuring a higher probability of approval, as well as securing competitive terms. Their job is to shop your application around at all lenders in order for the banks to compete for your business, thereby securing the best deal possible.

9. Review structural aspects.

Before you purchase a house you must consider structural aspects.

Patent Defects: These are flaws that are clearly visible, they include wall cracks, sagging gutters, broken windows, missing tiles. A buyer must be aware of the general condition of the property.

Water pressure and geyser condition. Ensure that you turn on all the taps to check the water pressure. Also find out how old the geyser is. Also check that toilets flush properly.

Approved plans for all alterations. Consult the local municipality to find out if all buildings within the property that you want to invest are approved and fall within the building plan.

He noted, “If certain illegal alterations were carried out, you would be liable to rectify these alterations. This includes application costs for approval of the plans. The structure can be demolished if it does not conform to municipal regulations.”

10. Making an offer

Adequate research on the prices of recent sales in the area is vital before you make any offer. As a buyer you must be aware of the current property market conditions. Gauge how fair an asking price is. He concluded by stating,”Consult with the best estate agents or purchase a property valuation report.”

2019 Property trends to closely monitor in South Africa.

A Fitzanne Estates property management agent recently shared property trends to look out for in South Africa as the year progresses. He noted factors that have an impact on the performance of the property market.

”There are big influences within the political, social, economic and technical arena. At times what happens in the property can be a reflection of whats’ happening in the economy.”

⦁ Political impact

Elections signal uncertainty which sees some reluctance by buyers to commit, uncertainty evokes unease. Purchasing property is a big decision that one has to take which must be coupled with confidence.

“Another political concern is the question of land expropriation, this means that buyers are very cautious while some sellers are very eager. While certain categories of land could be expropriated, the government of South Africa has not stated that it will expropriate residential property,” he noted.

⦁ The rise of property technology

More buyers are already searching for new homes online. Fitzanne Estates is anticipating continued growing throughout 2019. The use of technology within the property sector enables sellers and buyers to save time and money.

Various property online tools and platforms provide information, analysis, insights costs and comparisons. Technology is a wonderful factor that allows transparency and some competitiveness within the property sector.

⦁ Estate living for security.

Estate living is set to rise because of the safety and security offered by many Estates. Many South Africans are purchasing house within security estates. In Gauteng many estates homes are available and few new security developments are now being established closer to the major hubs within Cape Town. Estates prices are very high and are set to rise throughout 2019.

⦁ The sharing economy

Friends entering the property market together or buying to Airbnb will gather more momentum throughout 2019. According to a Fitzanne Estates property agent, “An increase in investment property and tourists set to visit the Western Cape is expected.

⦁ The caring economy

As the cost of living continues to rise in South Africa. Many parents who have some money to share have no choice but to help their children get into the property sector. Some assist with deposits while others buy property in their children’s names. While children also help their parents sell their property to downscale.

⦁ Downscaling.

The increasing petrol prices and all-round living costs have added to the trend of sellers looking to down-scale in 2018 which we believe will continue in 2019, with sellers looking to live closer to work and school and cutting costs where possible.

⦁ Ecologically friendly housing

Many consumers in South Africa are always searching for ways to cut down on costs especially on household water and electricity usage. In 2018 many homeowners chose to invest in properties that have rainwater tanks and boreholes. This trend is expected to continue according to a local property expert.

⦁ Semigration and emigration

Due to the Western Cape water crisis. During the beginning of 2018, the semigration trend slowed down. A few people left their provinces and moved to Cape Town last year.

The dam levels are back up to the 70% to 80% region. Hence, in 2019 a high number of families from Johannesburg and Durban is expected to move to other provinces.

Sellers emigrating is another notable trend. The FNB House Price Index revealed that about over 7.5% of property owners are packing up and leaving South Africa. This trend is also set to continue throughout 2019.

The Fitzanne Estates property manager also shared the top 4 vital trends within the residential space that should be closely monitored.

1. Consumer confidence – Consumer confidence is essential and is positive, however, it has not yet resulted in the demand of residential property buyers. Hence, we have an over-supply of residential property. The main buying criteria is value of the property and features which include the size, place and condition.

2. The rental market – The rental prices and market are also expected to stay subdued. In the sectional title market there is oversupply of rental stock because of the high number of recently completed high-rise apartment blocks last year.

3. Access to finance – Access to mortgage bonds is expected to be favourable throughout 2019 as banks compete for business. Rate concessions to buyers, approval rates and loan to value criteria offered by different banks offer buyers options to get access to finance.

4. Property prices – Property price growth across most provinces is expected to remain subdued throughout the first half of 2019. Performance of the residential market in the second half of 2019 will depend on the outcome of the 2019 elections. Depending on the election results property, prices may increase or decrease.

3 Vital Factors to know about South Africa’s property market in 2019

There are hopeful sentiments about the performance of the housing market in 2019, according to a local property expert.

“Despite negative aspects affecting economic growth such as petrol price increase, recent increase in VAT and the improbability of interest rate cuts.

Consumers are facing a tough economic climate but hopes of a bright future are prevalent in the property market,’’ he noted.

An investment analyst explained that younger demographics value owning property. “The market is buoyant and active because of the younger demographics. Some banks are also playing a pivotal role as they are providing bonds,” he added.

  • Building Costs

Statistics SA revealed that KwaZulu-Natal has the most expansive construction costs in South Africa. While the North West as the cheapest.

Construction costs in KwaZulu-Natal are R9,610 per square metre and average building costs in the North West amount to R5,060 per square metre.

Limpopo is the second most affordable province, at R5,270 per square while Mpumalanga is ranked third at R5,690 per square metre.

Gauteng is the second most expansive province at R7,870 per square metre followed by the Western Cape at R7,020 per square metre.

The province with the largest amount of building plans approved per total square meterage for the period January to July 2018 was the Western Cape. Gauteng ranked second while KwaZulu-Natal third.

Costs of renovating properties vary but, in most cases, it will be substantially lower than the per m2 costs described.

  • Key investment areas

FNB’s estate agent survey revealed that the Gauteng residential market is very stable and strong.

Growth in residential property prices in Kwazulu-Natal and Gauteng have slowly rebounded. The East Rand has shown the strongest recovery in the metropolitan areas of Gauteng.

Pretoria homes sell in just over 11 weeks in comparisons to the national average of approximately 16 weeks. Pretoria is the fastest growing South African metro economy.

According to Global Metro Monitor, Pretoria is ranked 35th on a list of 300 of the world’s biggest metro areas.

Pretoria surpassed Cape Town and Johannesburg with a 7.6% growth in employment and strong GDP per capital growth. Across all price ranges in Pretoria and Johannesburg, the market is experiencing an upward trend in sales.

  • A rise in sectional title living

A Fitzanne Estates property agent explained that, the Gauteng province is experiencing a demand for more sectional title units.

“Sectional title units are developed with convenience in mind. Many sectional title units provide several amenities. They are normally positioned for hassle free commute to hospitals, shopping centres schools and sports clubs.”

Locations such as Fourways, Centurion and Midrand are sought-after because they are properly priced and are an excellent property investment opportunity.

He concluded by sharing a few words of advice, “If you are refurbishing or letting out your property. Make sure you deal with an experienced, professional, reputable property management company.”

Important costs to consider when selling property in South Africa

The costs of selling a house quickly add up, therefore it is vital to know the costs involved in selling your property to determine the exact profit that you will make.

The costs that you should be aware of include advertising, obtaining a rates and taxes clearance certificate, bond cancellation fees, obtaining compliance certificates, estates agents commission, and capital gains tax.

Home inspection

Other sellers may require a home inspection to identify any issues before placing their home on the market. Costs range from R4 000 to R8 000. The prices of home inspections differ and will depend on the service provider.

Advertising Costs

A Fitzanne Estates property agent explained that if you are dealing with a property agent, advertising costs are usually included, however, if you are advertising the property on your own capacity you would have to pay for the advertising costs.

Agents Commission

The property agent also noted that if you are dealing with an estate agent, the standard figure of commission 7.5% excluding VAT should be paid, however, this is not a set figure. The commission rate can be negotiated before signing the contract. If you want to avoid the commission costs you can sell your property privately, but if you are not experienced this can be a mammoth task.

Bond Cancellation

Bond cancellation fees are charged when you cancel your bond after selling your property. If you cancel within 2 years of taking out a bond there can also be an early settlement fee that will be required.

Rates and tax certificate clearance

The rates and tax clearance can be obtained from a body corporate or the local authority stating that your rates, taxes, and levies are paid up to date. To get the clearance certificate it is essential to ensure that the rates and taxes have been paid 4 – 5 months in advance before registration. This required payment can add up to a fair amount of money that has to be paid upfront.

Levies

Where the seller is in an estate or sectional title property, the process that determines the levies that should be paid is similar to the rates and tax certificate. The homeowners’ association or body corporate may request that the seller pays for their levies a few months in advance to ensure these costs are covered until transfer takes place.

Electrical Compliance Certificate

Obtaining a home’s electrical certificate of compliance is another cost which sellers must be aware of. The electrical compliance certificate is required by law for the property to be transferred to the buyer’s name.

According to the South Africa’s current legislation, an ECOC (electrical certificate of compliance) is only valid for two years. This means if the ECOC is older than two years, the seller will be required to get a new one.

Electrical Fence System Compliance Certificates

According to the Fitzanne Estates property agent, an Electrical Fence System Compliance Certificate is also a requirement if the homeowner has installed electric fencing as a security measure on his/her property. “It is vital to note that an ECOC and Electrical Fence System Compliance Certificate are two separate documents,” he emphasized.

Certificate of Conformity

It is mandatory for homeowners who have installed gas lines to have a certificate of conformity which indicates that the installation has been conducted by a qualified technician.  Obtaining a certificate of conformity is therefore vital.

Beetle Infestation Clearance Certificate

Homeowners selling property in the KwaZulu-Natal and Western Cape regions will need to provide the purchaser with a beetle-free certificate. According to the Fitzanne Estates property agent, the beetle certificate is required only in respect of two types of beetles. “While the certificate may not be compulsory, in certain instances a beetle free certificate will be required before the bank will grant finance to the buyer,” the agent noted.

The Fitzanne Estates agent concluded by stating, “Knowing what costs are involved in a property transaction is essential and will give you the seller an accurate amount when it comes to the profit earned once the sale has been finalized. Working with experienced property agents is advised to ensure the best outcome when selling your property.

Property Management Pros & Cons

Purchasing property and letting it out provides a healthy income stream to willing investors over long-term periods. However, managing commercial or residential, single-family, or multi-units is a hassle and headaches are inevitable.

Patience and hard work go into finding the right tenants and maintaining the property. Hence its vital to find the best property management firm. So what type of services does a property management company offer?

Property management includes screening the credit histories, backgrounds of applicants, drawing up leases and processing rent payments. Maintaining tax and legal records and dealing with maintenance issues and complaints.

Before choosing the option of dealing with a professional property management company, the first thing to consider is if you have the time and expertise to manage your own property. Can you conduct basic handyman tasks?

Are you a reliable electrician and are your plumbing skills solid? Do you mind being on call 24/7 to handle issues that will without doubt inevitably arise? Can you confront tenants over complaints or late payments?

Hiring a property management firm can eliminate after-hours phone calls and mitigate day-to-day hassles.  Some maintenance issues (such as determining whether to repair an old dishwasher or replace it with a new one) are sure to require you to assess the situation and determine how to proceed.

A big part of what any property management firm (or hands-on landlord)  is dealing with tenants daily. Responsibilities vary from advertising open units, screening prospective tenants, drawing up leases, handling move-ins and move-outs. Dealing with complaints, collecting rent, handling late payments and managing evictions.

Property management firms have legal knowledge in law aspects of the landlord and tenant relationship. This Includes understanding the rights of each party and how to proceed legally in the event of any problems that arise.

According to a Fitzanne Estates property management agent, “hiring a property management firm a good ideal especially if you do not want to deal with a lot of paperwork. A property management firm can easily draw up lease agreements and handle the billing and accounts for monthly rent.

However, if you only have one or two rental properties with long-term tenants, dealing with paperwork shouldn’t take more than a few hours each month.  Nor should it occupy more than one drawer of a filing cabinet.

But if you own an entire building with a high turnover rate, that volume and time commitment can add up quickly. Therefore, property management is an essential need that can free up some of your time.”

 

 

The Difference between Sectional Title and Full Title

When it comes to buying property, it is important to understand the different property types. Every registered property has a Title Deed which sets out the type of property and any restrictions that may apply. The question is often asked what the difference is between a sectional title and a full title.

Sectional Title is the ownership of units within a complex or development, such as an apartment block or semi-detached homes. The section owners collectively own the common property and share all rights and responsibilities such ownership entails. Sectional title properties are governed by a body corporate which is the collective name given to the owners of all units within the development.

Pros of Sectional Title

  • Sectional Title owners share the responsibility in payment of the body corporate’s expenses;
  • Costs are lower, as these are shared between all owners;
  • Sectional title units are very popular in the rental market and are usually leased out easily;

Cons

  • Owners cannot extend sections without the permission of all the other owners;
  • All owners are jointly responsible for any expenses and debts incurred by the body corporate. Which means if one of the members of the body corporate does not contribute in the form of a monthly levy, it affects you too!
  • There are always rules to adhere to;

 

With regards to Full Title, the owner takes on the entire financial responsibility for the property.  This could mean that maintenance costs are higher, however, Full Title properties have more independence and fewer rules to abide by.  Examples of full title properties are free-standing houses and clusters, even if it is situated in an estate or smallholdings.

 

When deciding to purchase your next property, feel free to contact the expert sales team at Fitzanne Sales on sales@fitzanne.co.za

 

What is the role of the Rental Housing Tribunal?

The Rental Housing Tribunal was established in 2001 and its main aim is to help resolve disputes that arise between landlords and tenants. The Rental Housing Tribunal acts as an independent body and all services that are offered are for free.

The rental tribunal can effectively deal with non-payment of rentals, failure to refund deposits, overcrowding, unacceptable living conditions, harassment, intimidation, lack of maintenance, determination of fair rentals, unlawful seizure of tenant’s belongings, discrimination, exploitive rentals, illegal lock-out or illegal disconnections.

According to a local property lawyer any complaints can be lodged in person or by mail. “You can call 0860 106 166/ 011 355 4000/ 012 483 5020. It is important to note that while a complaint is being handled, the landlord may not evict a tenant, a tenant must continue to pay all rent payable and the landlord must remedy any and all necessary maintenance.”

He noted that the required documents to lodge a complaint include: an id/ permit/ passport, the relevant lease agreement, proof of applicable payments, proof of the physical address of both parties, and contact telephone numbers.

“Once a case is opened, and a reference number is allocated to the matter, a preliminary investigation is conducted. The investigation determines whether the complaint relates to a dispute that constitutes unfair practice.

After the preliminary investigation all parties will be informed in writing and a mediation session will be arranged to resolve the issue. If no agreement is reached, the matter will be referred for a tribunal hearing or arbitration. When the arbitration has taken place, a binding ruling will be handed down to both parties involved.

Any ruling will be enforced in terms of the Magistrate’s Court Act, if one of the parties is dissatisfied with the outcome, he/she can have the matter reviewed by a High Court.

To avoid any issues between new tenants and landlords its vital for both parties to conduct a joint inspection of a property prior to occupation,” the property  lawyer explained.

Any defects to the property should be noted and a date agreed by which time they will be fixed. To avoid any future disputes landlords should rather make use of experienced property rental agents. Property agents are experienced in dealing with rental arrangements, background checks, financial and reference checks.

Although verification and check processes may take some time this process reduce the chances of future disputes and potential defaulters and undesirable would-be tenants that can be problematic.

Tenants should also ensure that they familiarise themselves with the rules and laws pertaining to rentals so that treated unfairly or exploited by landlords

 

 

Is a Community Schemes Ombud Service Vital?

A residential complex can be a breeding ground for disputes. People with different temperaments and values share the same living space, while rules and trustees restrict what residents can and can’t do. If not dealt with properly, disagreements can lead to a breakdown in relationships between neighbours, and mismanagement of the scheme.

Themba Mthethwa noted that, “South Africa needs a statutory body that will enable disputes in community schemes to be resolved easily and effectively. ” Mthethwa, who is the chief ombud of the Community Schemes Ombud Service (CSOS), explained that in the absence of an ombud service, the only recourse has been a professional arbitrator or the courts, even for minor disputes.

According to a local property agent, a judge lamented the fact that a High Court was burdened by a dispute between a homeowners’ association and an owner because of a barking Chihuahua. Most individual owners cannot afford litigation or arbitration, while the adversarial nature of the court process also acts as a deterrent against taking on people they have to live with.”

A law student, Isaac Morics noted that “The regulations, and the Act itself, are set to be a game-changer for “community schemes”, which include a variety of arrangements (residential and commercial) involving the shared use and ownership of property, the most well-known being sectional title and homeowners’ associations.”

All community schemes are now directly accountable to a body, tasked with ensuring that they are properly managed. Schemes must register with the CSOS and each year submit a return to the CSOS, listing their executives, the levies paid by each unit and their annual financial statements.

They must lodge their governance documents, such as their management and conduct rules, with the CSOS, and the service must approve any changes to these documents before they can become effective.

The CSOS is specifically mandated to ensure that sectional title schemes comply with the new Sectional Titles Schemes Management (STSM) Act, which also came into operation on October 7.

According to worldwide stats, South Africa has the fourth-highest concentration of community schemes in the world. Mthethwa noted that community schemes had an asset value of more than R800 billion in 2015 and managers of these schemes collect R11 billion in levies annually.

The launch of the CSOS was the culmination of a process that started in 2004, when the cabinet mandated a committee, consisting of representatives from various government departments, to investigate how disputes in sectional title schemes should be dealt with.

Although many people are only now starting to come to terms with the reality of the CSOS, it has been in existence since 2013, when the Minister of Human Settlements appointed the seven non-executive members of the CSOS’s board, who serve for a three-year term. The board appointed the chief ombud and the chief financial officer, who are also executive members of the board.

Mthethwa’s five-year term as chief ombud started on October 1, 2014. His priorities were to establish the CSOS’s head office, which is in Sandton, and to appoint and train staff, anticipating that the CSOS legislation would take effect the following year. As it turned out, the draft regulations were only published for public comment a year later, in October 2015.

Although the CSOS is an “ombud” service, neither the chief ombud nor any of the regional ombuds are involved in resolving disputes. They are essentially chief executives and administrators. Conciliators or adjudicators settle disputes.

The CSOS hopes that most disputes will be settled via conciliation (like mediation), where a trained conciliator works with both parties to facilitate a mutually acceptable agreement. Conciliation is a “no-fault”, informal process, and a settlement can be reached in face-to-face meetings or by the parties exchanging submissions.

If the dispute cannot be resolved by conciliation, or if conciliation is not appropriate, the case will be referred to an adjudicator drawn from a panel made up of retired magistrates and judges, and professional adjudicators.

Adjudication is more formal than conciliation, and the adjudicator will rule in favour of the parties (or dismiss the application) and issue an order that has the same status as a judgment of a magistrate’s court or the High Court.

A party who is dissatisfied with an order can appeal to the High Court, but the grounds are limited to how the adjudicator applied the relevant law. Mthethwa says this prevents litigants from resorting to the courts to delay the implementation of orders.

The CSOS could not issue adjudication orders until the final regulations were promulgated on October 7. In the 2015/16 financial year, the CSOS finalised 646 complaints, most of them (225) by conciliation, but a large number (133) were closed without being resolved because the applicants failed to submit information requested by the CSOS.

The balance of the applications was rejected, withdrawn, settled by the parties without conciliation, or referred to other tribunals.

Mthethwa says that, contrary to expectations, the vast majority of complaints were not about barking dogs or noisy neighbours, but were financial matters, including “excessive” levy increases.

The imposition of special levies and the “incorrect” calculation of levies were amongst the other complaints. He says a common problem underlies all these complaints: owners and trustees do not understand how to apply the legislation that governs sectional title schemes.

One of the CSOS’s responsibilities is to educate owners, residents and scheme executives about their rights and obligations, and Mthethwa says carrying out this mandate is crucial to ensuring harmony and good governance in community schemes. The service plans to roll out several free workshops around the country and make educational material available.

He says it’s apparent that many owners do not understand that, when they buy into a community scheme, they automatically become liable for the expenses associated with maintaining and repairing the common areas – such as the exterior of the building, corridors, lifts, gardens and paving.

“Owners don’t attend an AGM where it’s decided, for example, that the building has to be painted. Then they become angry when their levies are increased,” Mthethwa says. “But when we investigate these complaints, we find that the body corporate did, in fact, follow the proper decision-making process before the levies were increased.”

He says owners must get involved in their schemes, attend meetings, read the governance documentation, and hold their executives accountable.