South Africans seeking security and a fuss-free lifestyle are increasingly opting for brand-new homes in property developments.
With the numerous residential developments and lifestyle estates having ‘popped up’ over the years, CEO of ooba Group, Rhys Dyer, predicts that these developments will dominate the real estate landscape for years to come.
“Newly built homes in developments appeal to potential homebuyers for many reasons”, he says, breaking 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 which means purchasing a property before it has been built and instead, basing your decision off of the developer’s vision and architect’s drawing.
This option requires a level of trust, but it 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 to budget accordingly.
No Transfer Duty
Drive past the site of any new development and you will 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 million 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 Duties do not apply, especially if it a multi-million-rand property.
With the Transfer Duty on a R3 million freehold home calculated at R146 000 and R256 000 for a R4 million freehold home, exemption from these fees is a major financial benefit for prospective buyers looking to buy an upmarket home.
Less Value Added Tax (VAT)
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. But if you are buying a new build, you will still pay less tax then 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 other 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.