Property valuation

In the real estate investment industry, South Africa follows a unique system in which each parcel is reflected in a diagram and ownership of the parcel is recorded in the corresponding Register of Deeds, available for public viewing. South Africa is known to have one of the best deed registration systems in the world with an exceptional degree of accuracy and security due to the influx of investment property in the country. The property can be owned individually, jointly or by a corporation or company registered within or outside of South Africa.

So why is the housing market falling so drastically?

With the amendment to the National Credit Act (NCA) that came into effect on June 1, 2007, the real estate industry became a wall of stability that is absolutely necessary in a country like South Africa. Despite the dozens of speculations and horror stories you may have heard about the NCA regarding home loans, the amendments would not have passed if there were chances of failure for the citizens of South Africa. So, to reassure everyone, the NCA will not affect the length of time required to grant or reject home loan approvals; While no one can guarantee the impact the NCA will have on the housing market, those stories are just a classic display of sensationalism.

Yes, the NCA has definitely changed the way banks and financial institutions operate when considering the approval of a mortgage loan or bond, but the municipality is almost certain that these types of loans will hardly be affected by the amended NCA. . The NCA should put an end to “reckless money lending”, thus protecting people from getting upset by borrowing money from the bank that they cannot afford to repay. In this way, people will be protected against the large monthly repayments of bonds; The NCA will make sure they feel comfortable paying off a home loan that their paychecks may be used to, while keeping them from drowning in debt.

The Nelson Mandela Bay rating

A recent case study describes how the NCA has already impacted property valuation. The first phase of the R65 million Nelson Mandela Bay Township property appraisal process that all city properties will undergo over the next two years has already begun. Although a final number has not yet been determined, the valuation process will result in an increase in rates according to each specific region. City Manager Graham Richards has also stated that some properties will be evaluated better than others, depending on where they are located in South Africa, which in turn will be reflected in their rates.

“The purpose of this is to determine a fair valuation of all properties, not only in Nelson Mandela Bay Township, but also nationally, so it is important that property owners allow data collectors, who carry accreditation correct, perform proper and accurate data collection of your property, “said Richards.

The most important factor that has changed is the loan’s qualification level. Before the amended NCA was introduced, financial institutions would make a home loan to a potential buyer based on just one-third of the buyer’s total income, in addition to their other debts, such as car financing, child student loans, bank accounts. clothes, etc. Now, with the NCA amended in practice, the loan is granted based on the available portion of the buyer’s income after all debts have been accounted for. Although the rate of real estate investment in South Africa is clearly declining, the method by which banks and financial institutions operate today looks much more promising than previous methods. Initially, with respect to the real estate industry, the amended credit law will be a setback in some of our plans that we may have had for the future. It would take some time to readjust to the new rules, but once it is passed, South Africans will see that the law is completely necessary and that we must strive for a healthy financial situation rather than burden ourselves with unnecessary debt.

However, it is true that young couples and newlyweds who wish to invest in a property together would have to save for a few years more than they initially planned or lower their expectations, as it would be more difficult to get a bond approved. . especially if it is your first link. The municipality claims this will cause younger couples to rent rather than buy, which in turn will boost the property rental market, which is a positive factor. The new property valuation process will also result in landlords being strict about how much they will award as rental income. Initial deposits to secure a rental apartment or home will also increase and residents will have to demonstrate that they can afford the monthly rent payment due to the increase in property valuation.

With the number of South African citizens drowning in debt, we should all try to look at the amended National Credit Act with an open mind and not be pessimistic because the three-story mansion in Llandudno is now even less affordable than before. The NCA will be a lifelong lesson for South Africans to be smart about their finances. The good news is that despite the drop in property sales now, the real estate industry is very positive and does not expect a noticeable decline in sales over the next few months. This is simply an interlude.