Key benefits of Sectional Title
This is reflected in the fact that Sectional Title (ST) properties now account for more than a third of home sales nationally, and more than 50% of sales in some areas, compared to just 10% of the market in 2010.
'In addition, the rising demand for ST homes has seen values in this sector of the residential market grow more than in the freehold sector in recent years and led to an increasing focus on ST projects among developers.'
He says the key benefit of ST schemes for home buyers and investors is, of course, their relative affordability, aided by the fact that in new apartment and townhouse developments, VAT is usually built into the purchase price so there is no additional tax for purchasers to pay.
'Meanwhile the recent increase in the Transfer Duty threshold from R1,1m to R1,21m has also put more pre-owned ST homes within the 'tax-free' category. The average ST home price in SA is currently around R1,2m, compared to an overall average home price of R1,5m.
'Purchasing an ST home is thus an ideal entry point to the market for young professionals aiming to build equity in property without overextending themselves financially.'
But ST is also a good option for investors, especially in a well-managed scheme where property values are protected and enhanced by regular maintenance and upkeep, jointly funded by all owners through the payment of their monthly levies, says Schaefer.
'The Sectional Titles Schemes Management Act (STSMA) provides a clear set of rules and governance requirements that ensure transparency, accountability and a good level of financial certainty and security for ST investors. And on top of that, ST schemes often provide stronger-than-average rental returns due to the ever-rising demand for apartments and townhouses in SA's big metros and other growth nodes.'
Meanwhile, he notes, ST schemes are becoming an increasingly popular retirement property option for seniors, who are finding that they offer a cost-effective way to own property compared to individual freehold ownership, where owners bear the full cost and effort of maintenance, or HOA-run estates where the entry costs are usually much higher.
'ST schemes typically also offer controlled access, boundary walling or fencing and on-site security, which are top priorities for older buyers seeking a safe and secure lifestyle. And levies are also generally lower and more predictable in ST schemes than in estates, which helps retirees manage fixed incomes more confidently.
'These days, many schemes are also working to foster a sense of belonging by promoting social interactions among neighbours, enabling owners to make the most of communal living while retaining their autonomy and privacy.'
Ultimately, Schaefer notes, ST ownership is about smart, sustainable living, 'and whether you're an investor or a home buyer, it's a property solution that combines great value with long-term peace of mind'.
Issued by the Trafalgar Property Group
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