Buying a Property in a Development? Here Is What You Should Know

Are you considering buying a property in a development? It can be a great way to secure a home in a community that has been specifically designed with your needs in mind. But before you sign on the dotted line, it’s important that you fully understand the ins and outs of buying in a development. 

When will you get the keys? How is it different from an ordinary transfer of property? Is it part of a sectional title scheme? In this article, we’ll explore the key things you need to know to make an informed decision. So, let’s dive in!

Advantages of Buying Property in a Development

Buying property in a development offers numerous benefits that include:

• You are buying a newly built property. Therefore, you will not need to fix anything.
• You can sleep peacefully as most development properties are situated in gated estates that offer great security.
• You will not have to pay transfer duty as most developers are VAT vendors and they will have to pay VAT to SARS on the transaction. 
• In many instances, however not all, the developer pays the transfer costs to the conveyancing attorneys appointed to attend to the transfer of the property from the developer to you. 
• The other properties in the development are also new and well maintained which has a positive impact on the value of your property. 

Now that you understand the advantages, let’s look at the types of development properties in the market.

Are All Development Property Sectional Title? 

Did you know that you can purchase a free-standing property (Erf) that’s part of a development and in a gated estate? Many people confuse purchasing properties such as these as forming part of a sectional title scheme, however there are huge differences. 

Buying an Erf in a development means buying land and property on it, while buying a property in a sectional title scheme only gives ownership of the unit and your undivided share in the common property. You won’t own the land and will be subject to body corporate rules.

However, a similarity between purchasing an Erf in a development and buying a unit in a sectional title development is that very often erven properties in developments may also be subject to rules of a homeowner’s association as sectional title properties are subject to the rules of the body corporate. 

The difference between rules of a homeowner’s association and that of body corporate rules is that homeowners association may also apply to properties outside the development but within specific areas whereas body corporate rules only apply to the sectional title properties within the sectional title scheme.

What To Consider When Buying In A Development

Other factors to consider when purchasing properties in developments include when the property will be transferred into your name, which will be dependent on the stage in which you purchased the property. 

For example: 

• If you purchased the property off plan, you could expect to wait a minimum of 1 year for the property to be transferred to you as the property hasn’t even been built yet.
• If you purchased the property in later phases of the development, you may receive transfer of the property within a couple of months. 

The transfer and bond process with developments differs to that of an ordinary transfer for the following reasons:

1. If the property forms part of a sectional title scheme, a sectional title register has to be opened in the Deeds office. 
2. Properties are transferred in bulk or phases, accordingly all units in a particular phase needs to be ready for lodgement i.e. transfer documents need to be signed, bond documents need to be signed (if the purchase price is being secured by a bond) and submitted to the bank together with building documents that the bank requires and a go ahead received from the bank, rates clearance certificates need to be obtained, transfer duty exemption receipts needs to be obtained, levy clearance consents and consents from home owners associations need to be obtained if applicable, whereas in a normal transfer, there is just one property to be transferred 
3. Since there will be a large set for the Deeds Office to process, the process from lodgement to registration for developments is longer than that of a normal transfer (which takes approximately 7 to 10 working days).

It is important to keep in mind that every development is different and varies in complexity based on the number of units involved and the transaction’s intricacy. 

Buying a property in a development has many advantages, but you should evaluate all the factors before you make a decision. Do you want to know more about property developments? Our team of conveyancing experts are happy to help. Get in touch with us today.