Draft media release
What goes up, must come down
Alwyn van der Merwe, director of investments at (SPI) goes against the grain, saying that high oil prices are not sustainable and explains just why he thinks so…
Johannesburg, June 19, 2008: The oil price is not sustainable at its current high levels and reserves are simply not as critically low as many believe them to be. This is according to Alwyn van der Merwe, director of investments at Sanlam Private Investments (SPI), who was speaking at a second quarter market review today.
Van der Merwe said that, even though the price of oil had spiraled from $60 to $135 per barrel in the past 12 months, the medium to longer term outlook for the oil price was at significantly lower levels relative to the lofty current price. “Of course, the oil price is currently high because of risk priced in - and justifiably so, based on very low spare capacity - but this is simply not sustainable in the long term.”
Van der Merwe said that one of the key reasons for SPI’s view was that it did not share widespread concerns that conventional reserves were at critically low levels. “Based on estimates by BP we hold the view that global oil resources still have in excess of forty years of production left,” he said in response to the theory that low reserve levels have contributed to increasing prices. In light of this, among other factors, he believes that in the long term the oil price should come down.
Van der Merwe also believes that the strains on current capacity utilization should ease in the next few years as investments on future production in the last five to ten years is expected to come on stream. Oil has also become a less affordable commodity. Oil consumption expressed as a percentage of local GDP, is running at a forty year high – a figure that is not sustainable and could be expected to change future demand patterns. High prices will ultimately change behavior patterns over the longer term. Where possible users will either use less oil or will try to develop alternatives for a commodity with traditionally limited substitutes.
Examining the reasons behind the current price hike, Van der Merwe said one critical factor that drove up the price of oil was the shortage of spare capacity in the oil producing world. If the oil producers do not have spare capacity, market participants will drive the price to much higher levels given the political risks associated with many producers and frequent historic incidents that have disrupted supplies. “There is a big premium in the current oil price based on the perceived risk by the market.
He said these were not the only factors driving the oil price higher. “Many commentators have argued that speculators have contributed to driving up the oil price. Although it may be difficult to quantify the role of speculators, it would be fair to say that some speculative activity added to the high oil price. In addition the cost of production has increased significantly as the inputs in the production process have gone up sharply.
” However these factors were not enough to justify the current price and, according to Van der Merwe, certainly not enough to sustain it. One could argue that these risks or perceived risks are not enough to explain an oil price that jumped from $60 a year ago to the current $135 plus price now, but when you find supply side disruption where capacity is tight, it is understandable that the price will respond aggressively.”
Despite his belief that the price is unsustainably high on the long term, it has become a lottery to forecast over the shorter term. He therefore still remains cautious on the global economic growth outlook due to the significant impact the high oil prices will have on global growth and local disposable income. “Historically, global growth suffered each time there was an oil shock. This time it may be no different,” he said.
“There are serious inflation implications. Locally, the high oil price is partly responsible for the inflation rate that is way outside the official target range of three to six percent.
A combination of lower growth and higher inflation will cause a dilemma for monetary policy makers,” he says. While the oil price remains at these levels, it is tough to argue that the governor of the Reserve Bank, Mr Tito Mboweni, will apply a more accommodative stance when he formulates monetary policy.
The high oil price impacts negatively on the currency. The terms of trade (ratio between import and export prices) is likely to come under pressure and therefore will put further pressure on the South African currency. “It is for that reason that we argue that investors should ensure that their overall portolios are well diversified geographically. The same argument applies to an equity only portfolio. Investors should ensure that they are sufficiently exposed the industrial rand hedge shares (such as Remgro and SA Breweries) that will protect them against a decline in the rand but also against the risks of subdued global economic growth,” he said.
In conclusion, the short term outlook for the oil price remains uncertain. In the longer term perspective the best cure for the current high prices would be high prices. “This means that the high prices will ultimately change behaviour patterns of consumers – and in time, this will eventually drive the oil price down,” he concludes.
Ends
Sanlam Private Investments
Alwyn van der Merwe
Sanlam Private Investments
Tel: 021 9502273
Cell: 0824595791
Email: alwynvdm@spi.sanlam.com
Nuraan Adams
Atmosphere Communications
Tel: 021 469 1566
Cell: 082 3041022
Email: Nuraan@atmosphere.co.za
About Sanlam Private Investments (SPI)
Part of the Sanlam Investment Group, SPI is a private client portfolio management and stockbroking business, serving high net worth individuals, charitable trusts and smaller institutions. With some R50 billion of assets under management, it is the second largest South African private investment manager, with branches in Cape Town, Durban, George, Knysna, Johannesburg, Sandton and Pretoria. For more information, visit www.sanlamprivateinvestments.co.za.
Tuesday, June 24, 2008
Friday, June 20, 2008
Unit for sale - R 678 000 neg - Brackenfell, Cape Town
Summerville, Brackenfell
Tenant pays R 4500 pm
Erf size 322m2
House size 68m2
3 bedrooms, 2 bathrooms, 1 garage, enclosed garden
Secure complex
Tuscan style
Levies +- R 140 per month
Contact vania@bondapply.com for more info
Wednesday, June 11, 2008
Property still in demand
Posted to the web on: 09 June 2008 Business Day
Property still in demand
BIDDING was brisk at the well-attended Alliance Group multiproperty auction on Wednesday where sales of half of the 24 properties on offer were confirmed on the floor. “It was a great turnout and shows that the property people aren’t panicking about what they see as a price adjustment,” Norman Raad of the Alliance Group said afterwards.
“The prices we achieved were very good seeing the market has come off its peak. Last year we saw a 10% yield; this year we have a 12,5% yield. Also, those dealers sitting on cash are looking for investment prospects.”
A brand new triple-A grade office block in Longmeadow Business Park fetched R26m, the highest price at the auction.
The building, at 86 Angus Drive, Longmeadow East, has a gross lettable area of 6940m² in what auctioneer Rael Levitt describes as the prime industrial node in the country.
The building has been recently completed and was sold with vacant occupation.
Following closely, were three office blocks in Mellis Park, Rivonia. The buildings stand on what was once a leafy estate with a caravan park belonging to the Mellis family, and was opposite Liliesleaf Farm which featured prominently in the Rivonia Trial of the 1960s.
The auction got off to a good start with the sale of a retail centre with blue chip tenants in Nelspruit. It has a gross lettable area of 2072m² and a gross income of R1,32m a year. The knockdown price was R7,5m.
A retail and office block in Vanderbijlpark sold for R3m. It has a gross lettable area of 1669m² and a gross income of R1,17m a year. Two adjoining blocks of flats housing 18 flats on Bedford Ave, Benoni, fetched R3,6m, and a block of 13 flats in Florida was knocked down for R3,1m.
An industrial warehouse in Steeldale sold for R10m. The building, with a gross lettable area of 4807m² and a gross income of R54706 a year, was sold with four industrial cranes.
Two hotels came under the hammer: a boutique hotel and health spa in Hyde Park with a gross lettable area of 1350m² fetched R7,5m and R15m was paid for the Sandton Park Hotel in Bramley Park. The latter has 62 suites and a 70% occupancy rate and offers an income of R5,17m a year.
A grade-A office block in Braamfontein attracted interest. The building sold for R9,2m.
Property still in demand
BIDDING was brisk at the well-attended Alliance Group multiproperty auction on Wednesday where sales of half of the 24 properties on offer were confirmed on the floor. “It was a great turnout and shows that the property people aren’t panicking about what they see as a price adjustment,” Norman Raad of the Alliance Group said afterwards.
“The prices we achieved were very good seeing the market has come off its peak. Last year we saw a 10% yield; this year we have a 12,5% yield. Also, those dealers sitting on cash are looking for investment prospects.”
A brand new triple-A grade office block in Longmeadow Business Park fetched R26m, the highest price at the auction.
The building, at 86 Angus Drive, Longmeadow East, has a gross lettable area of 6940m² in what auctioneer Rael Levitt describes as the prime industrial node in the country.
The building has been recently completed and was sold with vacant occupation.
Following closely, were three office blocks in Mellis Park, Rivonia. The buildings stand on what was once a leafy estate with a caravan park belonging to the Mellis family, and was opposite Liliesleaf Farm which featured prominently in the Rivonia Trial of the 1960s.
The auction got off to a good start with the sale of a retail centre with blue chip tenants in Nelspruit. It has a gross lettable area of 2072m² and a gross income of R1,32m a year. The knockdown price was R7,5m.
A retail and office block in Vanderbijlpark sold for R3m. It has a gross lettable area of 1669m² and a gross income of R1,17m a year. Two adjoining blocks of flats housing 18 flats on Bedford Ave, Benoni, fetched R3,6m, and a block of 13 flats in Florida was knocked down for R3,1m.
An industrial warehouse in Steeldale sold for R10m. The building, with a gross lettable area of 4807m² and a gross income of R54706 a year, was sold with four industrial cranes.
Two hotels came under the hammer: a boutique hotel and health spa in Hyde Park with a gross lettable area of 1350m² fetched R7,5m and R15m was paid for the Sandton Park Hotel in Bramley Park. The latter has 62 suites and a 70% occupancy rate and offers an income of R5,17m a year.
A grade-A office block in Braamfontein attracted interest. The building sold for R9,2m.
Tuesday, June 10, 2008
Property price drop may not be as big as feared
http://www.persfin.co.za/index.php?fSectionId=709&fArticleId=4443202
Residential property prices could continue to fall for two years. We report on how much pain property owners, sellers and buyers can expect to take, as well as how to make the best of the downturn.
June 7, 2008
By Neesa Moodley-isaacs
Property economists have painted a rather gloomy picture of the prospects for the residential property market in the years ahead, although the situation is not as dire as predicted by one major estate agency earlier this week.
John Loos, First National Bank's property strategist, says the list of negative influences on the residential property market is long, and includes rising interest rates, increasing inflation, a slowing economy, the impact of the National Credit Act, the electricity crisis, low income yields and the recent xenophobic violence.
Loos has projected a 21-percent decline in the value of new mortgage loans and re-advances granted for this year and says we are entering a period of house price deflation.
"South Africa's new mortgage market grew in value by almost 900 percent from 1999 to 2007 and house price inflation over the past decade was a few hundred percent," Loos says.
He says this means the current downturn in the property market is not the end of the world. However, because the list of negative factors affecting the market is longer than he had previously anticipated, Loos says the magnitude of the downturn would be more extreme than previously forecast.
Lew Geffen, the chairman of Lew Geffen Sotheby's International Realty, was quoted earlier this week as saying that property prices could fall by up to 40 percent from last year's highs.
However, property economist Erwin Rode, of Rode & Associates, says estate agents tend to equate market activity with changes in house prices. Although the number of house sales could drop by as much as 40 percent in the year ahead, this does not automatically mean that house prices will fall by the same percentage," Rode says.
"I expect that by next year or the year thereafter, residential property prices will have fallen by about 10 percent from current prices," he says. According to Rode, the bleak outlook is not likely to disappear overnight and property prices could hit rock bottom by 2010.
Geffen was quoted in daily newspapers this week as saying that his prediction of a 40-percent drop in house prices is borne out by the fact that banks are only offering mortgages where clients put down a five-percent to 25-percent deposit.
He says Absa, for example, is only providing 100-percent home loans for properties valued up to R800 000. For properties priced from R800 000 to R2.7 million, Absa will provide a 95-percent loan and, if the property is priced between R2.7 million and R4 million, the bank is only providing a 90-percent loan.
No straight line
However, Jacques du Toit, Absa's senior property analyst, shares a similar outlook to Rode's.
"You cannot draw a straight line between the deposit banks are asking mortgage owners to pay and a possible drop in house prices. There is much more to the calculation and it's simply not that straight- forward," he says.
Du Toit says he does not foresee a 40-percent drop in prices across the board in the next year.
"While we do expect the downward trend in house prices to continue, it definitely won't be to the extent stated [by estate agents]," he says. Du Toit says he expects the downward trend to bottom out late in 2009, with a slight sideways movement before the property market recovers very gradually from 2010.
Du Toit says the factors that have to be considered when looking at the property market include inflation and interest rates.
"Inflation is likely to remain quite high for some time and so will interest rates. The housing market is interest rate-sensitive, and people are likely to sell despite the fact that they are going to get lower prices than they would have a year ago. This applies particularly to people who bought property as speculators with the intention of selling later at a high profit," Du Toit says.
Mortgage bond repayments have already increased 32 percent on the back of nine rate increases since June 2006. According to Du Toit, overdue mortgage loans as a percentage of total mortgage loans increased from a low of one percent at the end of 2006 to 1.5 percent at the end of 2007, and probably increased again this year.
However, they are still well below the average of 6.6 percent recorded in 1999 after interest rates went as high as 25.5 percent in 1998.
Sizwe Nxedlana, the property economist at Standard Bank, says inflation is expected to remain above the Reserve Bank's target band of three to six percent for the next three years.
Nxedlana says further interest rate increases will mean that fewer people will pass the affordability test for new mortgage bonds, fewer mortgages will be granted and registered, and growth in house prices will be less likely.
Further stagnation
Rode says there is usually a lag of nine months between a change in interest rates and a change in house prices. "If you take into account that we are expecting two more interest rate hikes and then are looking at an effect on house prices nine months after the last interest rate hike, we are looking at an extended period of stagnation, if not a decline, in prices," he says.
Many sellers are still expecting to obtain unrealistic prices for their homes, based on the high price growth of the past few years. Rode says sellers need to drop their asking prices to more realistic levels.
"When you are making a buy-or- sell decision, you should never consider the historic cost of the house, as this is irrelevant.
"For example, if you bought a house for R2 million six months ago, the price you paid then has nothing to do with the price you will get for the same house if you sell it today. People assume they must get a better price than the price they paid, but that's not how the market works," Rode says.
How you can survive the property blues
High interest rates and high inflation are here to stay for a while. It is unlikely that we will see a drop in either in the near future, property economist Erwin Rode, of Rode & Associates, says.
If you do not urgently need to sell your property, you should sit out the drop in the market over the next two years at least. This means if you have a strong cash flow, are able to meet your mortgage bond repayments and do not need to sell - for example, to avoid repossession - you should not try to sell your property right now.
If you have bought a property for investment purposes, Rode says, you should put it up for sale and get out of the market as soon as possible.
The residential property market is not likely to be a good investment for the next five years, he says.
Many property owners who took on a mortgage bond of 100 percent or more over the past five years are likely to face a negative equity situation in the next 18 months, Rode says.
Negative equity means you owe more money on your mortgage bond than the actual value of your property. If you have bought a property as your primary residence, this does not necessarily present a huge problem, because all you have to do is ride out the next few years and make sure you are able to meet your mortgage bond repayments as they increase in line with interest rates.
However, you would be well advised not to take out any further loans against your property in the near future, because, should you be forced to sell your home in the next two years, it is unlikely you will obtain a selling price that will cover the entire mortgage amount you owe.
Rode says now is a good time to renovate your home, because small builders are being hit hard. "Small builders are under pressure and looking for work. You will probably get better quality work done on your home now, because small builders are more likely to look after their customers in the current environment," he says.
If you are looking to buy a property, Rode says you should not be in a hurry. You should ideally wait a year or two, because you are likely to pick up a better bargain as the property market gets worse for sellers.
Fixing your home loan interest rate may prove the more costly option for you
You may be thinking about fixing the interest rate on your home loan to avoid dealing with further interest rate hikes and the stress of higher mortgage bond repayments.
However, Mokgatla Madisha, a fixed-income analyst at Investec Asset Management (IAM), cautions that this may be a costly decision. "You could end up paying more in interest than if you were to ride out the [interest rate] cycle," he says.
Although he agrees with property economists that inflation is likely to remain above the Reserve Bank's target band of three to six percent "for a while", Madisha does not think South Africa is facing a situation of ever-increasing inflation and interest rates over the next two years. Instead, he says, inflation is likely to be elevated over the medium term.
"A year from now, interest rates could start to fall, but they are not going to fall very fast, neither are they going to fall very far," he says.
Madisha says fixing your interest rate for two years could mean that you are stuck paying off your mortgage bond at 16 percent in 2010 while inflation could have fallen back to six percent and interest rates could be reduced to 12 percent.
Banks generally offer you the opportunity to fix your interest rate at about half to one percentage point above the prime rate - currently 15 percent - for a period of up to two years. A variable interest rate linked to the prime rate is usually anything between one and two percentage points below prime.
The disadvantage of fixing your interest rate now is illustrated by the following examples:
# Homeowner A, who has a mortgage bond of R1 million and who pays an instalment of R11 715 a month at prime minus two percentage points - that is, 13 percent - decides to ride out the interest rate cycle. If it is assumed that interest rates are raised by one percentage point at each meeting of the Reserve Bank's monetary policy committee in June, August and October, and then stay level until May 2009, the prime rate will be 18 percent by October, and Homeowner A will be repaying R13 912 a month on an interest rate of 16 percent.
# Homeowner B, who also has a mortgage bond of R1 million, chooses to fix his home loan at prime plus one percentage point now, which will result in his monthly repayment increasing to R13 912.
This means Homeowner B will immediately have to cough up every month what Homeowner A will start paying only in October. Over a full year, Homeowner B will be paying about R6 000 more.
Madisha says IAM does not foresee a three-percentage-point hike in interest rates during this year.
"We anticipate a further one to 1.5-percentage-point-rate hike until the cycle peaks, which would mean that the homeowner on a fixed rate is even worse off. He could be stuck for another year at the fixed rate, while those on a floating rate, or a rate linked to the prime rate, could start enjoying the respite of lower interest rates."
Residential property prices could continue to fall for two years. We report on how much pain property owners, sellers and buyers can expect to take, as well as how to make the best of the downturn.
June 7, 2008
By Neesa Moodley-isaacs
Property economists have painted a rather gloomy picture of the prospects for the residential property market in the years ahead, although the situation is not as dire as predicted by one major estate agency earlier this week.
John Loos, First National Bank's property strategist, says the list of negative influences on the residential property market is long, and includes rising interest rates, increasing inflation, a slowing economy, the impact of the National Credit Act, the electricity crisis, low income yields and the recent xenophobic violence.
Loos has projected a 21-percent decline in the value of new mortgage loans and re-advances granted for this year and says we are entering a period of house price deflation.
"South Africa's new mortgage market grew in value by almost 900 percent from 1999 to 2007 and house price inflation over the past decade was a few hundred percent," Loos says.
He says this means the current downturn in the property market is not the end of the world. However, because the list of negative factors affecting the market is longer than he had previously anticipated, Loos says the magnitude of the downturn would be more extreme than previously forecast.
Lew Geffen, the chairman of Lew Geffen Sotheby's International Realty, was quoted earlier this week as saying that property prices could fall by up to 40 percent from last year's highs.
However, property economist Erwin Rode, of Rode & Associates, says estate agents tend to equate market activity with changes in house prices. Although the number of house sales could drop by as much as 40 percent in the year ahead, this does not automatically mean that house prices will fall by the same percentage," Rode says.
"I expect that by next year or the year thereafter, residential property prices will have fallen by about 10 percent from current prices," he says. According to Rode, the bleak outlook is not likely to disappear overnight and property prices could hit rock bottom by 2010.
Geffen was quoted in daily newspapers this week as saying that his prediction of a 40-percent drop in house prices is borne out by the fact that banks are only offering mortgages where clients put down a five-percent to 25-percent deposit.
He says Absa, for example, is only providing 100-percent home loans for properties valued up to R800 000. For properties priced from R800 000 to R2.7 million, Absa will provide a 95-percent loan and, if the property is priced between R2.7 million and R4 million, the bank is only providing a 90-percent loan.
No straight line
However, Jacques du Toit, Absa's senior property analyst, shares a similar outlook to Rode's.
"You cannot draw a straight line between the deposit banks are asking mortgage owners to pay and a possible drop in house prices. There is much more to the calculation and it's simply not that straight- forward," he says.
Du Toit says he does not foresee a 40-percent drop in prices across the board in the next year.
"While we do expect the downward trend in house prices to continue, it definitely won't be to the extent stated [by estate agents]," he says. Du Toit says he expects the downward trend to bottom out late in 2009, with a slight sideways movement before the property market recovers very gradually from 2010.
Du Toit says the factors that have to be considered when looking at the property market include inflation and interest rates.
"Inflation is likely to remain quite high for some time and so will interest rates. The housing market is interest rate-sensitive, and people are likely to sell despite the fact that they are going to get lower prices than they would have a year ago. This applies particularly to people who bought property as speculators with the intention of selling later at a high profit," Du Toit says.
Mortgage bond repayments have already increased 32 percent on the back of nine rate increases since June 2006. According to Du Toit, overdue mortgage loans as a percentage of total mortgage loans increased from a low of one percent at the end of 2006 to 1.5 percent at the end of 2007, and probably increased again this year.
However, they are still well below the average of 6.6 percent recorded in 1999 after interest rates went as high as 25.5 percent in 1998.
Sizwe Nxedlana, the property economist at Standard Bank, says inflation is expected to remain above the Reserve Bank's target band of three to six percent for the next three years.
Nxedlana says further interest rate increases will mean that fewer people will pass the affordability test for new mortgage bonds, fewer mortgages will be granted and registered, and growth in house prices will be less likely.
Further stagnation
Rode says there is usually a lag of nine months between a change in interest rates and a change in house prices. "If you take into account that we are expecting two more interest rate hikes and then are looking at an effect on house prices nine months after the last interest rate hike, we are looking at an extended period of stagnation, if not a decline, in prices," he says.
Many sellers are still expecting to obtain unrealistic prices for their homes, based on the high price growth of the past few years. Rode says sellers need to drop their asking prices to more realistic levels.
"When you are making a buy-or- sell decision, you should never consider the historic cost of the house, as this is irrelevant.
"For example, if you bought a house for R2 million six months ago, the price you paid then has nothing to do with the price you will get for the same house if you sell it today. People assume they must get a better price than the price they paid, but that's not how the market works," Rode says.
How you can survive the property blues
High interest rates and high inflation are here to stay for a while. It is unlikely that we will see a drop in either in the near future, property economist Erwin Rode, of Rode & Associates, says.
If you do not urgently need to sell your property, you should sit out the drop in the market over the next two years at least. This means if you have a strong cash flow, are able to meet your mortgage bond repayments and do not need to sell - for example, to avoid repossession - you should not try to sell your property right now.
If you have bought a property for investment purposes, Rode says, you should put it up for sale and get out of the market as soon as possible.
The residential property market is not likely to be a good investment for the next five years, he says.
Many property owners who took on a mortgage bond of 100 percent or more over the past five years are likely to face a negative equity situation in the next 18 months, Rode says.
Negative equity means you owe more money on your mortgage bond than the actual value of your property. If you have bought a property as your primary residence, this does not necessarily present a huge problem, because all you have to do is ride out the next few years and make sure you are able to meet your mortgage bond repayments as they increase in line with interest rates.
However, you would be well advised not to take out any further loans against your property in the near future, because, should you be forced to sell your home in the next two years, it is unlikely you will obtain a selling price that will cover the entire mortgage amount you owe.
Rode says now is a good time to renovate your home, because small builders are being hit hard. "Small builders are under pressure and looking for work. You will probably get better quality work done on your home now, because small builders are more likely to look after their customers in the current environment," he says.
If you are looking to buy a property, Rode says you should not be in a hurry. You should ideally wait a year or two, because you are likely to pick up a better bargain as the property market gets worse for sellers.
Fixing your home loan interest rate may prove the more costly option for you
You may be thinking about fixing the interest rate on your home loan to avoid dealing with further interest rate hikes and the stress of higher mortgage bond repayments.
However, Mokgatla Madisha, a fixed-income analyst at Investec Asset Management (IAM), cautions that this may be a costly decision. "You could end up paying more in interest than if you were to ride out the [interest rate] cycle," he says.
Although he agrees with property economists that inflation is likely to remain above the Reserve Bank's target band of three to six percent "for a while", Madisha does not think South Africa is facing a situation of ever-increasing inflation and interest rates over the next two years. Instead, he says, inflation is likely to be elevated over the medium term.
"A year from now, interest rates could start to fall, but they are not going to fall very fast, neither are they going to fall very far," he says.
Madisha says fixing your interest rate for two years could mean that you are stuck paying off your mortgage bond at 16 percent in 2010 while inflation could have fallen back to six percent and interest rates could be reduced to 12 percent.
Banks generally offer you the opportunity to fix your interest rate at about half to one percentage point above the prime rate - currently 15 percent - for a period of up to two years. A variable interest rate linked to the prime rate is usually anything between one and two percentage points below prime.
The disadvantage of fixing your interest rate now is illustrated by the following examples:
# Homeowner A, who has a mortgage bond of R1 million and who pays an instalment of R11 715 a month at prime minus two percentage points - that is, 13 percent - decides to ride out the interest rate cycle. If it is assumed that interest rates are raised by one percentage point at each meeting of the Reserve Bank's monetary policy committee in June, August and October, and then stay level until May 2009, the prime rate will be 18 percent by October, and Homeowner A will be repaying R13 912 a month on an interest rate of 16 percent.
# Homeowner B, who also has a mortgage bond of R1 million, chooses to fix his home loan at prime plus one percentage point now, which will result in his monthly repayment increasing to R13 912.
This means Homeowner B will immediately have to cough up every month what Homeowner A will start paying only in October. Over a full year, Homeowner B will be paying about R6 000 more.
Madisha says IAM does not foresee a three-percentage-point hike in interest rates during this year.
"We anticipate a further one to 1.5-percentage-point-rate hike until the cycle peaks, which would mean that the homeowner on a fixed rate is even worse off. He could be stuck for another year at the fixed rate, while those on a floating rate, or a rate linked to the prime rate, could start enjoying the respite of lower interest rates."
Monday, June 9, 2008
All about the cheese
"Times are Tight"
For the last few weeks we have been bombarded with bad news about our country. Eskom's incompetence, the “xenophobic” violence, the petrol price, interest rates etc - all bad news, or so the media would have us believe.
On Sunday night I watched Carte Blanche and, along with thousands of viewers, was shocked and horrified at the fact that people are losing their homes and, thanks to the intervention of the National Credit Regulator, have just enough money to buy food! My heart was gripped by fear. My stomach tied into a knot, and I had a sleepless night. But you see, that is what our media intends to happen. Because when you are ruled by fear, your creativity and individuality are paralysed, and you become a victim - then the media has got more bad news to feed on. It’s in the media’s interests to promote bad news, because bad news sells!
However, what the media does not tell you is that more people have become millionaires during hard times than during good times. More people have made fortunes during hard times than during good times. It all depends on your frame of mind. It's natural to feel threatened by the problems that we are facing, but if you succumb to fear, you are going to become a victim of these problems. However, if you acknowledge these problems, realise that they are an inescapable part of life and start living smarter, you will survive and you will prosper.
In the book “Who Moved my Cheese”, the author tells a simple story of a mouse that used to go to the same place every day to get his piece of cheese. One day the cheese was not there. The mouse panicked and was gripped by fear, and as a result went hungry the next day as well, and the next. He just kept on going back to the same place over and over, only to find that there was no more cheese. Then another mouse told him that there was cheese at another place, but he wouldn’t believe it. So he continued to go hungry.
Our cheese in South Africa is busy moving, and if you don’t move with it and look for new cheese, you will go hungry. You need to keep looking for better, smarter and more creative ways to achieve better results. Only those people that do this will prosper during these challenging times. Burying your head in the sand and talking about bad times with friends and colleagues will achieve nothing. Only smart, creative and consistent action will see you through.
When you talk about something and when it occupies your mind, you give it life. So occupy your mind with the excitement of being a different you, and through that, achieving a successful life.
For the last few weeks we have been bombarded with bad news about our country. Eskom's incompetence, the “xenophobic” violence, the petrol price, interest rates etc - all bad news, or so the media would have us believe.
On Sunday night I watched Carte Blanche and, along with thousands of viewers, was shocked and horrified at the fact that people are losing their homes and, thanks to the intervention of the National Credit Regulator, have just enough money to buy food! My heart was gripped by fear. My stomach tied into a knot, and I had a sleepless night. But you see, that is what our media intends to happen. Because when you are ruled by fear, your creativity and individuality are paralysed, and you become a victim - then the media has got more bad news to feed on. It’s in the media’s interests to promote bad news, because bad news sells!
However, what the media does not tell you is that more people have become millionaires during hard times than during good times. More people have made fortunes during hard times than during good times. It all depends on your frame of mind. It's natural to feel threatened by the problems that we are facing, but if you succumb to fear, you are going to become a victim of these problems. However, if you acknowledge these problems, realise that they are an inescapable part of life and start living smarter, you will survive and you will prosper.
In the book “Who Moved my Cheese”, the author tells a simple story of a mouse that used to go to the same place every day to get his piece of cheese. One day the cheese was not there. The mouse panicked and was gripped by fear, and as a result went hungry the next day as well, and the next. He just kept on going back to the same place over and over, only to find that there was no more cheese. Then another mouse told him that there was cheese at another place, but he wouldn’t believe it. So he continued to go hungry.
Our cheese in South Africa is busy moving, and if you don’t move with it and look for new cheese, you will go hungry. You need to keep looking for better, smarter and more creative ways to achieve better results. Only those people that do this will prosper during these challenging times. Burying your head in the sand and talking about bad times with friends and colleagues will achieve nothing. Only smart, creative and consistent action will see you through.
When you talk about something and when it occupies your mind, you give it life. So occupy your mind with the excitement of being a different you, and through that, achieving a successful life.
Wednesday, June 4, 2008
Personal loans
Repayment to income not to exceed 30% of gross income
Self employed clients cannot be assisted – only salaried clients
Clients banking with Capitec Bank cannot be assisted
We need the following:
· Id copy
· 3 months bank statements
· Latest salary slip
· Utility bill
· Completed application form
www.bondapply.com
Self employed clients cannot be assisted – only salaried clients
Clients banking with Capitec Bank cannot be assisted
We need the following:
· Id copy
· 3 months bank statements
· Latest salary slip
· Utility bill
· Completed application form
www.bondapply.com
Not opening your bills anymore?
Creditors chasing you for payment?
Struggling each month to pay your debts?
Financial judgments against you?
Spending more than you earn?
If your debt situation is out of control, a debt consolidation mortgage loan is almost certainly the answer. Most people go through a stage where their monthly expenditure exceeds their earnings, and if this situation carries on for some time then it leads to increasing debts and a need to consolidate those debts. This can often occur through no direct fault of your own. It could be the result of losing your job, divorce, ill health and other genuine reasons. The one thing you must not do is, ignore it.
Seeking professional debt management help or financial advice is often the first step to getting you back on track. The next possible step is consolidating your home loan, credit cards, retail debt, personal loans and any other debts into one new mortgage.
At bondapply.com we fully understand the problems experienced by some people with financial difficulties when it comes to getting a competitive mortgage deal. Our team constantly helps people with unsecured loans and credit card debts to consolidate their position with a mortgage, reducing their monthly outgoings and getting them back on solid credit foundation again. We do this by utilizing an equity release mortgage and debt consolidation approach.
While we endeavour to assist most applicants, we do however take into account your adverse credit history. We are aware that information listed on the respective credit bureaus may not be full up to date so we will do further investigation to ascertain whether the information reflected is correct.
In the following cases we CAN assist clients:
1 Clients who have settled their debts and need their credit bureau profile improved.
2 Clients, who have NOT yet settled their debts, but have the funds to settle their debts themselves and need their credit bureau profile improved.
3 Clients who have a poor credit profile and do not have the funds to settle their debts themselves but own a property (with sufficient equity).
Please fax the following docs to Vania at 0866 270 135 and we can get your application going. www.bondapply.com
All applicable ID documents.
Marriage certificate (if applicable).
ANC contract (if applicable).
Latest 3 months bank statements or 6 months if self-employed.
Latest 3 months payslips or letter from auditor if self-employed.
Latest 6 months bond statements or 12 months if self-employed.
Latest rates account.
Latest water and electricity account.
Latest Levy account (if applicable).
Statements from companies that client is indebted to or in arrears with, or a list of the accounts with approximate outstanding amounts and account numbers, if possible.
If self employed, 6 months company bank statements and company registration documents
Struggling each month to pay your debts?
Financial judgments against you?
Spending more than you earn?
If your debt situation is out of control, a debt consolidation mortgage loan is almost certainly the answer. Most people go through a stage where their monthly expenditure exceeds their earnings, and if this situation carries on for some time then it leads to increasing debts and a need to consolidate those debts. This can often occur through no direct fault of your own. It could be the result of losing your job, divorce, ill health and other genuine reasons. The one thing you must not do is, ignore it.
Seeking professional debt management help or financial advice is often the first step to getting you back on track. The next possible step is consolidating your home loan, credit cards, retail debt, personal loans and any other debts into one new mortgage.
At bondapply.com we fully understand the problems experienced by some people with financial difficulties when it comes to getting a competitive mortgage deal. Our team constantly helps people with unsecured loans and credit card debts to consolidate their position with a mortgage, reducing their monthly outgoings and getting them back on solid credit foundation again. We do this by utilizing an equity release mortgage and debt consolidation approach.
While we endeavour to assist most applicants, we do however take into account your adverse credit history. We are aware that information listed on the respective credit bureaus may not be full up to date so we will do further investigation to ascertain whether the information reflected is correct.
In the following cases we CAN assist clients:
1 Clients who have settled their debts and need their credit bureau profile improved.
2 Clients, who have NOT yet settled their debts, but have the funds to settle their debts themselves and need their credit bureau profile improved.
3 Clients who have a poor credit profile and do not have the funds to settle their debts themselves but own a property (with sufficient equity).
Please fax the following docs to Vania at 0866 270 135 and we can get your application going. www.bondapply.com
All applicable ID documents.
Marriage certificate (if applicable).
ANC contract (if applicable).
Latest 3 months bank statements or 6 months if self-employed.
Latest 3 months payslips or letter from auditor if self-employed.
Latest 6 months bond statements or 12 months if self-employed.
Latest rates account.
Latest water and electricity account.
Latest Levy account (if applicable).
Statements from companies that client is indebted to or in arrears with, or a list of the accounts with approximate outstanding amounts and account numbers, if possible.
If self employed, 6 months company bank statements and company registration documents
Debt consolidation mortgage
We have developed a financial plan that is underpinned by a debt consolidation equity release mortgage. This is a unique product in South African marketplace. While similar products exist in more mature markets, our concept is uniquely designed for the individual within the context of the south African economic and political reality. We put a great deal of effort into individual financial planning and we also endeavour to recommend an authorised credit provider for you to consider as an alternate lender.
We understand the historical legacies of the past and, we understand the commercial realities of the future. Clients must take care when evaluating a product of this nature and that their home could be at risk if they do not maintain payments of their mortgage or any other loan secured by their property. In reality, we should still be able to recommend a financial plan that offers them with a cheaper alternative than their current monthly repayments. They will be able to facilitate this if there is enough equity in their existing property.
We suggest that clients consider both the short term and long term benefits and advantages of obtaining a loan, they will in effect be swapping very expensive short term debt with affordable long term debt secured by their home.
Our consolidation product is designed to meet clients' needs with a carefully formulated framework. We have strict criteria in building the financial model because, while we are ultimately a profit driven organisation, we realize that we have moral and legal obligation not to overextend our clients financially. Our advisors have been trained to formulate a plan that will allow them to meet their financial commitments and alleviate their creditor stress that they may have been living under for some time.
This type of Debt consolidation can assist you in
· Managing your monthly repayments and getting rid of highly expensive retail debt
· Eliminating harassment from your creditors on overdue amounts
· Lowering your monthly debt payments
· Providing one affordable monthly repayment
The most important benefit of our offering is that it can offer a fresh start on the road to a healthier financial status. If you are not coping with your monthly commitments, and you meet the criteria of the equity release mortgage, then our trained personal advisors can help you. We reduce your monthly bills by using some of the funds released from your mortgage to settle your credit repayments and outstanding debt on your behalf.
We understand the historical legacies of the past and, we understand the commercial realities of the future. Clients must take care when evaluating a product of this nature and that their home could be at risk if they do not maintain payments of their mortgage or any other loan secured by their property. In reality, we should still be able to recommend a financial plan that offers them with a cheaper alternative than their current monthly repayments. They will be able to facilitate this if there is enough equity in their existing property.
We suggest that clients consider both the short term and long term benefits and advantages of obtaining a loan, they will in effect be swapping very expensive short term debt with affordable long term debt secured by their home.
Our consolidation product is designed to meet clients' needs with a carefully formulated framework. We have strict criteria in building the financial model because, while we are ultimately a profit driven organisation, we realize that we have moral and legal obligation not to overextend our clients financially. Our advisors have been trained to formulate a plan that will allow them to meet their financial commitments and alleviate their creditor stress that they may have been living under for some time.
This type of Debt consolidation can assist you in
· Managing your monthly repayments and getting rid of highly expensive retail debt
· Eliminating harassment from your creditors on overdue amounts
· Lowering your monthly debt payments
· Providing one affordable monthly repayment
The most important benefit of our offering is that it can offer a fresh start on the road to a healthier financial status. If you are not coping with your monthly commitments, and you meet the criteria of the equity release mortgage, then our trained personal advisors can help you. We reduce your monthly bills by using some of the funds released from your mortgage to settle your credit repayments and outstanding debt on your behalf.
Tuesday, June 3, 2008
Registration of mortgage bonds
http://www.vdt.co.za/default.asp?Page_Id=8
REGISTRATION OF MORTGAGE BONDS
Due to the financially demanding times in which prospective purchasers find themselves, it has become increasingly difficult to purchase fixed property without seeking some form of finance.
In order to provide finance, financial institutions insist upon some form of security and this is where a mortgage bond arises.
A mortgage bond is registered over the fixed property in order to secure the purchaser’s/the registered owner’s obligation to re-pay the money lent to him by the financial institution.
The mortgage bond comprises of two parts:
- The loan agreement with the financial institution who has lent the money and - Registration of the mortgage bond in the
Deed’s Registry.
The purchaser of the property who agrees to register the mortgage bond is known as the mortgagor. The institution advancing the money is known as the mortgagee.
It is possible to register a mortgage bond as security for any existing or future debt, e.g. overdraft facilities, initial capital for a business, etc.
THE DIFFERENCE BETWEEN THE REGISTRATION OF A MORTGAGE BOND AND THE TRANSFER OF A PROPERTY
These are related yet totally separate transactions. A transfer is the conveyance or transfer of ownership in fixed property from one owner to another.
The mortgage bond represents the security offered to the financial institution for the loan, which the bank is prepared to
advance in payment of the purchase price of the property.
DOCUMENTS THAT NEED TO BE SIGNED
THE POWER OF ATTORNEY TO REGISTER A MORTGAGE
BOND
This is a document signed by you as purchaser of the property (mortgagor), which enables the conveyancer to register the
mortgage bond simultaneously with the registration of transfer of the property. A draft of the mortgage bond to be registered in the Deeds Office is attached to the Power of Attorney and initialled by you for identification purposes. Important information contained in a mortgage bond includes the mortgagor’s name, identity number,marital status, the mortgagee’s details, the amount of the bond as well as a complete description of the property to be
mortgaged.
THE MORTGAGE LOAN AGREEMENT
This document is sometimes signed at the bank, but ordinarily the bank requires the conveyancer to assist the mortgagor in signing the Mortgage Loan Agreement, the Conditions of the Loan and Standard Terms and Conditions of Mortgage Bonds. This
document contains details such as the loan amount, interest rate, installment amount, special conditions, etc.
AUTHORITY FOR PAYMENT
This document authorizes the conveyancer to make the necessary payments from the proceeds of the bond on the date of registration. Usually at least two authorities are signed, one in favour of the existing bondholder to cover the amount
outstanding on the seller’s existing bond.
MARITAL STATUS AND SOLVENCY DECLARATIONS
These declarations are required by law and enables the conveyancer to be sure of the mortgagor’s marital and solvency
status.
TERMINOLOGY USED IN BONDS
Unusual terminology is sometimes encountered in mortgage bonds. Clients regularly approach the conveyancer for explanations of the terminology. We would like to clarify a few:
THE ADDITIONAL AMOUNT
This amount which normally consists of 20% of the bond amount, hardly ever comes into operation for most mortgages. It is an extra amount, which the bank may claim in the case of default by the mortgagor. Should the mortgagor default in paying installments, the mortgagee has the right to use the additional amount to cover legal and other costs incurred in tracing the mortgagor and finally selling the property in a judicial sale/auction.
WAIVING OF LEGAL EXCEPTIONS
These terms are mainly in Latin and have standard meanings.
Those that are used regularly are explained below:
- non numeratae pecuniae
The mortgagor is prevented from pleading that no money has been paid over to him/her or that he/she has not received any value from the mortgagee.
- non causa debiti
The mortgagor is prevented from pleading that there is no cause of indebtedness to the mortgagee.
- errore calculi/revision of accounts
The mortgagor is prevented from pleading that there was an error in the calculation of the amounts due by the mortgagor to the mortgagee.
- de duobus vel pluribus reis debendi
Should there be more than one mortgagor, each is collectively and individually responsible for the full amount of the debt.
TYPES OF MORTGAGE BONDS
It is also important to realize that there are different types of mortgage bonds. Financial Institutions market their special types of mortgage bonds under different names, but these are mainly variations of the following:
THE STANDARD MORTGAGE BOND
This is the mortgage bond, which entails payment of usually a monthly (or other arranged period) installment. The causes of such a mortgage bond could be money lent or advanced, balance of the purchase price, or goods and services supplied, as for e.g. in the case of a mortgage bond which you register when you purchase a new home.
A variation on this type of mortgage bond is the “Access Bond”, which allows further withdrawals to be made from the bond account, enabling the mortgagor to withdraw money from the bond account after a certain amount has been paid off.
Another new development is the “Fixed Rate Agreement”. This implies that the mortgagor and mortgagee decide on a fixed interest rate for a specified period. The interest rate is not linked to the prime rate during this period. This enables the mortgagor to plan his/her finances more effectively for a limited period of time.
COVERING BOND
This type of mortgage bond is used to cover future debts. The mortgagor intends to borrow money from the bank in the future and to that end registers a mortgage bond large enough to cover the full loan amount. The mortgagor of course only pays an installment on the actual debt at each stage.
SURETY BOND
This bond is passed to secure the debt of someone else. The surety registers a mortgage bond over his/her own property in favour of the creditor as surety for the principal debtor’s debt.
INDEMNITY BOND
This bond is usually passed by a mortgagor in favour of a surety who has guaranteed the repayment of a debt secured by a mortgage bond passed by the mortgagor over his property. This bond is passed as security to indemnify the surety in the event that he is called upon to pay.
NOTARIAL BOND
This bond is a standard bond, which is registered over movable property such as vehicles, machinery and equipment.
BUILDING BOND
This type of bond is similar to a standard mortgage bond in many respects. An “authorization for payment” must be signed over and above the normal documentation, which enables the bank to release funds as the work progresses. After the client has
indicated via the authorization of payment that he/she is satisfied with the work done, the bank sends a valuator to the premises to recommend an amount of money to be paid out. Some banks have a special building loan document by means of which the client applies for settlement of the full amount of the loan.
THERE IS A DIFFERENCE BETWEEN A SECTIONAL TITLE MORTGAGE BOND AND A STANDARD MORTGAGE BOND
SECTIONAL TITLE MORTGAGE BOND
The mortgagor passes the sectional title mortgage bond over a sectional title property, i.e. townhouse/duet house. The
mortgagor appears before a conveyancer to execute/pass the bond. It is then registered in the Deeds Office by the Registrar of
Deeds.
COSTS OF REGISTERING A BOND
The statement of account for the registration of a bond comprises of the following items:
BOND REGISTRATION
This is the conveyancer’s fee for drawing the documents and attending to the registration of the bond. It is determined by tariff
guidelines issued in terms of the Deeds Registries Act 47 of 1937.
REGISTRATION FEE
Fees for the registration of mortgage bonds are payable to the Deeds Office. These fees range from R200.00 to R1 000.00
depending on the capital amount of the bond.
POSTAGE AND PETTY EXPENSES
These represent the conveyancer’s costs for telephone calls, facsimile transmissions, postage, stationary etc.
DEEDS OFFICE SEARCH FEE
This is an electronic computerized search by the conveyancer on the property and/or owner of the property.
VAT
Value Added Tax is payable on services rendered i.e. our fee, postage and petty expenses and the Deeds Office search fee.
OUR PROFESSIONAL TEAM IS ON YOUR SIDE!
The professional team of VAN DER MERWE DU TOIT INCORPORATED is dedicated and motivated to rendering the best service possible to you, our client. Should you have queries, kindly contact any member of our conveyancing department.
REGISTRATION OF MORTGAGE BONDS
Due to the financially demanding times in which prospective purchasers find themselves, it has become increasingly difficult to purchase fixed property without seeking some form of finance.
In order to provide finance, financial institutions insist upon some form of security and this is where a mortgage bond arises.
A mortgage bond is registered over the fixed property in order to secure the purchaser’s/the registered owner’s obligation to re-pay the money lent to him by the financial institution.
The mortgage bond comprises of two parts:
- The loan agreement with the financial institution who has lent the money and - Registration of the mortgage bond in the
Deed’s Registry.
The purchaser of the property who agrees to register the mortgage bond is known as the mortgagor. The institution advancing the money is known as the mortgagee.
It is possible to register a mortgage bond as security for any existing or future debt, e.g. overdraft facilities, initial capital for a business, etc.
THE DIFFERENCE BETWEEN THE REGISTRATION OF A MORTGAGE BOND AND THE TRANSFER OF A PROPERTY
These are related yet totally separate transactions. A transfer is the conveyance or transfer of ownership in fixed property from one owner to another.
The mortgage bond represents the security offered to the financial institution for the loan, which the bank is prepared to
advance in payment of the purchase price of the property.
DOCUMENTS THAT NEED TO BE SIGNED
THE POWER OF ATTORNEY TO REGISTER A MORTGAGE
BOND
This is a document signed by you as purchaser of the property (mortgagor), which enables the conveyancer to register the
mortgage bond simultaneously with the registration of transfer of the property. A draft of the mortgage bond to be registered in the Deeds Office is attached to the Power of Attorney and initialled by you for identification purposes. Important information contained in a mortgage bond includes the mortgagor’s name, identity number,marital status, the mortgagee’s details, the amount of the bond as well as a complete description of the property to be
mortgaged.
THE MORTGAGE LOAN AGREEMENT
This document is sometimes signed at the bank, but ordinarily the bank requires the conveyancer to assist the mortgagor in signing the Mortgage Loan Agreement, the Conditions of the Loan and Standard Terms and Conditions of Mortgage Bonds. This
document contains details such as the loan amount, interest rate, installment amount, special conditions, etc.
AUTHORITY FOR PAYMENT
This document authorizes the conveyancer to make the necessary payments from the proceeds of the bond on the date of registration. Usually at least two authorities are signed, one in favour of the existing bondholder to cover the amount
outstanding on the seller’s existing bond.
MARITAL STATUS AND SOLVENCY DECLARATIONS
These declarations are required by law and enables the conveyancer to be sure of the mortgagor’s marital and solvency
status.
TERMINOLOGY USED IN BONDS
Unusual terminology is sometimes encountered in mortgage bonds. Clients regularly approach the conveyancer for explanations of the terminology. We would like to clarify a few:
THE ADDITIONAL AMOUNT
This amount which normally consists of 20% of the bond amount, hardly ever comes into operation for most mortgages. It is an extra amount, which the bank may claim in the case of default by the mortgagor. Should the mortgagor default in paying installments, the mortgagee has the right to use the additional amount to cover legal and other costs incurred in tracing the mortgagor and finally selling the property in a judicial sale/auction.
WAIVING OF LEGAL EXCEPTIONS
These terms are mainly in Latin and have standard meanings.
Those that are used regularly are explained below:
- non numeratae pecuniae
The mortgagor is prevented from pleading that no money has been paid over to him/her or that he/she has not received any value from the mortgagee.
- non causa debiti
The mortgagor is prevented from pleading that there is no cause of indebtedness to the mortgagee.
- errore calculi/revision of accounts
The mortgagor is prevented from pleading that there was an error in the calculation of the amounts due by the mortgagor to the mortgagee.
- de duobus vel pluribus reis debendi
Should there be more than one mortgagor, each is collectively and individually responsible for the full amount of the debt.
TYPES OF MORTGAGE BONDS
It is also important to realize that there are different types of mortgage bonds. Financial Institutions market their special types of mortgage bonds under different names, but these are mainly variations of the following:
THE STANDARD MORTGAGE BOND
This is the mortgage bond, which entails payment of usually a monthly (or other arranged period) installment. The causes of such a mortgage bond could be money lent or advanced, balance of the purchase price, or goods and services supplied, as for e.g. in the case of a mortgage bond which you register when you purchase a new home.
A variation on this type of mortgage bond is the “Access Bond”, which allows further withdrawals to be made from the bond account, enabling the mortgagor to withdraw money from the bond account after a certain amount has been paid off.
Another new development is the “Fixed Rate Agreement”. This implies that the mortgagor and mortgagee decide on a fixed interest rate for a specified period. The interest rate is not linked to the prime rate during this period. This enables the mortgagor to plan his/her finances more effectively for a limited period of time.
COVERING BOND
This type of mortgage bond is used to cover future debts. The mortgagor intends to borrow money from the bank in the future and to that end registers a mortgage bond large enough to cover the full loan amount. The mortgagor of course only pays an installment on the actual debt at each stage.
SURETY BOND
This bond is passed to secure the debt of someone else. The surety registers a mortgage bond over his/her own property in favour of the creditor as surety for the principal debtor’s debt.
INDEMNITY BOND
This bond is usually passed by a mortgagor in favour of a surety who has guaranteed the repayment of a debt secured by a mortgage bond passed by the mortgagor over his property. This bond is passed as security to indemnify the surety in the event that he is called upon to pay.
NOTARIAL BOND
This bond is a standard bond, which is registered over movable property such as vehicles, machinery and equipment.
BUILDING BOND
This type of bond is similar to a standard mortgage bond in many respects. An “authorization for payment” must be signed over and above the normal documentation, which enables the bank to release funds as the work progresses. After the client has
indicated via the authorization of payment that he/she is satisfied with the work done, the bank sends a valuator to the premises to recommend an amount of money to be paid out. Some banks have a special building loan document by means of which the client applies for settlement of the full amount of the loan.
THERE IS A DIFFERENCE BETWEEN A SECTIONAL TITLE MORTGAGE BOND AND A STANDARD MORTGAGE BOND
SECTIONAL TITLE MORTGAGE BOND
The mortgagor passes the sectional title mortgage bond over a sectional title property, i.e. townhouse/duet house. The
mortgagor appears before a conveyancer to execute/pass the bond. It is then registered in the Deeds Office by the Registrar of
Deeds.
COSTS OF REGISTERING A BOND
The statement of account for the registration of a bond comprises of the following items:
BOND REGISTRATION
This is the conveyancer’s fee for drawing the documents and attending to the registration of the bond. It is determined by tariff
guidelines issued in terms of the Deeds Registries Act 47 of 1937.
REGISTRATION FEE
Fees for the registration of mortgage bonds are payable to the Deeds Office. These fees range from R200.00 to R1 000.00
depending on the capital amount of the bond.
POSTAGE AND PETTY EXPENSES
These represent the conveyancer’s costs for telephone calls, facsimile transmissions, postage, stationary etc.
DEEDS OFFICE SEARCH FEE
This is an electronic computerized search by the conveyancer on the property and/or owner of the property.
VAT
Value Added Tax is payable on services rendered i.e. our fee, postage and petty expenses and the Deeds Office search fee.
OUR PROFESSIONAL TEAM IS ON YOUR SIDE!
The professional team of VAN DER MERWE DU TOIT INCORPORATED is dedicated and motivated to rendering the best service possible to you, our client. Should you have queries, kindly contact any member of our conveyancing department.
Bond registration process
http://www.meumannwhite.co.za/bond_reg.php
A Client will often require funds to assist in the purchasing of a property, or to improve their existing property, or to consolidate his or her debt. In order to cater for their needs they will go to a Bank for a loan. Let's describe the Bond registration process in relation to the above needs.
Purchase of a new Home
The client will make an application for a loan to the Bank setting out full details of assets and liabilities. Once the Bank has approved the loan, the Attorneys (Conveyances) are instructed to attend to the registration by means of a letter of grant setting out the conditions of the grant of loan and requesting that as security for the loan a Mortgage Bond be registered in favour of the Bank over the property being purchased.
The Attorney attending to the transfer of the property (Transferring Attorney) will be contacted by the Bank's Attorney requesting from them a copy of their draft title deed. The Bank's attorney will also make contact with the client (also known as the Mortgagor) and request copies of their Identity documents and marriage certificates if applicable. When the Bank's attorney receives the above mentioned documents he will draw the mortgage bond documents and will call upon the client to sign and pay the proforma account for the registration of the Mortgage bond. Payment thereof will be required immediately especially as the costs include stamp duty and deeds office lodgment fee which must be paid up front. The documents to be signed are as follows:
A Power of Attorney to Mortgage. – this document gives the attorneys the Authority to register a mortgage bond on behalf of the clients in favour of a Bank.
Authority for payment – this document instructs the Bank on registration to make payment of the borrowed funds.
Letter of grant – this is the terms and conditions of the Bank where upon signature the clients acknowledges its obligations to the Bank.
Draft Mortgage Bond – this is the document that records the client's financial obligations to the Bank in the deeds office.
Affidavits – this confirms the clients personal particulars regarding marriage and insolvency.
Surety ship - is required when a client needs a guarantor for the loan.
Cession of Life Cover – should life cover be required by the Bank – the client cedes an existing policy or takes out a new policy.
After signature and payment of costs have been received, the Attorneys prepare the necessary guarantees to secure the purchase price of the property. These guarantees are then forwarded to the transferring Attorneys. The Power of Attorney and draft Mortgage bond are forwarded to the Deeds registration Office in Pietermaritzburg where the documents are systematically checked over a period of 6 days and registered on the 7th day. On registration the transferring attorney presents the guarantees to the Bank and receives payment of the funds. The New mortgagor's loan is now operational and monthly payments will be due from the 1st day of the month following registration.
Improvements and Consolidation of Debt
The Bank will forward the letter of grant together with the title deeds to the Attorneys to register a bond for the amount of the loan that has been granted to the client. Thereafter the procedure is similar to the above except there is no interaction with any transferring attorneys.
Whenever a Mortgage Bond has been registered it affords the client access to the funds and affords the bank good security for the loan given.
A Client will often require funds to assist in the purchasing of a property, or to improve their existing property, or to consolidate his or her debt. In order to cater for their needs they will go to a Bank for a loan. Let's describe the Bond registration process in relation to the above needs.
Purchase of a new Home
The client will make an application for a loan to the Bank setting out full details of assets and liabilities. Once the Bank has approved the loan, the Attorneys (Conveyances) are instructed to attend to the registration by means of a letter of grant setting out the conditions of the grant of loan and requesting that as security for the loan a Mortgage Bond be registered in favour of the Bank over the property being purchased.
The Attorney attending to the transfer of the property (Transferring Attorney) will be contacted by the Bank's Attorney requesting from them a copy of their draft title deed. The Bank's attorney will also make contact with the client (also known as the Mortgagor) and request copies of their Identity documents and marriage certificates if applicable. When the Bank's attorney receives the above mentioned documents he will draw the mortgage bond documents and will call upon the client to sign and pay the proforma account for the registration of the Mortgage bond. Payment thereof will be required immediately especially as the costs include stamp duty and deeds office lodgment fee which must be paid up front. The documents to be signed are as follows:
A Power of Attorney to Mortgage. – this document gives the attorneys the Authority to register a mortgage bond on behalf of the clients in favour of a Bank.
Authority for payment – this document instructs the Bank on registration to make payment of the borrowed funds.
Letter of grant – this is the terms and conditions of the Bank where upon signature the clients acknowledges its obligations to the Bank.
Draft Mortgage Bond – this is the document that records the client's financial obligations to the Bank in the deeds office.
Affidavits – this confirms the clients personal particulars regarding marriage and insolvency.
Surety ship - is required when a client needs a guarantor for the loan.
Cession of Life Cover – should life cover be required by the Bank – the client cedes an existing policy or takes out a new policy.
After signature and payment of costs have been received, the Attorneys prepare the necessary guarantees to secure the purchase price of the property. These guarantees are then forwarded to the transferring Attorneys. The Power of Attorney and draft Mortgage bond are forwarded to the Deeds registration Office in Pietermaritzburg where the documents are systematically checked over a period of 6 days and registered on the 7th day. On registration the transferring attorney presents the guarantees to the Bank and receives payment of the funds. The New mortgagor's loan is now operational and monthly payments will be due from the 1st day of the month following registration.
Improvements and Consolidation of Debt
The Bank will forward the letter of grant together with the title deeds to the Attorneys to register a bond for the amount of the loan that has been granted to the client. Thereafter the procedure is similar to the above except there is no interaction with any transferring attorneys.
Whenever a Mortgage Bond has been registered it affords the client access to the funds and affords the bank good security for the loan given.
Conveyancing process - from lawsoc.co.za
Selling your house
The term "conveyancing" describes the legal process whereby rights in fixed property are registered in the deeds office. These rights include ownership, mortgage, servitude, mineral rights and others. All these rights vest legally in a person only on registration. The registration process, therefore, places an official "seal" on a person's rights in fixed property. "Fixed property" is any land, whether improved or not such as a house, farm or sectional title flat.
This pamphlet deals with the transfer of ownership pursuant to the sale of fixed property. The procedure is similar to that required for the ownership of fixed property pursuant to donation, inheritance, exchange or a divorce settlement and so forth.
A conveyancing transaction involves a chain of steps which begins with the deeds of sale and which continues through to the ultimate registration of ownership and the reconciliation of finances and payments.
Who is a Conveyancer?
A conveyancer is admitted as such by the High Court after having completed a special qualifying examination. In addition, only a person who has been admitted by the High Court as an Attorney, may practice as a conveyancer. All conveyancers are therefore, also attorneys. To be admitted, the person has to complete the required academic studies (usually four or more years for the necessary law degree), then a period of "articles" or work in a law-office for the necessary experience and then an extensive practical examination. If the qualified attorney wishes to practice in the highly technical branch of the law dealing with fixed property, he or she has to do intensive study of a large number of Acts of Parliament, regulations, High Court decisions and decisions by Registrars of Deeds relating to fixed property. Then he or she has to pass a conveyancing examination. Only after passing this examination will the High Court allow the attorney to practice as a conveyancer.
Who appoints a conveyancer?
In South Africa, the usual practice is for the seller to appoint a conveyancer for a property transaction, although this, like other aspects of a sale agreement, can be varied as a result of negotiation between the parties.
The purchaser may also appoint a conveyancer to advise him or her, but these charges will be over and above the conveyancing costs submitted by the seller's conveyancer, who will be doing the actual transfer.
What is the first step in the sale of fixed property?
The sale of fixed property is affected by entering into a written contract referred to as a deed of sale. The first prerequisite is that the deed of sale must be a written agreement. It must be signed by both the purchaser and the seller (and by the seller's spouse and the purchaser's spouse in some cases). A written "offer to purchase" signed by a purchaser and accepted by a seller also constitutes a deed of sale. A verbal contract for the sale of fixed property is not valid.
The deed of sale is an important document which must be carefully examined. The parties (with the assistance of a conveyancer or attorney) must check that the total amount payable by the seller or his estate agent are incorporated in the document and that nothing mentioned in the document is contrary to any legal provision.
Occupancy of the property does not necessarily have to coincide with registration of transfer. If occupation takes place prior to registration, the deed of sale must provide what rent is payable until the date of registration.
Risk in the property passes to the purchases when the deed of sale is signed, although the consequences can be (and often is) changed in the deed of the sale itself. The purchaser must, therefore, take out insurance in appropriate cases.
The purchaser is usually responsible for payment of transfer costs. These are fixed in terms of legislation or by guidelines and the purchaser will be able to know in advance, to within a few rands, what the costs will be.
Finally, if the sale is subjected to the granting of a bond, this must be specified in the deed of sale. It should also be specified as to what the amount of the bond must be, how much time the purchaser will have to obtain the bond, who will apply and so forth. It must also be specified that if the purchaser is unable to obtain the required bond in time, then the whole deal is to fall through. Arrangements as to which amounts (if any) the purchaser has to pay in these circumstances should also be specified.
The deed of sale is only valid if it is signed by all the parties. Ownership does, however, not pass on signature of the deed sale. The purchaser becomes owner only on registration of the property in his or her name in the deeds office. The deed of sale grants the purchaser the right to claim transfer of the property. (For more details on the purchase of land, see the brochure "Buying and selling a house").
What happens next?
The property must be signed by the seller and it authorizes the conveyancer to attend to the transfer on the seller's behalf.
Both the seller and the purchaser will be required to call at the office of the conveyancer to sign certain documents which have been prepared by the conveyancer and which will enable the conveyancer to effect the transfer in the deeds office. The documents which will have to be signed are the following?
1.
Declaration in respect of statusIn this document the purchaser declares his or her marital status. This deals with such questions as to whether he or she is married in or out of community of property (which determines whether the property is to be registered in his or her name or in the name of both spouses). Unmarried adult persons, whether never married, divorced or widowed, are granted full rights of ownership.
Transfer duty and Value Added Tax (VAT) declaration
Transfer duty is a form of tax payable to the State and is calculated on the value of the property. If the deed of sale is signed by either the seller or the purchaser after 30 September 1991 then Value Added Tax may be payable on the transaction. This tax will be payable on the estate agent's commission, on the conveyancer's fees and on portions of some municipal rates. If the seller is registered as a vendor then VAT will also be payable on the purchase price.
If VAT is payable on the purchase price, then no transfer duty will be payable. The conveyancer will require the parties to sign lengthy declarations about these taxes. With these declarations in hand he or she will be able to finalise the matter with the Receiver of Revenue and either pay the transfer duty (after being put in funds to do so) or obtain a transfer duty exemption. Without a transfer duty receipt or a transfer duty exemption receipt being produced, the Registrar of Deeds will not register the transaction.
Mortgage or bond documents
If the purchaser gets a loan from a financial institution (bank or building society) or from his or her employer or other source, the lender will insist that the purchaser registers a mortgage over the property to secure a loan.
To enable the bond to be registered, the purchaser will be required to sign a written power of attorney for the conveyancer to do so.
To enable the conveyancer to draw up all this documentation correctly, the purchaser must submit his or her identity document, marriage certificate and if applicable, antenuptial contract to the conveyancer. Details of the loan and the lender will also be required.
What are the costs involved?
The costs relating to the transfer of fixed property fall into three main categories:
Transfer duty or Value Added Tax - where transfer duty is payable to the Government it is calculated as follows: nothing on the first R100,000,00 of the purchase price + 5% on the balance of the purchase price between R 100 001 up to R300 000,00 and thereafter 8% in the case of natural persons (properties sold for less than R100 000,00 are exempt from transfer duty) and 10% where the purchaser is a company or close corporation. VAT is currently payable at the rate of 14% of the purchase price.
A pro rata portion of the rates payable on the property to the relevant local authority (or a pro rata portion of the levies payable to the Body Corporate in the case of a flat (plus Value Added Tax where applicable). Pest clearance and electrical compliance certificates together with any costs involved in making the house fit for the issue of such certificates are usually the responsibility of the seller.
The conveyancer's fee is determined by a guideline tariff but the amount of the fee may be negotiated with the conveyancer.
Where a bond is to be registered, the purchaser will have to pay the stamp duty payable on the bond (0,2% of the amount secured by the bond) an amount charged by the financial institution for the inspection of the property, provisional interest and insurance premiums and the conveyancer's fee (calculated on a sliding scale based on the amount of the bond).
Who arranges these transactions?
Having carried out the necessary searches in the deeds office and having checked all the details of the property and parties to the transaction, the conveyancer prepares the title deed and other necessary documents and on behalf of the purchaser pays the Receiver of Revenue and of both the seller and purchase the local authority.
Once the documents have been signed by the purchaser and the seller, and the purchaser has paid the costs and made satisfactory provision for the payment of the purchase price, the conveyancer can proceed with the registration of transfer of the property in the purchaser's name. (He will only do so, however, once the purchase price has been paid or secured).
What happens with the trust monies?
Section 78(2a) of the Attorneys Act specifically makes provision that an attorney, at the instruction of any person, may open a trust savings or other interest bearing account and the interest is paid out according to instruction. These funds are protected by the Attorneys Fidelity Fund. The attorney may charge a fee for this service.
What happens at the deeds office?
The conveyancer will lodge the title deed and other documents that he has prepared in the deeds office for registration. The deeds office is a government registry of ownership in all fixed property and other rights in fixed property. If there is a bond to be registered the conveyancer attending to the bond (who is usually not the conveyancer attending to the transfer) will also lodge the bond documents in the deeds office for registration simultaneously with the transfer documents.
The examiners in the deeds office scrutinize the documents to ensure that they comply with all relevant legislation and regulations. When they are satisfied, they inform the conveyancer that the deeds are ready for registration and thereupon, in the presence of the conveyancer and registrar of deeds, the transfer of the property is registered in the name of the purchaser. The bond (if applicable) is registered simultaneously.
On registration the purchaser becomes the lawful owner of the property. The title deed reflecting his ownership will be released by the deeds office after the registration and will be handed to him by the conveyancer, unless a bond had been registered, in which case the title deed is retained by the bondholder.
How long does the process take?
Having read this pamphlet you will be aware that conveyancing is a complex field requiring extensive knowledge, skill and attention to detail on the part of the conveyancer.
In the usual conveyancing transaction there are a number of parties involved such as:
The seller (and spouse)
The purchaser (and spouse)
The institution which previously gave the bond to the seller (and the conveyancer acting on its behalf)
The Receiver of Revenue
The municipality or local authority
The institution which gives the new bond to the purchaser (and the conveyancer acting on its behalf)
Estate agent
Conveyancer(s)
Registrar of Deeds
More often than not the following additional parties are also involved.
The buyer of the purchaser's previous property (which the purchaser had to sell to obtain the cash portion of the purchase price)
The conveyancer acting for the purchaser in that transaction
The institutions which gave and are giving the loans in that transaction (and their conveyancers) and so forth.
Very often there are whole chains of transactions linked up in this fashion.
The conveyancer has to complete the arrangements with all these parties. Because human beings and various institutions are involved in each instance, delays are possible at any stage of the transaction. The conveyancer (also being an attorney) knows exactly when and how to use legal methods to compel delaying parties to act more expeditiously.
It is important, therefore, that the purchaser should sign the documents and pay the required amounts as soon as the conveyancer calls on him or her to do so; this helps to ensure that there are no unnecessary delays.
The length of time it takes to get the transaction into the Deeds Office is dependent on the reaction time taken by each and every one of the mentioned parties. The usual time taken by the Deeds Office to inspect all the documents lodged by the different conveyancers for a specific transaction is seven working days.
On average, the time taken to register the transfer of property, where a bond is involved, will be two or three months from the date that the conveyancer is instructed.
Unforeseen difficulties such as the death of one of the parties, attachment of the property by a creditor of the seller and so forth may cause the period to be extended.
What recourse do I have if the conveyancer fails to do the job?
Conveyancers are subject to the disciplinary powers of the law society of the province in which they practice. Law societies will act in the interest of the public.
If someone believes that a conveyancer has not done his job properly, he may lodge a complaint with the relevant law society which will investigate the matter and, in appropriate cases, will discipline the conveyancer.
If the conveyancer has been negligent and the purchaser or the seller should suffer any loss thereby, they would have a claim against the conveyancer for the amount of the loss.
Why is a conveyancer necessary?
Most people are accustomed to doing much of their personal business without the need of a legal or other adviser. However, a great deal is at stake in the transfer of fixed property. It is generally the largest single asset that a person owns and the transaction for the purchase or sale of a fixed property is probably the most important contract undertaken by individuals.
The law therefore, provides that only qualified conveyancers may attend to the transfer of fixed property and related transactions. This is not only to give proper protection to the rights and interest of the public, but also to safeguard the integrity of the South African land registration system, which is universally regarded as one of the best in the world.
When all the checks have been made, all the procedures followed by the conveyancer and the property has been registered in the name of the purchaser, the purchaser can be assured that he or she has the best title to the property
The term "conveyancing" describes the legal process whereby rights in fixed property are registered in the deeds office. These rights include ownership, mortgage, servitude, mineral rights and others. All these rights vest legally in a person only on registration. The registration process, therefore, places an official "seal" on a person's rights in fixed property. "Fixed property" is any land, whether improved or not such as a house, farm or sectional title flat.
This pamphlet deals with the transfer of ownership pursuant to the sale of fixed property. The procedure is similar to that required for the ownership of fixed property pursuant to donation, inheritance, exchange or a divorce settlement and so forth.
A conveyancing transaction involves a chain of steps which begins with the deeds of sale and which continues through to the ultimate registration of ownership and the reconciliation of finances and payments.
Who is a Conveyancer?
A conveyancer is admitted as such by the High Court after having completed a special qualifying examination. In addition, only a person who has been admitted by the High Court as an Attorney, may practice as a conveyancer. All conveyancers are therefore, also attorneys. To be admitted, the person has to complete the required academic studies (usually four or more years for the necessary law degree), then a period of "articles" or work in a law-office for the necessary experience and then an extensive practical examination. If the qualified attorney wishes to practice in the highly technical branch of the law dealing with fixed property, he or she has to do intensive study of a large number of Acts of Parliament, regulations, High Court decisions and decisions by Registrars of Deeds relating to fixed property. Then he or she has to pass a conveyancing examination. Only after passing this examination will the High Court allow the attorney to practice as a conveyancer.
Who appoints a conveyancer?
In South Africa, the usual practice is for the seller to appoint a conveyancer for a property transaction, although this, like other aspects of a sale agreement, can be varied as a result of negotiation between the parties.
The purchaser may also appoint a conveyancer to advise him or her, but these charges will be over and above the conveyancing costs submitted by the seller's conveyancer, who will be doing the actual transfer.
What is the first step in the sale of fixed property?
The sale of fixed property is affected by entering into a written contract referred to as a deed of sale. The first prerequisite is that the deed of sale must be a written agreement. It must be signed by both the purchaser and the seller (and by the seller's spouse and the purchaser's spouse in some cases). A written "offer to purchase" signed by a purchaser and accepted by a seller also constitutes a deed of sale. A verbal contract for the sale of fixed property is not valid.
The deed of sale is an important document which must be carefully examined. The parties (with the assistance of a conveyancer or attorney) must check that the total amount payable by the seller or his estate agent are incorporated in the document and that nothing mentioned in the document is contrary to any legal provision.
Occupancy of the property does not necessarily have to coincide with registration of transfer. If occupation takes place prior to registration, the deed of sale must provide what rent is payable until the date of registration.
Risk in the property passes to the purchases when the deed of sale is signed, although the consequences can be (and often is) changed in the deed of the sale itself. The purchaser must, therefore, take out insurance in appropriate cases.
The purchaser is usually responsible for payment of transfer costs. These are fixed in terms of legislation or by guidelines and the purchaser will be able to know in advance, to within a few rands, what the costs will be.
Finally, if the sale is subjected to the granting of a bond, this must be specified in the deed of sale. It should also be specified as to what the amount of the bond must be, how much time the purchaser will have to obtain the bond, who will apply and so forth. It must also be specified that if the purchaser is unable to obtain the required bond in time, then the whole deal is to fall through. Arrangements as to which amounts (if any) the purchaser has to pay in these circumstances should also be specified.
The deed of sale is only valid if it is signed by all the parties. Ownership does, however, not pass on signature of the deed sale. The purchaser becomes owner only on registration of the property in his or her name in the deeds office. The deed of sale grants the purchaser the right to claim transfer of the property. (For more details on the purchase of land, see the brochure "Buying and selling a house").
What happens next?
The property must be signed by the seller and it authorizes the conveyancer to attend to the transfer on the seller's behalf.
Both the seller and the purchaser will be required to call at the office of the conveyancer to sign certain documents which have been prepared by the conveyancer and which will enable the conveyancer to effect the transfer in the deeds office. The documents which will have to be signed are the following?
1.
Declaration in respect of statusIn this document the purchaser declares his or her marital status. This deals with such questions as to whether he or she is married in or out of community of property (which determines whether the property is to be registered in his or her name or in the name of both spouses). Unmarried adult persons, whether never married, divorced or widowed, are granted full rights of ownership.
Transfer duty and Value Added Tax (VAT) declaration
Transfer duty is a form of tax payable to the State and is calculated on the value of the property. If the deed of sale is signed by either the seller or the purchaser after 30 September 1991 then Value Added Tax may be payable on the transaction. This tax will be payable on the estate agent's commission, on the conveyancer's fees and on portions of some municipal rates. If the seller is registered as a vendor then VAT will also be payable on the purchase price.
If VAT is payable on the purchase price, then no transfer duty will be payable. The conveyancer will require the parties to sign lengthy declarations about these taxes. With these declarations in hand he or she will be able to finalise the matter with the Receiver of Revenue and either pay the transfer duty (after being put in funds to do so) or obtain a transfer duty exemption. Without a transfer duty receipt or a transfer duty exemption receipt being produced, the Registrar of Deeds will not register the transaction.
Mortgage or bond documents
If the purchaser gets a loan from a financial institution (bank or building society) or from his or her employer or other source, the lender will insist that the purchaser registers a mortgage over the property to secure a loan.
To enable the bond to be registered, the purchaser will be required to sign a written power of attorney for the conveyancer to do so.
To enable the conveyancer to draw up all this documentation correctly, the purchaser must submit his or her identity document, marriage certificate and if applicable, antenuptial contract to the conveyancer. Details of the loan and the lender will also be required.
What are the costs involved?
The costs relating to the transfer of fixed property fall into three main categories:
Transfer duty or Value Added Tax - where transfer duty is payable to the Government it is calculated as follows: nothing on the first R100,000,00 of the purchase price + 5% on the balance of the purchase price between R 100 001 up to R300 000,00 and thereafter 8% in the case of natural persons (properties sold for less than R100 000,00 are exempt from transfer duty) and 10% where the purchaser is a company or close corporation. VAT is currently payable at the rate of 14% of the purchase price.
A pro rata portion of the rates payable on the property to the relevant local authority (or a pro rata portion of the levies payable to the Body Corporate in the case of a flat (plus Value Added Tax where applicable). Pest clearance and electrical compliance certificates together with any costs involved in making the house fit for the issue of such certificates are usually the responsibility of the seller.
The conveyancer's fee is determined by a guideline tariff but the amount of the fee may be negotiated with the conveyancer.
Where a bond is to be registered, the purchaser will have to pay the stamp duty payable on the bond (0,2% of the amount secured by the bond) an amount charged by the financial institution for the inspection of the property, provisional interest and insurance premiums and the conveyancer's fee (calculated on a sliding scale based on the amount of the bond).
Who arranges these transactions?
Having carried out the necessary searches in the deeds office and having checked all the details of the property and parties to the transaction, the conveyancer prepares the title deed and other necessary documents and on behalf of the purchaser pays the Receiver of Revenue and of both the seller and purchase the local authority.
Once the documents have been signed by the purchaser and the seller, and the purchaser has paid the costs and made satisfactory provision for the payment of the purchase price, the conveyancer can proceed with the registration of transfer of the property in the purchaser's name. (He will only do so, however, once the purchase price has been paid or secured).
What happens with the trust monies?
Section 78(2a) of the Attorneys Act specifically makes provision that an attorney, at the instruction of any person, may open a trust savings or other interest bearing account and the interest is paid out according to instruction. These funds are protected by the Attorneys Fidelity Fund. The attorney may charge a fee for this service.
What happens at the deeds office?
The conveyancer will lodge the title deed and other documents that he has prepared in the deeds office for registration. The deeds office is a government registry of ownership in all fixed property and other rights in fixed property. If there is a bond to be registered the conveyancer attending to the bond (who is usually not the conveyancer attending to the transfer) will also lodge the bond documents in the deeds office for registration simultaneously with the transfer documents.
The examiners in the deeds office scrutinize the documents to ensure that they comply with all relevant legislation and regulations. When they are satisfied, they inform the conveyancer that the deeds are ready for registration and thereupon, in the presence of the conveyancer and registrar of deeds, the transfer of the property is registered in the name of the purchaser. The bond (if applicable) is registered simultaneously.
On registration the purchaser becomes the lawful owner of the property. The title deed reflecting his ownership will be released by the deeds office after the registration and will be handed to him by the conveyancer, unless a bond had been registered, in which case the title deed is retained by the bondholder.
How long does the process take?
Having read this pamphlet you will be aware that conveyancing is a complex field requiring extensive knowledge, skill and attention to detail on the part of the conveyancer.
In the usual conveyancing transaction there are a number of parties involved such as:
The seller (and spouse)
The purchaser (and spouse)
The institution which previously gave the bond to the seller (and the conveyancer acting on its behalf)
The Receiver of Revenue
The municipality or local authority
The institution which gives the new bond to the purchaser (and the conveyancer acting on its behalf)
Estate agent
Conveyancer(s)
Registrar of Deeds
More often than not the following additional parties are also involved.
The buyer of the purchaser's previous property (which the purchaser had to sell to obtain the cash portion of the purchase price)
The conveyancer acting for the purchaser in that transaction
The institutions which gave and are giving the loans in that transaction (and their conveyancers) and so forth.
Very often there are whole chains of transactions linked up in this fashion.
The conveyancer has to complete the arrangements with all these parties. Because human beings and various institutions are involved in each instance, delays are possible at any stage of the transaction. The conveyancer (also being an attorney) knows exactly when and how to use legal methods to compel delaying parties to act more expeditiously.
It is important, therefore, that the purchaser should sign the documents and pay the required amounts as soon as the conveyancer calls on him or her to do so; this helps to ensure that there are no unnecessary delays.
The length of time it takes to get the transaction into the Deeds Office is dependent on the reaction time taken by each and every one of the mentioned parties. The usual time taken by the Deeds Office to inspect all the documents lodged by the different conveyancers for a specific transaction is seven working days.
On average, the time taken to register the transfer of property, where a bond is involved, will be two or three months from the date that the conveyancer is instructed.
Unforeseen difficulties such as the death of one of the parties, attachment of the property by a creditor of the seller and so forth may cause the period to be extended.
What recourse do I have if the conveyancer fails to do the job?
Conveyancers are subject to the disciplinary powers of the law society of the province in which they practice. Law societies will act in the interest of the public.
If someone believes that a conveyancer has not done his job properly, he may lodge a complaint with the relevant law society which will investigate the matter and, in appropriate cases, will discipline the conveyancer.
If the conveyancer has been negligent and the purchaser or the seller should suffer any loss thereby, they would have a claim against the conveyancer for the amount of the loss.
Why is a conveyancer necessary?
Most people are accustomed to doing much of their personal business without the need of a legal or other adviser. However, a great deal is at stake in the transfer of fixed property. It is generally the largest single asset that a person owns and the transaction for the purchase or sale of a fixed property is probably the most important contract undertaken by individuals.
The law therefore, provides that only qualified conveyancers may attend to the transfer of fixed property and related transactions. This is not only to give proper protection to the rights and interest of the public, but also to safeguard the integrity of the South African land registration system, which is universally regarded as one of the best in the world.
When all the checks have been made, all the procedures followed by the conveyancer and the property has been registered in the name of the purchaser, the purchaser can be assured that he or she has the best title to the property
Monday, June 2, 2008
Seven ways to boost your business cash flow - from Treoc.com
By Niel Malan
Many business owners have had a bit of a slow year thus far due to a tighter economy and now struggle with cash-flow. The following few points will give you some good ideas for boosting your cash-flow to help ease the burden:
1. Re-activate Inactive Clients
A good friend worked as an actuary for a large life-insurance company many years ago. He did some analysis on their database and found that they had hundreds of thousands of clients that they sold a policy to once, but never contacted again.
He put a telemarketing team in place and managed to get a hold of approximately 30 000 clients. 70% agreed to upgrade their low premium cancer policies to a higher monthly installment for double the benefits. Once they contacted everyone, they went back to the same people and re-upgraded them once more. To their astonishment about 70% of their clients upgraded again!
I am not at liberty to share what their financial rewards were from this exercise, but I can tell you it was very significant. Do you have old clients that you haven’t spoken to in a while, that may be ready to buy? Be sure to work your existing client list as it is the quickest and surest way to boost sales fast!
2. Get Rid of Dead Wood
If you have been running your company for some time, you are likely to have a few members on the team that aren’t contributing to results and that simply cost you money. Many entrepreneurs make the mistake of tolerating poor performance for too long because they feel bad to let people go.
What they don’t realise is that poor performance by a few team members puts the whole company in jeopardy and creates an unfair environment where other people have to pick up the slack for the work that the poor performers don’t do. My philosophy in business is very simple – hire slowly and fire fast if you realise you made a mistake.
3. Start Charging for Free Services
A while back I bumped into a client who shared a very interesting story. He is a furniture manufacturer in Randburg that makes all sorts of wooden furniture. He does about 30 deliveries every day, and used to do it for free as part of his service to his clients.
On my insistence he tried charging for the deliveries. At first he charged R75 per delivery and to his surprise nobody complained. He then tested charging R150 per delivery, and still nobody complained. Today he is making an extra R90 000 clean profit per month purely by charging for every delivery he used to do for free.
What products and services are you giving away for free that you can start charging for?
4. Stop Discounting!
The CEO of a big fitment centre group contacted me once to help him improve sales and profits of his loss-making company. By chance I needed some tires for my car, and I decided to get a fitment at one of their outlets. I drove into one of their stores in Fourways one Saturday morning and asked the sales lady to quote me on four new tires.
She took out her calculator, quoted the price, and then offered me a 20% discount without me even asking for it. To be honest, I had no prior knowledge of the prices of tires, and I am not a price sensitive shopper. I probably would have bought the tires without the discount.
The fitment industry only averages between 25% and 35% margin on tires, which means this lady gave away about 65% of their potential profits on the sale without even thinking twice. Be very mindful about discounting! According to MIT only 14% of purchase decisions are made purely on the basis of price, and you can usually get around discounting by educating your clients on the value you add by your products and services.
5. Re-negotiate Bad Deals
Business oriented agreements normally cost more and more the longer they are in place. But usually the value you get from the agreement doesn’t go up proportionately. Once I had an office of about 40 people in Johannesburg and my rental started off at about R60 per square meter. After a few years my rent escalated to close on R100 per square meter for the same office space, while the going rate for similar offices were about R80 per square meter. I was over-paying because I was locked into an agreement!
The same thing happens in a variety of areas. For example, often personnel who have been with a company for many years have received a steady 10% to 12% increase every year while delivering the same output. One way to boost your cash-flow is to go and re-negotiate all deals where you are over-paying.
Below are a few areas you can explore to give you a start:
Rental agreements including offices, equipment, etc.
Personnel contracts
Supplier agreements on pricing and terms
Terms with clients including payment terms, pricing, etc.
Professional services fees like accountants, attorney’s, etc.
Insurance products including life assurance, short-term insurance, etc.
6. Pay for Performance
My views on marketing are very controversial. Most people see marketing as an expense and don’t expect a measurable return. I view marketing as an investment, which means I track the results and corresponding returns very carefully. Let’s say I decide to run an ad in the paper to market one of our courses and it costs me R10 000. I expect at least a R20 000 profit from that ad, otherwise I stop running it.
The same thing goes for staff. When I start a business I will have staff on the payroll. But soon I pay everyone for every item of work they deliver, or a profit share depending on the profits the business makes. This way everyone is focused on the results of their work as opposed to the activity of their work. This practice incidentally makes your management life much easier as personnel keep each other accountable to good quality work and cost conscientiousness.
Evaluate every expense item in your business and see if you can reduce it down to a cost per item of work or to a profit equation. You will be amazed how quickly this thinking eliminates wasted expense and improves performance.
7. Analyse Your Management Accounts
A few years ago I was on the judging panel for an Entrepreneurship show on TV3. One of the panel members was a very accomplished accountant that brokered large deals. I asked him what he felt the most important difference was between companies that succeed and companies that fail.
Without hesitation he answered: “companies who take their management accounts seriously.” Implement a discipline in your office of evaluating and analyzing your management accounts on the same day every month, for example the 14th of every month. Look at the most important metrics like profitability, revenue, debtors trading cycle, stock-holding, etc. You will soon have a very firm handle on the performance of your business and spot areas for immediate improvement.
To Your Success!
Many business owners have had a bit of a slow year thus far due to a tighter economy and now struggle with cash-flow. The following few points will give you some good ideas for boosting your cash-flow to help ease the burden:
1. Re-activate Inactive Clients
A good friend worked as an actuary for a large life-insurance company many years ago. He did some analysis on their database and found that they had hundreds of thousands of clients that they sold a policy to once, but never contacted again.
He put a telemarketing team in place and managed to get a hold of approximately 30 000 clients. 70% agreed to upgrade their low premium cancer policies to a higher monthly installment for double the benefits. Once they contacted everyone, they went back to the same people and re-upgraded them once more. To their astonishment about 70% of their clients upgraded again!
I am not at liberty to share what their financial rewards were from this exercise, but I can tell you it was very significant. Do you have old clients that you haven’t spoken to in a while, that may be ready to buy? Be sure to work your existing client list as it is the quickest and surest way to boost sales fast!
2. Get Rid of Dead Wood
If you have been running your company for some time, you are likely to have a few members on the team that aren’t contributing to results and that simply cost you money. Many entrepreneurs make the mistake of tolerating poor performance for too long because they feel bad to let people go.
What they don’t realise is that poor performance by a few team members puts the whole company in jeopardy and creates an unfair environment where other people have to pick up the slack for the work that the poor performers don’t do. My philosophy in business is very simple – hire slowly and fire fast if you realise you made a mistake.
3. Start Charging for Free Services
A while back I bumped into a client who shared a very interesting story. He is a furniture manufacturer in Randburg that makes all sorts of wooden furniture. He does about 30 deliveries every day, and used to do it for free as part of his service to his clients.
On my insistence he tried charging for the deliveries. At first he charged R75 per delivery and to his surprise nobody complained. He then tested charging R150 per delivery, and still nobody complained. Today he is making an extra R90 000 clean profit per month purely by charging for every delivery he used to do for free.
What products and services are you giving away for free that you can start charging for?
4. Stop Discounting!
The CEO of a big fitment centre group contacted me once to help him improve sales and profits of his loss-making company. By chance I needed some tires for my car, and I decided to get a fitment at one of their outlets. I drove into one of their stores in Fourways one Saturday morning and asked the sales lady to quote me on four new tires.
She took out her calculator, quoted the price, and then offered me a 20% discount without me even asking for it. To be honest, I had no prior knowledge of the prices of tires, and I am not a price sensitive shopper. I probably would have bought the tires without the discount.
The fitment industry only averages between 25% and 35% margin on tires, which means this lady gave away about 65% of their potential profits on the sale without even thinking twice. Be very mindful about discounting! According to MIT only 14% of purchase decisions are made purely on the basis of price, and you can usually get around discounting by educating your clients on the value you add by your products and services.
5. Re-negotiate Bad Deals
Business oriented agreements normally cost more and more the longer they are in place. But usually the value you get from the agreement doesn’t go up proportionately. Once I had an office of about 40 people in Johannesburg and my rental started off at about R60 per square meter. After a few years my rent escalated to close on R100 per square meter for the same office space, while the going rate for similar offices were about R80 per square meter. I was over-paying because I was locked into an agreement!
The same thing happens in a variety of areas. For example, often personnel who have been with a company for many years have received a steady 10% to 12% increase every year while delivering the same output. One way to boost your cash-flow is to go and re-negotiate all deals where you are over-paying.
Below are a few areas you can explore to give you a start:
Rental agreements including offices, equipment, etc.
Personnel contracts
Supplier agreements on pricing and terms
Terms with clients including payment terms, pricing, etc.
Professional services fees like accountants, attorney’s, etc.
Insurance products including life assurance, short-term insurance, etc.
6. Pay for Performance
My views on marketing are very controversial. Most people see marketing as an expense and don’t expect a measurable return. I view marketing as an investment, which means I track the results and corresponding returns very carefully. Let’s say I decide to run an ad in the paper to market one of our courses and it costs me R10 000. I expect at least a R20 000 profit from that ad, otherwise I stop running it.
The same thing goes for staff. When I start a business I will have staff on the payroll. But soon I pay everyone for every item of work they deliver, or a profit share depending on the profits the business makes. This way everyone is focused on the results of their work as opposed to the activity of their work. This practice incidentally makes your management life much easier as personnel keep each other accountable to good quality work and cost conscientiousness.
Evaluate every expense item in your business and see if you can reduce it down to a cost per item of work or to a profit equation. You will be amazed how quickly this thinking eliminates wasted expense and improves performance.
7. Analyse Your Management Accounts
A few years ago I was on the judging panel for an Entrepreneurship show on TV3. One of the panel members was a very accomplished accountant that brokered large deals. I asked him what he felt the most important difference was between companies that succeed and companies that fail.
Without hesitation he answered: “companies who take their management accounts seriously.” Implement a discipline in your office of evaluating and analyzing your management accounts on the same day every month, for example the 14th of every month. Look at the most important metrics like profitability, revenue, debtors trading cycle, stock-holding, etc. You will soon have a very firm handle on the performance of your business and spot areas for immediate improvement.
To Your Success!
Fixing of bonds - from Treoc.com
by Coert Coetzee
(Coert Coetzee is the Founder of the TREOC Group consisting out of different companies and trusts. He is an experienced Business Owner and Property Investor and shares his experience and secrets of many years.)
Fixing of bonds
In June 2006 I fixed some of my bonds, at an average rate of 10.6%, and in so doing missed the largest part of the last two years’ interest rate increases. The cycle has continued for longer than we expected though, due to numerous external factors, of which the record oil price is the most notable. In 2006 I fixed my rates for a two-year period, and this period will expire in June 2008.
When I fix interest rates, I never fix the rates on all my bonds. I usually fix half of my bonds and leave the others at the variable rate. I then always park my reserve cash in the bonds with the highest rates. If the interest rates peak sooner than I expect and drop down below my fixed interest rate, then I move the money to the fixed rate bonds. In so doing, I have the best of both worlds. Of course, this method only works if you keep extra money in your bonds.
In June I will be coming off the fixed rate from two years ago, with the rates still high and a strong possibility of them rising further, so this week I fixed the bonds that weren’t already fixed, at an average rate of 15.3%. Fixed rates will vary from bank to bank and property to property, depending on your Loan-to-Value ratio.
The reason I have fixed now at such a high rate is that no-one can predict how high rates will actually go. High inflation is being driven by high oil prices, and I can’t see that this is going to change in a hurry. Although I said at the seminar a few years ago that I didn’t think we would reach 1998’s high of 25.5%, this is now starting to look more and more like a possibility. Let’s hope I’m wrong and that it comes down soon. Then I will simply move the money to the bonds with the highest rates. If not, fortunately my rates will be fixed like in 1998, when I fixed at 17%. At that stage people were already saying I was crazy to fix so high, but it worked!
Whether you fix or not is your choice. All that I want to achieve with this message is to make you aware of the possibilities and to inform you of my decision, as I always promise I will. Whatever the case, make sure that you can afford what you are doing. One of the golden rules of the Treoc Way is affordability. Never disregard this. This is why the Treoc Investor software allows you to play with “what if” scenarios.
How to utilize the buyer’s market
The present market conditions are bringing us fantastic buying opportunities. At Treoc we recently developed two revolutionary products that will be to the benefit of buyers as well as sellers. These products are going to be the “talk of the town” because they will give immediate relieve of bond payments to people in trouble and they will secure huge bargains for people with affordability irrespective of whether they can qualify for a bond or not. It is the first bond free purchase method of it’s kind in South Africa. We will launch it in the next issue of the Treoc Times. It will also form part of future seminars. Be sure not to miss it!
(Coert Coetzee is the Founder of the TREOC Group consisting out of different companies and trusts. He is an experienced Business Owner and Property Investor and shares his experience and secrets of many years.)
Fixing of bonds
In June 2006 I fixed some of my bonds, at an average rate of 10.6%, and in so doing missed the largest part of the last two years’ interest rate increases. The cycle has continued for longer than we expected though, due to numerous external factors, of which the record oil price is the most notable. In 2006 I fixed my rates for a two-year period, and this period will expire in June 2008.
When I fix interest rates, I never fix the rates on all my bonds. I usually fix half of my bonds and leave the others at the variable rate. I then always park my reserve cash in the bonds with the highest rates. If the interest rates peak sooner than I expect and drop down below my fixed interest rate, then I move the money to the fixed rate bonds. In so doing, I have the best of both worlds. Of course, this method only works if you keep extra money in your bonds.
In June I will be coming off the fixed rate from two years ago, with the rates still high and a strong possibility of them rising further, so this week I fixed the bonds that weren’t already fixed, at an average rate of 15.3%. Fixed rates will vary from bank to bank and property to property, depending on your Loan-to-Value ratio.
The reason I have fixed now at such a high rate is that no-one can predict how high rates will actually go. High inflation is being driven by high oil prices, and I can’t see that this is going to change in a hurry. Although I said at the seminar a few years ago that I didn’t think we would reach 1998’s high of 25.5%, this is now starting to look more and more like a possibility. Let’s hope I’m wrong and that it comes down soon. Then I will simply move the money to the bonds with the highest rates. If not, fortunately my rates will be fixed like in 1998, when I fixed at 17%. At that stage people were already saying I was crazy to fix so high, but it worked!
Whether you fix or not is your choice. All that I want to achieve with this message is to make you aware of the possibilities and to inform you of my decision, as I always promise I will. Whatever the case, make sure that you can afford what you are doing. One of the golden rules of the Treoc Way is affordability. Never disregard this. This is why the Treoc Investor software allows you to play with “what if” scenarios.
How to utilize the buyer’s market
The present market conditions are bringing us fantastic buying opportunities. At Treoc we recently developed two revolutionary products that will be to the benefit of buyers as well as sellers. These products are going to be the “talk of the town” because they will give immediate relieve of bond payments to people in trouble and they will secure huge bargains for people with affordability irrespective of whether they can qualify for a bond or not. It is the first bond free purchase method of it’s kind in South Africa. We will launch it in the next issue of the Treoc Times. It will also form part of future seminars. Be sure not to miss it!
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