“Newly built homes are appealing to buyers for a number of reasons,” says Rhys Dyer, CEO of ooba home loans, South Africa’s home loan comparison service. “For starters, repairs and redecoration costs should be minimal for the first few years and, if the property is built to the correct standards, homeowners can enjoy lower running costs and energy bills.
“Buyers can often select fixtures and fittings to tailor the property finish to their own tastes and new properties also come with structural guarantees. And then, of course, there is the simple fact that many people like the idea of being the first to live in a home.”
The benefits of buying in a new housing development
But it’s not just the aesthetic elements that make new developments an appealing investment. The actual process of acquiring the property is free from many of the legal and financial obligations that accompany a previously owned property. Here are a few examples:
No Transfer Duty
“The payment of transfer duty only applies when a property changes ownership, which is obviously not the case with a new build,” explains Rhys Dyer.
“In South Africa, any existing property priced over R900 000 requires the payment of a transfer duty, which increases exponentially with the cost of the house. Where transfer duty does not apply, such as on the sale of a new-build development property, the savings can be significant. For example, the transfer duty on a R1.25 million property amounts to R10 500. This is a valuable saving, and some developers even include registration costs in the price.”
In the absence of the payment of transfer duty, you will have to pay VAT, as the house is registered in the name of a development company, and is thus subject to a tax on the sale of immovable property.
Nevertheless, you will still pay less tax on a new build than you would have done were you to buy an existing property from a VAT registered private seller. As Dyer explains: “The difference is that a new development property is registered at the minus-VAT value.
Questions to ask when buying a new-build home
While there are many benefits to buying a new-build home, the fact that it is newly built means additional factors you need to take into consideration. You’ll be the first to live in the home and, as such, there’s no one who can provide you with a first-hand account of the living experience, you’ll need to investigate that yourself. Here are some questions you should ask:
- Are the rooms voluminous? Measurements in sales brochures are usually based on the floor area only. What about volume? Buyers should watch out for builder’s “tricks”, such as using large wall mirrors or glass furniture to make show house rooms appear larger than they actually are.
- What’s the layout like? “It’s not just about how it looks,” says Dyer. “Consider how the space will actually be used.” For example, open-plan spaces may suit people with kids, as it allows you to keep an eye on them playing in the living room while you’re cooking in the kitchen.
- Is there natural light? It’s not simply about having a room with large windows. It’s about how that light flows through the house. “If you can open the front door and see through to the garden, you’re going to enjoy a really strong sense of space and light in your home,” says Dyer.
- How does the property blend with its surroundings? Love an area for its character? Then look at the big picture and consider how the development sits within its surroundings. If it doesn’t feel well integrated, it might not be the place for you.
- How future proof is it? If you’re planning to make this your forever home, you might want to consider what facilities are available nearby in case mobility becomes a problem. Is there a doctor’s surgery? Are the transport links good? There’s a growing trend for new developments to make it possible to incorporate extra care and facilities, which can add enormously to the home’s resale value.
If you’d like to invest in a new-build development, whether for the purpose of moving in or renting it out, ooba home loans, South Africa’s largest home loan comparison service, offers a range of tools that can make the home-buying process a lot easier. Start with their home loan calculators, then use the ooba Bond Indicator, a free, online prequalification tool, to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.