Buying a sectional title? Here’s what you need to know

Article summary

• Sectional title describes the separate ownership of a unit within a group-owned complex or development.
• Sectional title offers advantages such as heightened security, communal outdoor spaces and a greater sense of community.
• However, unit owners have to abide by the rules and regulations of the complex, and contribute to the upkeep.
• The bank will need to check the financials of the body corporate before granting a home loan.

What is a sectional title property and why should you consider buying one? We explain the benefits of a sectional title property, and what makes it different from a freehold property.

Sectional title versus freehold property

Sectional title refers to the ownership of a unit that forms part of a group-owned complex or development.

Freehold refers to a property that stands on its own and doesn’t form part of any greater community.

You manage a freehold property by yourself, where as in a sectional title, you and the other home owners in the complex or development make decisions as a committee.

The difference sounds simple but there are some factors to take into account.

Managing a sectional title property

• You form part of a body corporate that makes decisions regarding the complex.
• These decisions may include whether to install new features, such as a swimming pool or upgraded security.
• Each member of the body corporate will have to pay levies that go toward the maintenance of the complex as a whole.

Benefits of a sectional title property

• You don’t have to concern yourself with upkeep, such as mowing lawns or fixing pavements, as this is taken care of by staff hired by the body corporate.
• You don’t have to pay for your own home insurance.
• Sectional title complexes usually have advanced security in place to protect the whole complex.
• There is a greater sense of community due to the proximity of units to each other.
• There are usually communal facilities that everyone can make use of, such as a swimming pool and braai area.
• The superior security and communal areas make sectional title properties ideal for children.
• Sectional titles are ideal for a work-from-home lifestyle as they usually include expansive and safe outdoor areas, with convenient facilities in close proximity close-at-hand.

Downsides include:

• The need to comply with rules and regulations set by the body corporate (such as whether or not pets are allowed).
• You can’t make major decisions regarding your property without the approval of the body corporate.

Is sectional title a good investment?

• Sectional title properties are increasing in popularity due to demand for better security and a work-from-home lifestyle.
• Sectional title sales made up 29% of the market in 2020.

Applying for sectional title

• Banks will want to assess the financials of the body corporate before granting a home loan for a sectional title property.
• They’ll check what is owed by the scheme, whether loans have been taken to cover
 accounts where there have been shortfalls in levies paid, and how well the scheme is managed.
• You’ll also want to assess this information before purchasing in a sectional title. You’ll want to ensure the complex is well managed and that everyone pays their share.
• Once the bank has assessed the financials, the granting of the home loan works the same way as a freehold property, with bond registration and property transfer.

Applying for a sectional title property?

Get the best deal on your home loan by employing a home loan comparison service such as ooba Home Loans.

We submit your application to multiple banks, increasing your chances of home loan approval and getting favourable interest rates.

We also offer a range of tools that can make the home buying process easier.  Start with our Bond Calculator, then use our Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.