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Wednesday, 17 June 2009

Buying or building a house


What should you be doing if you have decided to buy a house in Camps Bay and environs as an existing resident or a prospective property owner ? The following is a sensible modus operandi for someone who wants to buy, alter or build a home in this best of all possible places:

Here are some handy tips for the unwary. “Caveat emptor” (Buyer beware”) is really what this is all about.

1) Decide how much you can afford and get your finances in order.

2) Are you paying cash or getting a bond?

3) Can you afford the repayments plus interest?

4) Are you buying to live in or develop and sell the property?

5) Decide what area you are looking to live or redevelop in.

6) Get some Estate Agents to show you some properties and, very importantly, the terms of their prospective Deed of Sale – especially the transfer date.

7) Get the services of a Conveyancing Lawyer, an Architect, a Planner, a Structural Engineer and a Quantity Surveyor to help you decide upon your options – especially if you want to alter or rebuild.

8) Obtain a copy of the current Title Deeds – get your professional team to scrutinize and advise you on all the ramifications thereof.

9) Get to understand the City Council Zoning scheme restrictions applicable to your prospective purchase – same as last. Title Deeds and Zoning Schemes often contradict each other!

10) Find out from the Seller / Agent whether the house as it presently stands reflects the passed plans in the possession of the Council. You may be buying illegally built work which will be picked up by the council should you want to alter the building.

11) Get advice on the state of the electrical and mechanical installations and hopefully the state of the existing timbers (especially in the roof). Get a beetle-free certificate.

12) Compare the last two to ascertain whether you are inheriting illegal work not previously passed by the Council for which you will become responsible once you have completed your purchase as you will certainly be purchasing the property “voetstoots” (“as is”).

13) Look at the properties immediately surrounding your possible purchase. Is there a possibility that any of the adjacent properties could be altered / rebuilt to alter / obscure that lovely view for which you are prepared to pay a fortune? If there is, what are your rights?

14) Is there, as in Fulham Road, the possibility of a major dual carriageway freeway passing right in front of your property in due course?!

15) What are the legal / time ramifications if you want to run a business (guesthouse, hairdresser etc.) from your property – or subdivide, build a granny-flat or double / second dwelling etc. etc.?
You need professional advice here and be prepared to pay some up-front money to assist you in your decision-making process. Money thus spent may save you plenty later on if you have rushed in without fully acquainting yourself with all the issues, costs and time involved.

16) What is the rates valuation status of the property? – this is very relevant at the present time. For example: The present Owner received a revaluation from the Council in February 2007 for R6 000 000 and has objected to this and has asked for it to be reduced to R4 000 000. His objection may not yet have been adjudicated. So, even although you managed to buy the property for R4 200 000, you will still pay the 8% transfer duty on the Council revaluation of R6 000 000 and not on the sales price – ie. R480 000 in lieu of R336 000! This will apply unless the Council has agreed to reduce the new valuation down to the R4 000 000 the present owner has asked for. Should the objection situation have been resolved before your transfer, you will only pay rates on the R4 200 000 sales price. Just to remind you, your annual rates bill on R4 200 000 property will be R 4 200 000 minus R88 000 equals R4 112 000 X R0,00459 in the Rand = R18 874 per annum = R1573 per month plus sewage, garbage removal, water and electricity.

17) Lastly, find out whether you are going to be sheltered from the wind or are you going to always be walking at 80 degrees?!

Still want to buy ? Enjoy !



Building a home for yourself is a long and complicated journey, with many stages, each of which follow logically on one another and some of which overlap. In simple terms, this is what you, the client in a building contract need to do or organize:

1. Appoint an Estate Agent and professional consultants (Architect, Engineer, Land Surveyor, Quantity Surveyor).

2. In conjunction with the above persons, appraise and define the project (eg. the site and planning and statutory regulations pertaining to it).

3. Prepare a preliminary target budget and consider all the economic and financial issues pertaining to your intentions (including furnishing!).

4. Prepare a holistic programme of every process - not only the construction process.

5. Assess your ability to finance the project and, if necessary, talk to your financial adviser and bank manager.

6. Investigate the locality and availability of prospective properties, which conform to your aspirations. Check the Title Deed restrictions and Town Planning Zoning Scheme regulations applicable to the property or properties under consideration and be on the lookout for Council Servitudes.

7. Prepare a rough preliminary design (or designs) to decide which design/property is suitable for you.

8. Check the Title Deed restrictions and Town Planning Scheme regulations related to your preliminary design/s. Obtain advice from a Conveyancing Lawyer and a Town Planner that there are no title deed restrictions or townplanning zoning scheme regulations which will prevent you doing what you wish to do on the property.

9. Purchase the land (or, as some people are now doing, buy the property and demolish the house – another, very expensive way of acquiring the plot of your dreams!).

10. Prepare a more developed and realistic design concept in preliminary sketch plan form. Check the budget and programme for this developed preliminary design concept against your original target budget and programme and change any or all components of either of these accordingly. At this stage you have already committed yourself to a portion of your consultants’ fees. However this is probably not more than about 25% of your final overall fee.

11. You must now commit yourself to instructing your design and cost consultants to develop the previous conceptual sketch plans into preliminary working drawings for the purpose of reviewing the design with the relevant authorities.

12. Submit preliminary working drawings to the authorities for their preliminary plan scrutiny and approval.

13. Proceed through the process of obtaining community and authority permission for Title Deed amendments and / or Town Planning Zoning Scheme departures should these be necessary. (These can be very time-consuming).

14. Prepare final construction working drawings for tender purposes.

15. Submit developed working drawings to the authorities for scrutiny and approval.

16. Recheck your original budget against the tender documentation and amend either as and if necessary.

17. Call for tenders or negotiate with one Contractor - or decide to go owner building (if you can spare the time) - not always your cheapest option!

18. Obtain all approved plans from the authorities.

19. Assess tenders received or negotiations finalised against the current budget, adjust either as and if necessary. Accept one tender and sign a contract agreement with a contractor or commence with your own owner building process. If you sign a contract agreement with a contractor, you will need to finalise various issues, such as the construction period, penalty for late completion, construction guarantee or retention fund, waiver of builder’s lien or client’s payment guarantee, signing powers, insurances and payments, for work done and work still to be done (such as when subcontractors request large up-front deposits on order, a practice much to be discouraged!).

20. Register the project with the NHBRC (The National Home Builders Registration Council) and in terms of the Occupational Health and Safety Act, as the ultimate responsibilty for the safety of all persons on your construction site is now yours, not the contractor’s.

21. Notify the authorities, the NHBRC and the Occupational Health and Safety Department and commence construction on site in accordance with a construction programme prepared by the contractor and presented by him at the first site meeting. At this stage, before commencement of construction, you will now have been obliged to pay in the vicinity of about 75% of your consultants’ overall fees.

22. Finalise all documentation and decisions which have to be made on all contracts/subcontracts, the design and costs for which were not finalised at the time that tenders were called for and therefore were included in the accepted tender by means of Prime Cost Items and Provisional Sums. This process must be done strictly in accordance with the contractor’s construction programme. Failure to keep to this programme will entitle the contractor to claim an extension of his construction period with increased costs for this extension of time having to be paid for by you.

23. Instruct any alterations to the design brief in consultation with the design and cost consultants.

24. Check interim cost reports against the latest budget and either alter the budget and financing to cater for reported cost overruns or alter the design / specifications of work still to be constructed to offset the reported additional costs. Alternatively, should the reports reflect anticipated savings on the previous budget, decide whether you wish to pocket these savings or add to the extent or specifications of uncompleted work. All the instructions emanating from these decisions must be issued timeously to avoid extension of construction period claims from the contractor.

25. Pay the contractor/s and professional consultants timeously within the contracted time periods on an interim basis.

26. Conclude the construction process by:
26.1 Properly insuring the new about-to-be-occupied building, works on site and contents.
26.2 Taking beneficial occupation.
26.3 Pointing out patent defects that you have noticed once you have taken beneficial occupation.
26.4 Receiving and commenting on the design and cost consultants’ final reports and final account.
26.5. Receiving and responding to the design and cost consultants’ reports and recommendations on any disputes which may have arisen in terms of the contract agreement - intermediately and at the end of the construction period.
26.6 Finally accepting that all defects which have been pointed out by you have been made good by the contractor/s.
26.7 Making final payments to the contractor/s and all consultants.
26.8 Receiving “as-built” drawings, guarantees, operating instructions manuals.

What the above is demonstrating is that there is a huge amount of work to be done by a lot of people, especially by you, the client, before, during and after the construction period. This whole process can take a considerable time, regardless of the size of the building. It depends on a vast amount of circumstances and challenges, all of which must be considered and solved on a continuous basis in order that your costs do not run entirely out of control and you achieve what you originally wanted. When it comes to the overall budgeting, procurement, contract agreement, construction and financial control processes, it is vital that you employ a Quantity Surveyor in some form or other (whether for full or partial services) - at least simultaneously with your Architect - as he/she will have a major influence in enabling you to be aware, at all times, whether you are able to afford what you have had designed for you on the property which you have purchased.

Building your own home will probably be the biggest investment you will make in your whole life. You cannot afford to take short cuts and make expensive mistakes. Employ the right professional consultants and reputable contractor /s with proven track records at fair prices and enjoy the ride!

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