About Me

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I am a qualified Attorney. I specialise in Property Law, Commercial Law, Corporate Law and Trusts.
 
Please visit our website at www.prop-law.co.za for more details.
 
I am an elected Committee Member of the Property Committee of the Association of Pretoria Attorneys and through my involvement, I like to ensure that I am constantly at the "sharp-end" of Conveyancing Practice.

I am the elected Chairman on the Gauteng Council of SAPOA. The South African Property Owners Association (SAPOA) is the biggest and most influential institution in the property industry. SAPOA members control about 90% of commercial property in SA, with a combined portfolio in excess of R150 Billion (about $22 Billion). I am also on the National Council and the National Legal Committee of SAPOA.
 
Member of the Institute of Directors South Africa.

14 June 2011

Where will the smart money in property be going in the next twelve months?

Where will the smart money in property be going in the next twelve months? - Investment insights

This is an article by Jason Lee. I have read his books and also receive his weekly newsletter. His advice is usually quite sound and practicle.

It is interesting that he points out that the barriers to entry into commercial/industrial property investment are higher and that it therefore represents a better opportunity for investors. However, he fails to mention how these barriers may be overcome.

Gareth Shepperson

10 June 2011

Growthpoint, PIC concludes V&A Waterfront deal - Commercial - South Africa

Growthpoint, PIC concludes V&A Waterfront deal - Commercial - South Africa

The Government Employees Pension Fund (GEPF), represented by the Public Investment Corporation Limited (PIC), together with Growthpoint Properties Limited today announced that their purchase, in equal proportions, of South Africa's landmark V&A Waterfront is now complete and all conditions have been fulfilled.

Sectional Title Amendment Act has useful changes

Sectional Title Amendment Act has useful changes

The Sectional Title Amendment Act (2010) which is now in force incorporates a number of useful changes.

The latest amendment allows the trustees of the scheme to extend a section simply by notifying the bondholder/owner - and, if no response is received from him within 30 days, to deem that he has no objection

09 June 2011

2012 - 2013 likely to see property recovery

2012 - 2013 likely to see property recovery - Property talk

On-going reporting on the USA's massive debt, serious economic problems in at least five European countries, war, revolution and other problems in the Arab world, Afghanistan and Pakistan are said by some to have dampened confidence in property worldwide - and here in SA.

(An article by Lanice Steward, the MD of Anne Porter Knight Frank.)

06 June 2011

Health returning to industrial property

Health returning to industrial property

Industrial property is showing signs of a recovery with vacancy rates seemingly levelling off and rentals once again showing growth.

First time buyers set to dominate sales

First time buyers set to dominate sales

South Africa has arguably one of the fastest growing middle class population segments in the world, which brings new property buyers into the market every month.

Time to make like China, learn from US successes

Time to make like China, learn from US successes

It’s a short jump from forgetting why the Berlin Wall fell to joining the mob attacking the cornerstones of free market economics. Given its obvious superiority over the alternatives, these attacks are illogical. So I started wondering whether this isn’t some dastardly plot hatched in Washington, designed to throw the rest of us off track. Because, surely, our leaders couldn’t be that dumb?

03 June 2011

Property investment: disproving the conventional wisdom of "high risk, high return"

Property investment: disproving the conventional wisdom of "high risk, high return"

Conventional knowledge dictates that high risk investments will produce high returns, and similarly, low risk investments will yield low returns. Dr Koos du Toit, CEO of P3 Investment Group explains why this adage does not hold true when it comes to buy-to-let property, a low risk investment producing exceptional returns.

Far reaching judgement may cause upsets for property sales

Far reaching judgement may cause upsets for property sales

The Supreme Court of Appeals recently delivered two far-reaching judgments, with detrimental consequences for the taxpayer. The latest case, delivered in May has far reaching consequences for companies wanting to sell unused land.

The first, on 1 December 2010, was the NWK case and the most recent on May 10 2011, was the Founders Hill case. Neither judgment was in the taxpayer's favour, and there is a growing fear that a new trend has started at the Supreme Court of Appeal against the taxpayer. In the NWK case, more than a century worth of good precedent was strangely interpreted to arrive at a judgement against the taxpayer.

02 June 2011

Property deals cannot be exited after offer is accepted

Property deals cannot be exited after offer is accepted

This is an interesting article from Realestateweb and in my opinion highlights why buyers and sellers should consult with their PROPERTY ATTORNEY throughout the process and particularly BEFORE SIGNING ANYTHING!

This will be the biggest financial transaction of their lives and yet people seem to be willing to enter it based upon blind faith. Great for litigation attorneys - not great for anyone else.

There are many honourable and professional people in the real estate game but there are also many "snakes" on the prowl for victims. Find honourable, honest and ethical people. Ask around.

My advice - make sure that you consult with a specialist Property Lawyer throughout the process.

Gareth Shepperson

Taking care of your biggest investment - Wealth Building | Moneyweb

Taking care of your biggest investment - Wealth Building Moneyweb

MOST people consider their residential property to be their biggest asset. This perception was created by the 8-year property boom which came to an end when the Global Recession hit in 2008.

However, the downturn in the residential property market has shattered this myth as property went into a severe downturn. Property can be an expensive mistake, as so many buyers of leisure properties and empty stands can testify. Furthermore, your property is a lifestyle asset. We all need to live somewhere, but will this provide an income for your retirement?

Gareth Shepperson

27 May 2011

Realestateweb - SA RMBS performance remains stable In March 2011 - Moody`s - Investment insights - South Africa's fastest-growing property website

Realestateweb - SA RMBS performance remains stable In March 2011 - Moody`s - Investment insights - South Africa's fastest-growing property website

London, 24 May 2011 -- The performance of the South African residential mortgage-backed securities (RMBS) market remained stable during the six-month period leading to March 2011, according to the latest indices published by Moody's Investors Service.

Gareth Shepperson

25 May 2011

Demand outstrips supply for lower-to-mid priced rentals - Residential

Realestateweb - Demand outstrips supply for lower-to-mid priced rentals - Residential - South Africa's fastest-growing property website

The first quarter of 2011 saw a 25% increase in volume of transactions concluded for rentals in the Cape Town Metropolitan Area, with demand for lower-to-mid priced (R5,000 - R10,000) rentals outstripping supply.

Gareth Shepperson

Regulator moves to shut down estate agency - Property | Moneyweb

Regulator moves to shut down estate agency - Property | Moneyweb

Constantia Sectional Title Management (CSTM) is hours away from having its fidelity fund certificate (FFC) withdrawn by the Estate Agency Affairs Board (EAAB). On Tuesday the EAAB will in an urgent application to the South Gauteng High Court seek to withdraw CSTM’s FFC and have a curator officially appointed to administer its trust account.

Gareth Shepperson

Goodbye dollar - Across the Atlantic | Moneyweb.com

Goodbye dollar - Across the Atlantic | Moneyweb.com

By 2025, the dollar will no longer be the world's dominant reserve currency; instead, global finance will be based on a multipolar system in which the dollar shares the role of top currency dog with the euro and the renminbi.

This is one of the predictions of the World Bank's latest report, Global Development Horizons 2011-Multipolarity: The New Global Economy, which argues that the growing economic importance of emerging markets is reshaping the global system in fundamental and important ways.

Gareth Shepperson

24 May 2011

Property News Gauteng: Selling your home should be "strictly business"

Property News Gauteng: Selling your home should be "strictly business"

More home loans approved

Banks declined fewer home loans in April 2011 compared to the same month in 2010, a bond originator said on Monday. 

"The ability to obtain financing is one of the biggest drivers in the property market, so the consistent improvements are positive for the market," ooba CEO Saul Geffen said in a statement. 

The bank initial decline ratio was 8.7 percent lower year-on-year, at 45.4 percent. 

The bank effective approval ratio for home loans increased significantly from 57.3 percent in April last year to 64.4 percent, ooba found. 

Geffen said the strong April approval rates followed record numbers in March, when the approval figure was the highest value of approved home loans since October 2008. 

The average deposit size as a percentage of the purchase price decreased year-on-year by 39.6 percent to 13.1 percent, or R108,164. 

At the same time, the average approved bond size increased by 3.7 percent to R715,319 in April 2011 from R689,742 in April 2010. 

"The average deposit for April was only 13 percent of purchase price, which is significantly improved from the levels seen in 2009, and this opens up a considerably broader homebuyer base who can now afford the lower deposit requirements," said Geffen. 

The oobarometer price index showed a year-on-year decline in the average purchase price of 6.5 percent to R823,483 in April 2011 from R881,044 a year earlier. 

The average purchase price by a first time buyer fell by a more moderate 0.2 percent year-on-year to R625,252. 

Geffen said the decline in house prices in April pointed to a further period of declining prices, after strong growth in the first half of 2010. 

"We anticipate the negative growth trend will reverse shortly after mid-year and show moderate positive price growth for the second half of the year," he said. - Sapa

Sharemax offers investors a “haircut”

Sharemax investors are being offered the choice between receiving a monthly income for their investment in the company or being repaid part of the money that they have invested in a full and final settlement agreement.

About 40 000 investors have put more than R4,5-billion into the property syndication company. The Sharemax board has proposed that a scheme of arrangement and an offer of compromise is negotiated with investors.

In September last year Sharemax defaulted on monthly interest payment to investors and this led to the company being investigated and statutory managers being appointed to run the scheme which appeared to be operating in contravention of the Banks Act.

Spokesman for the company, Dawie Roodt confirmed that some of the companies in the Sharemax portfolio were "definitely bankrupt" and said that the amount owed to investors by some of the companies exceeded the value of assets owned by the company.

He did not say which of the companies was bankrupt.

He says that the R3,5-billion The Villa shopping centre, south east of Pretoria is one of the developments that is bankrupt and Roodt says that one of the advantages of liquidation of the bankrupt businesses is that certain investigations could be conducted and those at fault identified.

However, he adds that liquidation would not be in the interests of the investors.

He says the new board of Sharemax has been granted permission by the High Court to seek the approval of investors in Zambezi Retail Park and The Villa to outline details of an income plan scheme as part of a scheme of arrangement and offer of compromise. The dates for these meetings have not yet been finalised.

Roodt says that the reason for this is that the board is still considering alternatives that might provide a better solution for the investors but would not say what these alternatives are.

He says that the board wants to give existing investors the option of staying in the syndication and riding out the tough times or getting out of it now and "taking a haircut" – a reference to getting back less money than originally invested.

He says that investors in The Villa will not be repaid the full amount of their investment.

Are banks 'killing' property market?

Has it ever struck you just how many people are property experts when you mention that you are thinking of buying or selling a property?


Paddy Hartdegen writes a regular column for Property24.com

These well-meaning advisers – with opinions that are certainly influenced more by hearsay than knowledge – will say that now is not the time to be involved in the property sector and, as a rule of thumb, they think they're right.

People with a little more knowledge, like estate agents, will say it's an excellent time to buy but, if you want to sell, make sure that you've priced your house correctly, particularly if it falls into the upper price brackets.

Do estate agents give you a true value? Never. They give you a 'gut-instinct' based value that is determined by what you want and what they think they can get. If the house is slow to move, then the price is too high. It's a pathetic basis for determining a true value.

Bankers (responsible for lending the money) often won't say a word – except among friends. And the sad fact of the matter is that bankers are the ones who dictate the state of the property market. If they lend money, sales boom. If they don't sales dwindle.

In years gone by, when the cyclical swings were not as great as they appear to be today, banks would look for value in a property and would grant a bond based on the value that they attributed to it.

You would expect that pattern to be cast in stone and that, today, if you were to go to four different banks, you would get a very similar valuation from all four of them.

And that's where you'd be so wrong. Different banks have different criteria and they use different yardsticks to adjudicate value. Ask for a value from a banker and you'll get four very different ones.

This, naturally enough, makes it incredibly difficult for property owners and for estate agents who, for instance, put in an application for a bond (based on a fair purchase price) to all four of the banks and find that some banks come back and say there is "insufficient value" in the property to the grant the bond amount applied for.

The more expensive the home, the greater variation there is. And much of that valuation process appears to be purely subjective rather than scientific.

Question a bank about the details of why the value is so low and they will come up with all sorts of subjective reasons: "It's not the right property to be buying in this market" or "The property is over-priced for the area" or "The owners have over-capitalised and want too much money" or the "The asking price is simply too high for the home" or, mostly importantly "We won't grant a loan of that size against that property"..

Forget the fact that the buyer has a right to decide what amount he or she is prepared to pay for the property in question. Forget the fact that the bank won't pay a penny of the excessively exorbitant interest rates that are calculated over the next 20 or 25 years. That's the buyer's responsibility.

Just remember banks borrow money from the Reserve Bank at 5,5% and charge the money they've borrowed at prime of 9% so banks make 3,5% gratis before lending a bean. It's iniquitous.

If that's not bad enough then we have the other factor: banks can now stipulate what a house is worth by making a snap, subjective and often unfair value judgment.

I watched one of these valuers at work on the property that I currently rent. He had a measuring tape (on wheels to calculate the perimeter of the house) that he wheeled past the plants (not next to the house) to give him a rough idea of the outer boundary.

Then he walked through the house, taking no more than five minutes to survey the lot. Then he swaggered through to my office demanding that I drop what I'm doing and immediately let him out.

If he was here for five minutes then that was a lot.

I went outside with him and waited next to his run-down white jalopy while he searched for an address in a map book.

After I had spent more time looking at him than he had spent looking at my house, I tapped on his window and said, rather sharply, "Listen, bud, I'm busy so why don't you leave find directions somewhere else rather than just wasting my time."

He drove away mumbling – and I didn't give a fig.

His few minutes here resulted in a decision worth more than a million rand. It's totally absurd and certainly a deeply unprofessional way to determine the value of a property.

His visit was typical of all those others I have experienced when valuators come to value a house. In the course of my lifetime I have bought and sold more than 20 properties and I have never had a different experience from a bank's valuation man.

So I was hardly surprised to read the comments from Ronald Ennik, an executive director of Leapfrog Property Group who says that banks are damaging the property market by continuing to value properties "too conservatively".

He's quite right. I would take it further than Ennik did: I would say that banks are killing the property market and they seem to be doing so with a smile on their corporate faces and it makes me sick.

Apart from making it really hard to qualify for a bond, the banks are now deciding the value of property and what it's worth. How unfair is that?

Homebuyers' dreams are smashed by a cretin who spends less than ten minutes looking at a property. The same cretin who cannot even read directions in a map book.

And the bank he represents accepts his word as gospel – the final say on what a property is worth. It's bizarre.

Surely there must be a less subjective way of determining property values?

Professional land valuers (like my cousin) will tell you that there is a lot more that goes into compiling an accurate and realistic property value than just wandering around with a tape measure and a pair of reasonable eyes.

And it is these professionals that should be doing the valuations for banks and it is their figures that should be the basis for any bond regardless of which bank it is that's granting the money.

Property values must surely be based on measurable criteria and not on value judgments. Value judgments are not a valuation, they're a guess. And I wish that  Standard, Absa, Nedbank and FNB would remember that.

And then stick to lending money based on the risk profile of the individual and not on whether they approve of the purchase he or she is making.

I also wish that Capitec and African Bank (and others) would step into the market and shake it up completely by adopting a more fair and reasonable approach.

Because as things go mortgage-lending banks are just a very motley bunch. 

Property in demand, despite prices

The demand for property in SA belies reports of a "soft" market from First National Bank (FNB) and Absa (ASA), according to Jawitz Properties.

Absa reported that house prices encountered relatively sharper declines on a year-on-year basis in April, while FNB said the April increase in house prices may not be sustainable in the short term.

Jawitz Properties CEO
Herschel Jawitz said: "Demand is measured by show-day attendance, enquiries, buyer appointments and website activity, all of which are still showing better numbers than property price performance would suggest. It's not as if the phone is not ringing."

He added that the underlying activity in the market continued to be resilient, but converting this underlying activity and interest into offers and successful deals was the real challenge.

"When buyers do decide to put in offers, they usually reflect their perception of a buyer's market, and often much work still needs to be done to close the gap between buyer and seller," he said.

Jawitz listed bank lending as another challenge. Statistics such as debt-to-income ratios posed a problem in terms of the recovery of the market. The current measure was at 78%, down from about 84%, and economists were using this as a key measure for bank lending.

"Consumers are indebted, but with consumer spending in the doldrums and interest rates at historic lows, the likelihood of this measure coming down much further is slim."

He said it was likely that the debt-to-income ratio might rise when interest rates started to go up later this year, or in 2012. If banks tightened their lending further, a real recovery in property prices might occur only in 2013. - Moyagabo Maake, I-Net Bridge

23 May 2011

CSTM suspected of “criminal wrongdoing” - EAAB - Special investigations | Moneyweb

CSTM suspected of “criminal wrongdoing” - EAAB - Special investigations | Moneyweb

The offices of Constantia Sectional Title Management (CSTM) in Roodepoort, Johannesburg were again raided on Friday by the Estate Agency Affairs Board’s (EAAB) inspectors assisted by the police. Gareth Shepperson

20 May 2011

Sandton skyline dominates property development awards

Sandton skyline dominates property development awards

The South African Property Owners Association (SAPOA) Innovative Excellence in Property Development Awards 2011, sponsored by Nedbank Corporate Property Finance, has awarded five of the nine award-winning property developments to properties located in Sandton, proving it to be the centre of innovative property development and design in South Africa.

Office Cycle upswing in the wings?

This article is from the Newsletter that I receive from eprop.co.za

In general the amount of new development has come down or at least remained quite steady and the ratio of unlet space has remained fairly flat as shown in the first graph below. Over the past five quarters the ratio has come down quite noticeably for Durban and has broadly been flat for Cape Town, Pretoria and Johannesburg . The prognosis is that most markets are in line to experience balanced supply evidenced by lower new supply and a tapering off of vacancy rates on existing stock. This bodes well for perfomance into the medium term.

As per the second graph, the ratio of new development to total market stock shows a slight increase for Cape Town and Joburg. The highest ratio remains PE now approaching 12 percent with Pretoria at under 6 percent albeit having come down from over 12 percent 18 months previously. It is important to note that the OVS tracks committed new developments as opposed to planned/speculative schemes; that being said completed office developments in Durban was quite buoyant in 2010 and yet the ratio shown here does not reflect this. As such careful research is required to assess whether supply is taking place in other Durban nodes and if any risks exist to the take-up outlook.

If properly managed, SA's developmental challenges could well become a blessing in disguise, offering focus to delivery agents and hope to millions of people. Let's each play our part, no matter how big or small.



 

Gareth Shepperson


 

19 May 2011

Realestateweb - Generation x leads property recovery - Property talk - South Africa's fastest-growing property website

Realestateweb - Generation x leads property recovery - Property talk - South Africa's fastest-growing property website

A report by an American company, John Burns Real Estate Consulting, revealed that of the 10 000 buyers and potential buyers they surveyed in 27 metro areas throughout the US, between 85% and 89% said that they felt now was a good time to buy a home and most felt optimistic about a new home purchase.

17 May 2011

Realestateweb - Gloves off as Trafalgar takes on the city of Tshwane - Residential - South Africa's fastest-growing property website

Realestateweb - Gloves off as Trafalgar takes on the city of Tshwane - Residential - South Africa's fastest-growing property website

Trafalgar Property Management is taking its six-year long battle with the Tshwane Metropolitan Council back to court after the council failed to comply with a court order against it. Attorney Dewald de Beer says his client will apply to have the matter placed on the unopposed court roll after the city failed to meet the 15-day deadline to file an opposing affidavit. This was after the council indicated it was going to oppose an application to have the Tshwane Metro declared in contempt of court.

The application was lodged after the city apparently failed to comply with a court order. The dispute first arose in 2005 when Trafalgar discovered that around 30 body corporates under its management in Pretoria were being billed for individual owner's arrear electricity accounts. These are the accounts for which body corporates are not legally liable for under South African law. Trafalgar says the discrepancy was immediately reported to the Metro which gave the assurance it would correct the accounts. However, this was in vain. "...No action was taken and month after month Trafalgar clients continued to be billed not just for the same arrear accounts, but for additional charges accrued including final demands, final cut offs and interest." A statement says the bodies corporate involved soon accrued debts running into hundreds of thousands of rands.

To add insult to injury, the council then began disconnecting services almost on a monthly basis. This was not done to single units deemed to be in arrears, but to entire blocks and sectional title complexes.

Gareth Shepperson

16 May 2011

Outrage at CIPC, Cipro`s replacement`s website - Special investigations | Moneyweb

Outrage at CIPC, Cipro`s replacement`s website - Special investigations | Moneyweb

We have experienced the exact same issues with CIPC. It also took us 45 minutes "on hold" to get through to the call centre who basically advised that we should be patient it is being attended to. Ou e-mails to CIPC have met with zero response and appear to be an utter waste of time.

Gareth Shepperson

South Africa most transparent real estate market out of BRICS nations - South Africa | Moneyweb

South Africa most transparent real estate market out of BRICS nations - South Africa | Moneyweb

According to Jones Lang LaSalle’s Global Foresight research paper on local real estate, factors that contribute to South Africa’s high transparency ranking include robust listed vehicle governance, strong auditing and reporting standards, a highly-developed legal system, the fairness and efficiency of the regulatory framework relating to real estate taxation, planning and building codes, enforceability of contracts and title, and a strong tradition of property rights.