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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 and Member of the Sirdar Governance Panel.

11 January 2013

Real house prices expected to continue decline in 2013 ... or are they???

Far be it for me to contradict an esteemed property economist such as John Loos ... but I respectfully disagree.

In my humble opinion, house prices are driven almost exclusively by one factor - SENTIMENT.

In the boom stage, house prices were rising at up to 40% a year and speculation was rife.  In this aricle, you will see a decline in house prices (in real terms) over the last few years.  Was the land, the bricks and mortar, the fixtures, fittings, tiles and sanitaryware really worth 40% more in one year and 2% less in another year?  Was the value of his shelter any less valuable to the occupier the dwelling?

No - the house prices were driven solely by market sentiment (assisted by over zealous lending by financial institutions).
I would obviously make a lot of money if we could predict market sentiment but at least I can identify flags (in the terminology of Clem Sunter).  These are indications of what might happen.

The flag for the decline of the SA Property Market was the events in the USA surrounding sub-prime mortgages, Fanny Mae and Freddy Mac, and the collapse of the US Property Market.  It would therefore appear to me to be logical that the most important flag for the recovery of the SA market will be an improvement in the American market.  There are already indications of just such an improvement in the USA.

Obviously, there are other flags that could bring the whole thing down (e.g. the Euro Debt Crisis, tensions in the South China Sea, a drop in Chinese growth, etc.).

Let me be clear, I don't expect a spectacular recovery but I don't see a decline either.

Gareth Shepperson

Real house prices expected to continue decline in 2013

Average house prices rose 5 percent year on year in 2012, which was a slight improvement on the 3.3 percent growth achieved in 2011, but the rate is expected to slow this year because of weak economic conditions, according to FNB.

John Loos, a household and property sector strategist at FNB, said yesterday that nominal house prices were expected to increase by an average of 2.5 percent this year.

Given expectations of consumer inflation of between 5 percent and 6 percent this year, this would imply a further "downward correction" in real house prices, he said.

Real house prices, the increase in house prices adjusted to take inflation into account, declined by 0.6 percent last year, but this represented an improvement on the 1.7 percent real decline in 2011.

Loos said the broad "downward correction" in real house prices had continued for much of the period since 2007.

But Loos stressed that the FNB house price index in real terms remained well above the levels achieved early in the last decade, with the real price average for last year still 70.7 percent higher than in 2001.

In nominal terms, the average house price last year was 218 percent higher than the average price level in 2001.

Both real and nominal house price levels last year therefore remained far above the pre-boom levels of early in the new millennium, he said.

The average price of homes sold last year increased to R845 106 from R804 536 in 2011.

Loos said the biggest contribution to overall house price growth last year was made by economic conditions late in 2011 and in the first half of 2012.

He said the country was entering the new year on a much weaker economic footing than last year, with gross domestic product (GDP) growth slowing to 1.2 percent in the third quarter as the rate of global economic expansion continued to be pedestrian and large scale domestic strike action disrupted economic output.

Loos said various industry surveys suggested the fourthquarter growth rate might have deteriorated even further.

He said key issues remained similar to recent years, including the financial pressure on many households, which was an overhang of the credit boom of the past decade and meant the search for housing affordability would remain a priority.

Above-inflation increases in municipal rates and utilities tariffs were also set to remain problematic for homeowners.

Business Report

09 January 2013

Schubart Park residents must register to return to their properties

If you look back through my Blog posts, you will see that I have posted a number of articles and comments on Schubart Park.

I have long been a proponent of housing the majority of the population closer to the city centre because the benefit of cutting out travel time and costs is logical.  My opinion was enhanced when I visited Shanghai, Foshan, Guangzhou and Hong Kong during 2011.  It is just so much more efficient.

However, the damage done by Schubart Park to the perception of such high-rise housing in the minds of Tshwane residents should not be underestimated and I really hope that the management of the building will be handled better in the future.  It is totally unsustainable to continue building sprawling single storey projects further and further from the City centre.
Gareth Shepperson




Schubart Park residents must register to return to their properties

An urgent call has been made to former Schubart Park residents who were evicted from their homes more than a year ago to register for occupation when refurbishment of the flats is completed.



The Constitutional Court gave Schubart Park back to its residents.

According to Lawyers for Human Rights (LHR), who represented the former residents in their Pretoria High Court and Constitutional Court battles against the Tshwane Metro Council last year, registration will take place between Monday and Friday (January 18).

This is the second registration period and the last chance for the former residents to register. The first registration period was between December 10 and December 14 last year.

The LHR said in a statement yesterday that those who failed to register and were identified as former residents would have no access to alternative accommodation and would be unable return to their homes in the Schubart Park complex.

According to the LHR, a court order in October last year requires that the former tenants, "identified through an agreed process (between the residents' representatives and the metro council)", must be assisted with temporary accommodation before being allowed to move back into the Schubart Park buildings.

Registration will take place at the inner city offices of the metro council in the Sammy Marks complex, corner Madiba (Vermeulen) and Sisulu (Prinsloo) Streets, between 9am and 4pm.

Those wanting to register must bring copies of their own and their dependants' ID books, passports or asylum/refugee permits.

For more information call Nathaniah Jacobs at 071 608 6658.

Pretoria News

08 January 2013

Camps Bay's 'R300m mansion' under offer

Whilst it is interesting in a morbid way (because it's not me) that someone can afford this amount for a house, it is also interesting to note the comments of the major SA Estate Agencies at the end of the article regarding the general state of the property industry.

There are "green shoots" appearing in the American property market and because they lead the world into the worldwide property slump, I would similarly expect the USA to lead the world out of it.  I don't expect anything dramatic but hopefully a steady increase in 2013 will mean that by the start of 2014 we have experienced a significant improvement.

P.S. Message to Jawitz and Lew Geffen Sothebys :- I am currently available to register the R300 million property transfer.

Gareth Shepperson


Camps Bay's 'R300m mansion' under offer


Two offers have been made for a R300 million mansion in The Glen, Camps Bay - which, if sold, would be the highest price ever paid for a house in Cape Town and South Africa.



A foreigner and a South African "connected to politics" have put in offers for this R300 million Cape Town property.


Jawitz Properties director Francois Venter said one prospective buyer is foreign and has made an offer "in excess of R250 million" for the mansion.

The prospective buyer has until the end of the month to do a due diligence check on the property before committing to buy.

Venter said the second offer came from a South African "connected to politics", but would give no further details.

"It's difficult to confirm if R300 million is a good asking price for the mansion," said an estate agent who works in Camps Bay. "But it will create a buzz and you might get an ego buyer who has plenty of money."

When a story first appeared about the house on a specialist property news website in September, some readers reacted with disbelief and said the price tag was a marketing ploy. But property insiders say the property could well be worth that figure.

The house, known as "Enigma Mansion", is built on four erven on a combined plot of 7 130m², and is one of the most sought-after positions in the city.

The average size for an erf in Cape Town ranges from 500 to 1 500m², say estate agents. The norm for a two-bedroom flat, meanwhile, is only about 80m².

Jawitz, which shares a mandate for the house with Lew Geffen Sotheby's International Realty, boasts on its website that the mansion has "every possible luxury". This includes a specially designed Olympic-sized swimming pool and a 3D cinema.

The house also comes with a sauna, a "Balinese massage temple" and a tea temple, as well as winter, herb and vegetable gardens. Besides multiple garages, terraces and a staff cottage, there is a separate guesthouse on the spacious lawns.

If the house is sold, it would buck the trend of what Laurie Wener, managing director of Pam Golding in the Western Cape, says has been a slow time for houses priced over R10m on the Atlantic seaboard.

"Up to now the very top end has definitely been underperforming," she said.

While Andy Todd, principal of Seeff Properties for the southern suburbs, agrees that Cape Town's high-end property market was sluggish last year, he said that in general the property market has definitely improved. Turnover for Seeff in the southern suburbs has increased by more than 15 percent.

Todd said buyers were exhibiting less anxiety than in previous years. This has cased the Cape property market to first stabilise, then gradually start to grow again.

Danny Dreghorn, an estate agent from Dogon Group Properties, said the property market in Camps Bay had been showing positive growth in the past few months.

"We hit the bottom about the middle of last year."

He added that foreigners had stopped buying properties on the Atlantic seaboard about two years ago as the worldwide recession forced them to tighten their belts.

Since the middle of last year, however, growth had returned.

Cape Times

07 January 2013

Is it worth keeping a home loan open?

For all your Property Questions ... including the finacial aspects of all property transactions, contact Shepperson Attorneys and we will gladly help you.

Gareth Shepperson



Is it worth keeping a home loan open?

If your home loan is paid up or even in credit, you may still be liable for a monthly service fee.

The fee will be determined by when you entered into your home loan agreement or last amended it.

If your home loan agreement was entered into before the National Credit Act (NCA) came into effect, and no material changes have been made to your original agreement, the Usury Act maximum monthly fee of R5 (before VAT) applies. If it was after June 1, 2007, or if your original agreement was amended after the introduction of the NCA, you can be charged up to R50 (before VAT) a month.

First National Bank (FNB) client Mr BC complained to the bank that he is being charged a monthly service fee of R5.70 on a home loan account that has been in credit for the past 10 years.

Praven Subbramoney, head of product and marketing at FNB, says the bank is within its rights to charge a monthly administration or service fee on all its accounts.

"There is no mention in our documents, or in the regulations, of a rule to suspend fees when accounts are paid up or [in] any other instances. While we may have waived the fee in the past, we have re-evaluated our situation due to the economics of the product and, unfortunately, can no longer afford to do so," Subbramoney says.

The only way you can get out of paying the monthly service fee is by cancelling your mortgage bond, which will cost you about R2 500.

Subbramoney says many customers don't know that there's a cost to cancelling a mortgage bond. "This cost is paid [by the client] to an attorney to cancel the bond at the Deeds Office when the bond has been settled."

As soon as a bond reaches maturity (that is, when the full term of the loan period is reached), it has to be cancelled - and this service comes at a cost.

All the banks have their own "panels" of conveyancing attorneys to whom they give work.

Subbramoney says FNB Home Loans has negotiated with its panel of attorneys to discount bond cancellation fees to R1 400 for FNB clients. This includes the Deeds Office cancellation levy of R80.

Although it may cost you to keep a home loan account open - and you don't earn interest on a positive balance in a paid-up home loan account - the benefits of keeping your account open are that you have access to relatively cheap credit (in case of emergency) and you save yourself the cost of registering a new mortgage bond should you want access to a loan again.

Subbramoney says if you want to earn interest on a positive balance, you should open an investment or savings account. Clients are not encouraged to leave positive balances in their mortgage accounts "due to past experience with fraud and money laundering on these accounts", he says.

Clients at Absa and Nedbank are not charged a monthly service fee on home loans that have been paid up, but conditions apply.

At Absa, provided your account does not have a positive balance, you won't be charged a monthly service fee, Arrie Rautenbach, head of retail markets at Absa, says.

At Nedbank, you need to ask for your home loan account to be made "dormant", Charles de Winnaar, the bank's acting head of sales and customer management, says.

A monthly service fee will be charged where a home loan account has a zero or positive balance and the client has not asked for the account to be made dormant, De Winnaar says.

Like FNB, Standard Bank levies a monthly service fee on home loans that have been settled, because such accounts are still "active", Steven Barker, head of home loans at Standard Bank, says.

Barker defines "active" home loan accounts as those that are kept open for homeowners' insurance and customer convenience.

Even when the account reflects a nil balance, the bank is required by law to provide annual statements and notifications of rate changes, and must cover the cost of keeping the title deed. All these costs must be recovered, Barker says.

The "true cost" of running a mortgage bond is, on average, more than R100 a month, FNB's Subbramoney says. He says the bank incurs costs for managing home loans in the following ways:


•Capital costs: banks must keep capital to cover any available balances. This means the bank incurs a cost for any prepaid funds or credit that is available to you.


•Monitoring for fraud and money laundering.


•Monitoring of credit management and account conduct.


•Collecting debt from customers who don't pay.


•Ensuring safe custody of the bond and deed documentation.


•Day-to-day customer services and correspondence.


•Computer system and staff.

Similarly, the initiation fees on home loans don't cover the actual cost of bond origination, Subbramoney says.

"The actual origination cost to the bank is in the region of three times the fee recovered," he says.

The NCA restricts money lenders to an initiation fee of no more than R5 700 (R5 000 plus VAT).

Subbramoney says the advent of Basel III (a global regulatory standard on bank capital ade-quacy and market liquidity risk) will add to liquidity charges, affecting the interest part of the mortgage business.

"The reality is that if the banks don't find a healthy balance on the mortgage portfolio that is economically viable, they may need to rethink mortgage lending in totality," he says.


•If you have a home loan of less than R500 000 that was in force before June 1, 2007, when the National Credit Act (NCA) became fully effective, you should be paying no more than R5 a month to your bank or credit provider in administration or service charges.

The Usury Act, which governed home loans before the NCA became effective, set a cap of R5 (excluding VAT) for monthly service fees on home loans of R500 000 or less.

The Act was repealed and replaced by the NCA, which provides for a maximum monthly service fee of R50 (excluding VAT) on home loans.

However, a credit provider is not entitled to charge an administration fee in excess of the maximum set under the Usury Act on home loans granted before the NCA replaced the Usury Act.

This is in terms of a judgment handed down by the Supreme Court of Appeal at the end of last month, in the matter between the National Credit Regulator (NCR) and Standard Bank.

Standard Bank contended that the limit imposed on administration fees under the Usury Act did not "survive the transition to the NCA" as far as pre-existing home loans were concerned.

The regulator disputed this, and the Supreme Court of Appeal ruled in its favour, declaring that Standard Bank "is not entitled to charge an administration fee on housing loans that existed at the time the NCA came into operation in excess of the fee provided for in ... the Usury Act unless and until that fee is amended under the NCA".

If you took out a home loan before June 1, 2007, check your bank statements to ensure you haven't been overcharged for administration. If you find that you have, you can take it up with your bank or the NCR.

Steven Barker, head of home loans at Standard Bank, says all affected customers will have their monthly service fees amended back to R5 (before VAT) from January 1, 2013. Charges in excess of the Usury Act maximum will be fully refunded.

Angelique Arde
Personal Finance

Hartbeespoort Dam cleaner, set to be drawcard for tourists

On Saturday (5 January 2012), I spent the day with my family at Hartbeespoort going up the mountain on the "new" Cable Car.  The view from the top was breathtaking and I was astonished to see the city centre of Joburg from such an enormous distance away.

The dam also looked great from high above BUT when we drove over the dam wall we noticed that the water was luminous green and I for one would not want to spend any time near that colour water.

I think that the authorities have a long way to go still.

Gareth Shepperson



Hartbeespoort Dam cleaner, set to be drawcard for tourists

Hartebeespoort Dam starts off this year the cleanest is has been for years, say water officials.

"As Hartbeespoort Dam enters 2013 with the cleanest bill of health in years, tourists and anglers are encouraged to visit the shores of the dam again without concern over pollution or the lingering stench of dead plant material," says Gerard Smit of the Harties Metsi a Me (Harties My Water) programme.

The programme is a joint venture between the national Department of Water Affairs and Rand Water, and uses ecologically friendly ways to clean up the dam.

Smit says the Hartbeespoort Dam integrated biological remediation programme has been a huge success and has received international recognition as a case study on how ecological methods could turn ailing dams around.

"Where fungicide was sprayed in the past on the floating hyacinths, these and other invading plants matter are now harvested by hand," says Smit.

"Not only is this process more effective, but since 2008 it has consistently provided work for between 80 and 140 workers.

"They have successfully removed most of the hyacinths that once covered a large part of the dam's surface, as well as 2 400 tons of litter and debris, and 31 000 million litres of algae soup.

"Moreover, 190 tons of unwanted fish species were caught and sold cheaply in the community."

"Most of the eroded shorelines were rehabilitated, and floating wetlands that act as very effective filters to clean the water of pollution were established." Smit says the harvested plant matter, litter and debris was recycled, with organic matter composted through vermiculture, which uses earthworms. Locals started earthworm farms near the dam to feed into the programme.

Petrus Venter, Water Affairs' programme leader for the dam, says the clean-up has been running for four years.

It involved dealing with the catchment area as well as the dam. The catchment area includes more than 1 000km of rivers that feed into the dam, he notes.

The clean-up was hampered by a lack of local information on how pollution affects the dam, so initially, officials had to use international information.

"The principle of this remediation programme has been one of conserving, protecting and managing natural resources towards achieving optimum biodiversity," according to Venter.

"The deterioration of this dam, used as a major recreational area for Gauteng and North West residents, as well as the water source for both human consumption and irrigation for Brits and its surrounding agricultural community, has been laid firmly at the door of humans acting irresponsibly with nature's resources.

"We now try to educate as many people as possible at a special communication centre that has been set up at the dam about the effect of ecological footprints."

The Star

Have your say on Pretoria CBD street closures

I go into the Pretoria CBD on virtually a daily basis to attend to registrations at the Deeds Office.

I therefore have personal experience of the agony of searching for a parking place.  It is infuriating when you are in a rush and can't find a parking.

I applaud the City for taking the initiative to try and improve the CBD but by blocking off access and removing parking bays, I am not sure that the City's efforts will have the desired result.

Gareth Shepperson


Have your say on Pretoria CBD street closures


The public have been given a chance to have their say on the Tshwane Metro Council's plans to restrict traffic in certain streets in Pretoria's inner city.




Paul Kruger Street is one of the city streets set to become traffic free as part of Operation Reclaim.

The restriction of traffic in these streets is part of the municipality's Operation Reclaim, aimed at revitalising the CBD.

A notice in last week's Government Gazette said the municipality had appointed Mashabane Rose Architects and Urban Designers to undertake a Heritage Impact Assessment (HIA), public consultation and to propose urban intervention.

The streets to be upgraded are Lilian Ngoyi (Van der Walt), between Pretorius and Madiba (Vermeulen); Sisulu (Prinsloo) between Madiba (Vermeulen) and Pretorius; and Helen Joseph (Church) between Du Toit and Thabo Sehume (Andries).

The metro council said: "This is a pilot urban intervention to pedestrianise the identified routes with an intention to reclaim the precinct for... non-motorised users."

The chairman of the Inner City Improvement District (ICID), advocate Salim Yousuf, said this was an attempt to introduce a draconian law to effectively and forcefully preventing visitors with vehicles from entering the city centre.

He said the mayoral committee member for city planning and economic development, Subesh Pillay, was on record as saying that it would cause a temporary inconvenience to business.

"Our concern is that the proposed operation (Reclaim) to block main arterial routes would be catastrophic to businesses in the inner city. We have formally objected to the proposed closures and are prepared to take the matter on review on the basis that the CTMM (City of Tshwane Metropolitan Municipality) is acting unreasonably and irrationally," he said.

Yousuf said the municipality had so far failed to respond to the ICID's concerns that the proposed closures were not economically or socially feasible.

The ICID had submitted its objections to the metro council's strategic land development tribunal. "The backlog in upgrading and inadequate maintenance programmes greatly contributes to underdevelopment in the inner city," Yousuf said.

He added that clearly demarcated parking bays and the management of parking "is grossly neglected".

Informal trading was also poorly demarcated and managed, he said.

"Poor traffic control, by-law enforcement and the low visibility of the TMPD (Tshwane Metro Police Department) during peak traffic times are primarily the reason for traffic congestion," he said.

Inner-city businesses had the advantage of being easily accessible by vehicle or foot, Yousuf said.

"Attempting to limit vehicle and parking in the inner city would prejudice the capacity of the retail and services sector," said Yousuf. The ICID has requested:

Detailed design and structural plans by the transport department, showing the impact of diverting traffic flow and the resultant compromise of parking bays;

Detailed management plans allowing vehicle access to existing, and bona fide, parking on private properties;

Management plans allowing bona fide access, eg deliveries by vehicles and collection of goods and bulk goods by shoppers;

Alternative parking to existing street parking bays that will be compromised by Operation Reclaim;

The City of Tshwane's budget for investment in ageing infrastructure of parking, public toilets, taxi parking bays and informal trade;

Simulation on traffic flow indicating whether the partial street closures will have a positive impact on traffic flow.

Copies of the HIA and further particulars of the intended project are open for inspection from 7.30am to 4 pm for the rest of the month at Es'kia Mphahlele Library, Sammy Marks Square, corner Madiba (Vermeulen) and Sisulu (Prinsloo) streets, or call 012 358 8710/1077.

Comments on and objections to the HIA must be lodged with Mashabane Rose Associates on or before February 4. These can be posted to Mashabane Rose Associates, Suite 246, Private Bag X2600, Houghton 2041.

Pretoria News

18 December 2012

Rise in new wealth bodes well for residential property

Rise in new wealth bodes well for residential property


Recent reports of current annual growth of 31% in the ranks of the wealthy in South Africa (compared with 19% in 2010) is good news for prime residential property says Gauteng luxury homes marketer Ronald Ennik.

"Firstly, it will create a welcome new layer of buyers of luxury homes. Secondly, the sustainability of the top end of the market will be reinforced as more and more of the new wealthy buy into it.

"Thirdly, it will compensate for the (hopefully temporary) withdrawal of foreign investors who, in spite of the attractions of the weaker Rand, seem to be adopting a wait-and-see strategy based on recent negative socio-economic and political developments in South Africa," says the CEO of Christie's-affiliated Ennik Estates.


•Meanwhile, in the recently published global Wealth Report 2012, Renato Grandmont, chief investment officer for Citi Wealth Management and Citi Private Bank in Latin America, picks Johannesburg as one of the world cities of the future (along with Cairo, Lagos, Mumbai...and other well-established centres such as London, New York and Moscow).

"This comes as no surprise," says Ronald.

"With its world-class infrastructure, Johannesburg remains the port of entry for foreign business visitors to Africa - and particularly the fast-growing Southern African region.

"As a result, upmarket Sandton, is now by far the most favoured base for foreign corporates intent on establishing operating footholds in the region," says Ronald.

"This has hugely favourable implications for Johannesburg's luxury residential property market," he concludes.

Ennik Estates Press Release