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PRETORIA, GP, South Africa
Whatever I tell you about myself is TOTALLY IRRELEVANT! For an OBJECTIVE view, please read my LinkedIn Profile at https://www.linkedin.com/in/shepperson/ , and particularly the LinkedIn RECOMMENDATIONS, also see the numerous Awards won by my Firm in our Corporate Profile and consider the variety of representative positions to which I have been elected in recognition of my experience, expertise and leadership.

27 June 2011

Old Mutual in R3bn development that will house its SA HQ

Old Mutual in R3bn development that will house its SA HQ

Insiders say the new precinct , called Mutual Place, will be a 120 000m² multi-storey mixed use office precinct and is expected to be taller than the 50-floor Carlton Centre in downtown Johannesburg. It will also be one of the greenest, if not the greenest, multi-storey precincts in the area.

Property as an investment option

Property as an investment option - Investment insights

The biggest leverage that any successful investor possesses is knowledge. Knowing where and how to invest comes with studying the market and the current conditions. While current property market conditions favour buyers, one still needs to make an informed decision and look at all factors relating to the purchase such as the location and future appreciation potential of the property. These elements of property investment will always remain important regardless of the conditions surrounding the transaction.

*Adrian Goslett is the CEO of RE/MAX of Southern Africa.

23 June 2011


This morning, I was fortunate enough to attend the Property Finance "Power-Hour" Breakfast offered by SAPOA (South African Property Owners Association) in Sandton.

The Power Hour was presented by Gerhard Zeelie of Standard Bank and he dealt with the state of the South African Property Market. It was interesting to get his perspective on where the market is and where it may be heading. No-one can accurately predict these things BUT as Gerhard said … "At least he has charts."

Obviously an hour is wholly insufficient to cover the whole market in depth but we were afforded the opportunity to gain an oversight. Gerhard dealt with the following:
  • Office Property Market
  • Industrial Property Market
  • Retail Property Market
  • Residential Property Market

On average, the first three segments of the property market appear to be fairing quite well. Returns in the Office market are currently the best with an average return of 14.1% but the other segments are also reasonable with Industrial at 13.6% and Retail at 13.1%. In Gerhard's words, when it comes to Retail space, "Bigger is Better". In other words, neighbourhood centres are not doing as well as regional centres.
On the supply side, there is still plenty of retail space being built. This is illustrated by the following table reflecting the area completed in respect of centres over 5000m2
2008865,048 square meters
2009543,814 square meters
2010394,973 square meters
2011 (provisional)454,100 square meters

However, the Residential Market is close to a disaster in terms of performance. Standard Bank's median house price has recorded a growth rate of 3.3% year on year in May and the FNB House Price Index 2.1% in May. It is clear that these increases are below the official inflation rate and that therefore in real terms, house prices are actually declining. The leisure market (e.g. Golf Estates) have been particularly hard hit. There are, however, some bright spots to this picture of adversity. Firstly, the buy-to-let market is showing good returns as a result of the "bargains" on offer. The Affordable Housing Market is still performing well.

Standard Bank have conducted an investigation into Development Loss Drivers. In other words, what factors cause financial losses to Developers. I may go into this on my Blog sometime in the future but I must say that for someone (like myself) who is interested in Real Estate Development, it provides some fascinating insights and I would have liked to engage with Gerhard on this topic for far longer than the time allowed.

Gerhard briefly dealt with some aspects of the CPA that have particular relevance to the Property Industry. SAPOA is currently liaising directly with the relevant authorities regarding specific provisions of the Act and the Regulations. SAPOA will also shortly be presenting a workshop dealing exclusively with the CPA. I will therefore soon dedicate a detailed Blog Post to the CPA and follow it up in a series of posts as various aspects of the operation of the CPA become clearer.

Thanks to Gerhard Zeelie of Standard Bank and to SAPOA for an interesting morning (and a good breakfast)
Gareth Shepperson

21 June 2011

Standard Bank expects to payout over R50bn in new loans

Standard Bank expects to payout over R50bn in new loans

Higher than inflation increases in disposable incomes and demand for mortgages is expected to help Standard Bank (JSE:SBK) lend over R50bn in new loans this year as businesses and individual’s appetite to borrow recovers, the bank said on Monday.

Standard Bank’s head of personal and business banking, Peter Schlebusch, said the bank expects to pay out over R50bn in new loans this year mainly in the personal markets space.

Buying or selling property?

Buying or selling property?

Most property transactions in South Africa are affected by the legislation in terms of which taxes and duties are levied. This article provides a summary on some of these taxes.

Transfer Duty

Transfer duty is, generally speaking, payable when immovable property is acquired. It is payable by the purchaser and is calculated as a percentage of the purchase price. If SARS is of the opinion that the purchase price is less than the fair value of the property, then SARS will calculate the transfer duty based on the fair value.

The current transfer duty rates were announced in the Budget on 23 February 2011. They are applicable to both individuals and legal persons (companies, close corporations and trusts) in respect of properties acquired under sale agreements concluded on or after 23 February 2011. R37,000 plus 8% of the value above R1,500,000

Transfer duty is payable within six months from the date of acquisition, which is usually the date the sale agreement is signed, failing which SARS will charge penalty interest.

A purchaser does not pay transfer duty in transactions where VAT is payable. In such instances, the purchaser will pay the purchase price and VAT to the seller who is then responsible for paying the VAT to SARS.

Value Added Tax (VAT)

VAT is payable on the supply by a VAT vendor of goods supplied in the course and furtherance of any enterprise carried on by such vendor. In relation to a property transaction, this means that if the seller is a VAT vendor and the sale of the property is in the course and furtherance of the seller's enterprise then VAT will be payable on the purchase price.

Ordinarily such VAT will be calculated at the rate of 14%. However, if the property is sold as a going concern, VAT will be calculated at the rate of 0%.

In order for the sale of a property to be "zero-rated" the following main requirements must be met:

The seller and purchaser must be VAT vendors.
The seller and purchaser must agree in writing that the property is sold as a going concern and that the purchase price is inclusive of VAT at the rate of 0%.
The property must constitute an income earning activity.
The sale of the property must include all the assets required for carrying on the income earning activity.

Donations Tax

Donations tax is payable on the value of property disposed of by a resident by means of a donation. Donations tax is levied at 20% on the value of the property donated and is payable by the donor. There are certain exemptions from donations tax. It is important to bear in mind that if SARS is of the opinion that a property has been disposed of for a consideration which is not adequate, then the property will be treated as having been disposed of by donation and donations tax will be payable.

Withholding Tax

Non-residents are liable to pay capital gains tax when they dispose of immovable property situated in South Africa. SARS found this taxation of non-residents difficult to enforce and therefore introduced a "withholding tax" provision in the Income Tax Act.

In terms of the provision, when a purchaser buys immovable property from a non-resident and the purchase price is over R2 million, the purchaser must withhold a certain percentage from the amount due to the seller and pay this to SARS. In most instances, this payment will be done on the purchaser's behalf by the conveyancers attending to the transfer. The amount withheld from the seller is seen as an advance on his tax liability for that tax year.

The current withholding tax rates are as follows: if the seller is a natural person, the purchaser must withhold 5% of the purchase price, if the seller is a company, 7,5% and if the seller is a trust, 10%.

Income Tax Act - transfer of residence grace period

The grace period which was introduced in terms of the Income Tax Act in 2009, which allows for a primary residence owned by a company, close corporation or trust, to be transferred to the relevant individuals of such entity without incurring CGT or transfer duty, has been amended. The initial grace period now only applies in respect of a property which has been acquired by an individual from the relevant entity by no later than 30 September 2010.

In order to take advantage of the new grace period, the following requirements must be met:

The residence must be disposed of to a person who is a "connected person", as defined in the Act, in relation to the entity.
The person must have ordinarily resided in the residence from at least 11 February 2009 to the date of disposal and the residence must have been used mainly for domestic purposes.
The disposal must take place on or before 31 December 2012.
Within six months from the date of disposal the entity must take steps to liquidate, wind up or deregister.

* Victoria Hodgon is a director in the conveyancing department at Garlicke & Bousfield Inc.

Homeownership: Rent or buy

Homeownership: Rent or buy

I have time and again seen homeownership put a family on a new footing socially, psychologically and economically. Homeownership provides a stabilising influence and serves as an anchor for which all members of the family will be prepared to make sacrifices and endure hardship.

However in today's market we are frequently asked if this is not a good time to rent.

20 June 2011

Property market remains conducive to new home buyers

Realestateweb - Property market remains conducive to new home buyers

Residential house prices in South Africa fell slightly in May from a year earlier, according to latest statistics recorded by ooba - South Africa's leading bond originator - however, the environment remains conducive to new homebuyers with lenders continuing to relax their lending criteria.

Realestateweb - Property Loan Stocks deliver performance - Investment insights - South Africa's fastest-growing property website

Property Loan Stocks deliver performance - Investment insights - South Africa's fastest-growing property website

Research published by the PLSA demonstrates that some PLSs are already showing around double-digit returns for the year-to-date to May 2011: Fortress B is at some 15.9% and Octodec 8.4% in the three month period to 31 May 2011, highest returns were reported by Fortress B, Octodec, and Growthpoint Properties with total returns of 18.1%, 13.0% and 10.8%, respectively.

Wendy Machanik reapplies for a Fidelity Fund Certificate

Wendy Machanik reapplies for a FFC

Although the Wendy Mechanik saga is rapidly becoming old news to everyone except Wendy Mechanik, I have posted this article because of a comment that was posted by someone using the pseudonymn Zeitgeis, who posted:
"what an idiot - she's going to jail!? is she going to sell timeshare in the eating hall?"

Gareth Shepperson

17 June 2011

What motivates an Estate Agent’s selection of a Conveyancer???

I would humbly submit that our Firm provides a service that is better than most and is, in fact, comparable to the very best service levels in our profession!

In a perfect world, this should mean that Estate Agents are beating down our doors in order to refer work to us. This is (unfortunately) not happening and I continue to search for the essential elements that inform an Agent's choice of Conveyancer.

I am specifically not going to deal with the kickbacks paid to Agents by Conveyancers. We all know that it happens but (as a highly ethical law firm … don't laugh, there is such a thing) we are not prepared to indulge in illegal behavior. I am therefore not including it in my search for the essential elements that inform an Agent's choice of Conveyancer. Other than to state that we serve and treat our Agents very well, I am not prepared indulge this topic any further.

I therefore continue to actively strive to ascertain what motivates the selection of a Conveyancer. In an effort to get to the bottom of an Agent's motivation, I sent out a survey last year to 183 Agents who were registered with Private Property. Here are some of the more relevant extracts from my survey:

Q1. How long have you been doing business as an Estate Agent?I am a novice, "0.0%"
1 - 3 years, "5.6%"
3 - 6 years, "38.9%"
6 - 10 years, "33.3%"
Too long to remember!!, "22.2%"

Q2. How long have you been listing on Private Property?
Less than 1 month, "0.0%"
1 - 2 months, "0.0%"
3 - 6 months, "22.2%"
6 - 12 months, "38.9%"
More than a year, "38.9%"

Q9. Do you frequently advise Sellers to make use of a Conveyancer that you deal with, know and trust?
Never, "5.6%"
Seldom, "5.6%"
Often, "27.8%"
Always, "61.1%"
Is there a Conveyancer that can be trusted?, "0.0%"

Q10. In a few words, describe what would influence you to recommend a Conveyancer to Sellers.18 respondents answered the question

From the survey, it is clear that although the Sellers may sometimes nominate the Conveyancers, the Estate Agents recommend the Conveyancer in the overwhelming majority of transfers. This is very clearly illustrated in this chart.

18 Respondents answered question 10, which really gets to the heart of the motivation behind an Agent's selection of a Conveyancer. Here are some of the responses:
  1. he must have a professional, trust relationship with me as an agent before I will recommend him to sellers.
  2. Only service.
  3. Good, promp service. Thank - you
  4. Personal contact - not through the secretary or admin person - it's very frustrating. They assist me in finding information I need to complete a successful transaction.
  6. Head Office
  7. Relationship with an Attorney that provides above average service proves to be vital in every transaction. Knowing the job and thoroughly implementing years of experience into daily practice to eliminate errors and shorten the length of time on each transaction bringing a quick and pleasant transfer to conclusion.
  8. Tell me more
  10. Good feedback and quick response.
  11. Personal relationship and track record
  12. service
  13. Trust and relationship
  14. one who communicates with me and the client at every stage of the transaction
  15. Good service
  16. Service and feedback.

It is clear that we have returned to SERVICE as the major motivator. We have done everything in our power in order to ensure that we provide the very best service possible. In this regard please indulge me if I highlight a few:
  • We send out weekly detailed comprehensive reports to Sellers, Buyers and Agents wherein we set out the entire history of the transaction and the remaining items on the path to registration.
  • I (the Conveyancer) personally go to the clients. This includes Sellers, Buyers and Agents and any other relevant people/entities, in order to ensure that the transfer is registered as expeditiously as possible. It is my job to register the transfer and so I don't sit in my office and expect people to take time away from work in order to come and see me. This also sometimes includes after hours and weekend visits to clients. (Whatever it takes to get things done as fast as possible.)
  • We have built up and make use of our Contacts at Municipalities in order to ensure the minimum possible delay.
  • Training is important. Our staff regularly attend various training courses so that we are constantly at the forefront of conveyancing developments and fully au fait with the processes and technology involved. In order to better understand the developer's perspective, I attended the very prestigious Property Development Program (PDP), presented by SAPOA and the UCT Graduate School of Business.
  • I regularly meet with colleagues and a variety of industry players through my membership of (and participation in) various organisations. I am currently serving as the vice-chairman (Gauteng) of the South African Property Owners Association (SAPOA) and I am a member of the Property Committee of the Association of Pretoria Attorneys. I am therefore at the coalface of developments in property law.
  • I have contributed a number of articles to the Media. The most recent being my thoughts on Foreign Investment in South African Real Estate which appeared in the March edition of the Property Magazine.
  • I also try and keep in touch through Social Media such as Facebook, LinkedIn and others. My Blog (Gareth Shepperson's First Law) at http://garethsfirstlaw.blogspot.com/ is certainly my biggest contribution to Cyber Real Estate and I hope to add some value through that vehicle.

We continue to strive for excellence and professionalism in what we do and continue to live up to our motto:
"For all of your Real Estate Questions, we are the Answer."
If you are an Estate Agent and have a different view on what motivates your selection of a Conveyancer, I would really love to hear from you.

Gareth Shepperson
Brazington Shepperson & McConnell Attorneys

Significant improvement in residential building activity

Significant improvement in residential building activity

In the first four months of 2011, building activity with regard to new housing in the South African residential property market improved significantly in especially the planning phase compared with the same period in 2010.

REALTOR® Magazine-Daily News-Signs of a Real Estate Recovery?

REALTOR® Magazine-Daily News-Signs of a Real Estate Recovery?

The global financial crisis started with the sub-prime mortgage issues in the USA and the ensuing downturn in that real estate market. That is why I am always on the lookout for positive news from the US real estate market becuase I don't think that a local recovery is possible without a coinciding global recovery.

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