What the different property options in housing schemes mean to buyers | Everything Property

What the different property options in housing schemes mean to buyers

housing schemes
Whale Rock Ridge in Plettenberg Bay

With so many different types of secure development now all falling under the Community Housing Schemes Ombud Service Act, it’s important for homebuyers to be aware of the differences between sectional title and freehold properties when buying in these schemes. This is especially crucial for those buying for the first time and understanding how these differences are likely to affect them in the future.

No matter what they look like, the most important difference between sectional title and freehold property developments is the fact that in a sectional title scheme, you are buying a share in the common property in addition to your own apartment, townhouse or house, says Andrew Schaefer, MD of leading property management company Trafalgar.

“This common property includes the land on which the whole scheme is built, as well as gardens, parking, any other shared amenities and security equipment such as electric gates and fencing, CCTV and biometric scanners. And you will be liable to pay a monthly levy to cover the maintenance and repair of this common property, as well as certain other items.”

On the other hand, he says, when you buy a freehold or full title home, you acquire exclusive ownership of an entire property, including the land and any structures on it. When it is in an estate, you will also have to pay a monthly levy to the homeowners’ association (HOA) to cover the maintenance and upkeep of common areas, roadways and the security provisions. Your personal homeowners’ insurance cover (HoC) will, however, not be included in this levy.

“Meanwhile when it comes to home maintenance, owners in sectional title schemes are only responsible for any maintenance or repair needed inside their own unit, and do not need to pay for HoC, only for insurance on the contents of their units. Exteriors and the common property are the responsibility of the body corporate, which must also ensure that the whole complex is adequately insured and pay the local authority for any services provided to the common property.”

Who controls what

Another major difference between sectional title and freehold ownership, Schaefer says, is who has control over what you can do with your property. “All community housing schemes have certain rules and policies that everyone must follow, but if you buy a freehold home, you will have more control over decisions related to the use of your own home. It will be easier to make additions or alterations, for example, or to decide what to plant in your garden, or to install a rooftop solar system.”

In a sectional title scheme, all those decisions would have to be made by the body corporate, and there will most probably be additional rules regarding noise, parking, pets and the use of any shared amenities such as pools, laundries or tennis courts. “You are also likely to live in closer proximity to your neighbours, which can create privacy issues,” he says.

The price difference

A third important distinction between sectional title and freehold properties, he notes, is price. Sectional title properties are often more affordable and thus accessible, especially for first time buyers – although this is not always the case. “There are luxury sectional title apartments in both Johannesburg and Cape Town, for example, that cost considerably more than large freehold homes in upmarket lifestyle estates.

“And it is crucial to remember that the value of a home in any community housing scheme, as well as its resale potential, will be heavily influenced by the condition of the complex and good financial management on the part of either the body corporate or the HOA.”

Remember this …

So, while your choice between these property types will depend on your own budget and lifestyle preferences, it’s also essential to establish that any community housing scheme you are considering buying into is well run. “If you are buying into a new scheme, make sure that the developer is reputable and has a good track record before you commit to the purchase,” Schaefer says.

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