The hidden costs of property ownership
Purchasing a property is a significant undertaking. It's the kind of thing we plan for, dream about, save for, and in many cases sacrifice a great deal for.
This is why those "hidden" costs can come as something of a shock... You've done the sums, tested the bond calculator a number of times, and feel confident that if you don't buy a new car, skip a holiday this year, and cut back on eating out, you should be able to cover the bond repayments every month. And then suddenly you're faced with more expenses.
"Yes, tightening the purse strings is certainly what it takes to get into the property market, but unfortunately the bond repayments are really just one aspect of the cost of property ownership," Skoko Sebola, Principal at Leapfrog Midrand, cautions.
He adds that it is important to not only be aware of the other costs around property ownership but to also actively plan how you'll cover them.
Some of the costs you can be sure to encounter are:
Bond registration and transfer costs
Certainly the biggest cost associated with purchasing a property, they're also completely unavoidable. The bond registration cost refers to the fees payable to the conveyancing attorney for the registration of the bond over the title deeds. The amount is related to the loan amount and is based on tariffs recommended by the Law Society but may vary from firm to firm.
This is a once-off cost that is paid to the conveyancing attorneys before the bond is registered.
Rates, taxes and levies
There are those who believe that there are only two things in life we can be certain of; death and taxes. If you're a property owner you're likely one of them!
The rates and taxes on a freehold property is determined by the value of the property, which in turn is influenced by the size of the property and the area in which it is located. Rates are the fees for services such as sewerage usage and waste removal while taxes are what you pay on the value of the property.
In some cases there will also be levies payable. "Levies will apply if you're buying into a sectional title where the levy is intended to cover the cost of running the complex or estate," Sebola explains.
"It's a good idea to find out more or less what these will be each month so that you can plan for it, else the additional expense, which may be anything from a couple of hundred to a couple of thousand, could come as quite a shock," Sebola says.
And be sure to ask about any other special levies that may apply to ensure you're not guard off-guard with yet another mandatory payment.
Insurance in general tends to be a grudge purchase, but an absolutely essential one. "It's about the financial protection in the case of loss or damage but there are a number of other advantages that may include emergency repair services and cover for temporary living expenses in the event of property needing to be evacuated," Sebola explains.
"There is no legal obligation to have homeowners insurance but if your property is bonded the lender will require that you take out a comprehensive insurance policy that covers the replacement cost of the building," Sebola elaborates.
There are many different insurance products on the market, covering vastly different things, and many of them can be tailored to your exact needs.
"This is the cost that people often 'forget' about but it's something that you need to plan for in advance," Sebola says. It may be that you're just moving around the corner and a kind friend volunteered his trailer for the day, but in other cases you'll probably need to pay a company to move your things for you. Bear in mind that the cost of moving is typically determined by the size of your load and the distance it has to travel.
Other costs you're likely in incur when moving include things like new school uniforms for your children if the move is to a new area, new or extra furniture and furnishings for the new property, as well as the cost of things that break in the move (and there is always something, unfortunately).
"It's a good idea to shop around to find the most competitively priced moving services," Sebola recommends.
A trusted property advisor will help to guide you through the process, alerting you to all the costs so that you can plan for it effectively.