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Chapter 10 - Land and Housing

Buying a house

Getting money is the first step in the process of buying a house. You need some savings because you have to pay a deposit of between 5% and 20% of the price of the house, before any bank will lend you money. Also, if you qualify you can get a housing subsidy. When you have paid your deposit and worked out what your subsidy will be (if any), you must borrow the rest of the money to buy the house. The money you borrow from a bank is called a mortgage bond or home loan.

Your monthly repayments go towards paying off:

• the lump sum of money you borrow
• the interest which is the money that the bank charges you for lending you the lump sum.

Interest rates change over time. If the interest rate goes down this means your repayments will go down. If it goes up, your repayments will go up.

The time over which you pay back the loan is called the 'redemption period'. It is usually 20 years, but you can pay the money off quicker if you have spare cash.

Banks usually only lend money to people with stable jobs. Most banks insist that your bond repayment is not higher than 25% of your income, or 30% of your joint income if you are married. Banks will also only lend you money to buy a house made with brick or concrete walls, and zinc or asbestos roofing.

See Problem 11: Falling behind on bond payments.

The offer to purchase

Your offer to the seller to buy the house must be made in writing. Sometimes the seller tries to put a 'voetstoets’ into the offer before he or she will sign it. This means that you agree to buy the house exactly as it is and you can never ask the seller to do repairs for anything. Before you allow a ‘voetstoets’ clause, you should make sure you are happy that there are no problems that you don't know about.

When both you and the seller sign the Offer to Purchase it becomes a contract, called the Deed of Sale. By law the buyer and seller must then obey the contract.

If you buy a house under leasehold or Deed of Grant, you usually go to the offices of the Township Manager or the Home Ownership Division. If it is a new house, you fill in forms to apply for your lease-hold or Deed of Grant. If it is not a new house, you go there to sign the transfer papers and to pay the bond registration and transfer fees. Take your ID or reference book, marriage certificate and if you have one, your decree of divorce or spouse's death certificate with you.

Transfer

This is the change of ownership from the seller to you, the buyer. A special lawyer, called a conveyancer, writes a document known as a Deed of Transfer. This document then goes to the Deeds Office for the area where the house is. Once the Registrar of Deeds signs the Deed of Transfer it is called the title deed and it proves that you are the legal owner of the property. You get a copy and the Deeds Office keeps a copy. Before you buy the house you should check that the seller is the real legal owner of the house. You can do this by checking the title deed at the Deeds Office.

Defects in a house

If a builder builds a new house for you, you have to sign a delivery note saying that you are happy that the house was completed according to the plan. The builder then gives you a three-month guarantee. This means the builder is responsible for the first three months for fixing any problems in the way the house was built.

Sometimes hidden problems only show after the first three months. For example, if the roof collapses after the first few years, it may be the builder's fault. This is known as a latent defect.

See Problem 12: Problems with a house you bought.